What are the 6 principles

In general, 6 principles are considered. These principles are:

• Impputation principle
• Principle of prudence
• Realization principle
• Matching principle
• Continuity principle
• Resistance principle

Explanation by principle

Impputation principle

What does one charge when? This concerns the profits of the company. In a given period, this is the difference between the beginning equity and the end equity. If it is good, profits will be made in that particular year. The profit and increase or decrease in equity shall be calculated on the basis of costs and revenues in that year. It does not look at revenue and expenditure. You can receive money in a given year from customers who bought it last year. If you order goods this year and pay them only next year, the purchase costs will be included in this year and not next year.

Principle of prudence

The principle says it all you're careful nothing is certain until you get it. That's how accountancy is also thought. If losses are foreseen, for example, a customer who is not going to pay or a lawsuit that is likely to be lost, it must be activated. The possible loss is assumed as a loss for security, even if it may later appear that the customer has paid for everything. Winnings, on the other hand, even though you almost certainly know, are not taken as profits. There is always a factor of uncertainty, and the principle of prudence wants to counter this.