Modifying Principles of Accounting - QS Study
QS Study

Modifying Principles of Accounting 

To build the accounting information valuable to different interested parties, the fundamental assumptions and concepts conversed before have been customized. These modifying principles are describe below;.

Cost Benefit Principle

According to this principle, a cost of applying an accounting principle should be fewer than profit. This modifying principle states that the expenditure of applying a principle should not be further than the profit derived from it. If the expenditure is further than the profit then that principle should be modified.

Materiality Principle

Non-relevant information is not to be shown in the financial statements. The materiality principle necessitates all comparatively appropriate information should be disclosed in the financial statements. Inconsequential and irrelevant information are whichever left out or merged with other items.

Consistency Principle

Consentience usually requires that a company use the similar accounting principles and reporting practice through time. The aspire of consistency principle is to protect the comparability of financial statements. The system, observations, ideas and principles used in accounting should be constantly practical and applied year after year. Comparisons of financial results of the industry among diverse accounting stage can be important and consequential only when reliable practices were followed in determining them.