Second: Money Measurement Principle
According to this principle, only transactions which can be expressed
in monetary terms, are allowed to be recorded in the Balance Sheet
or the Income & Loss Statement of a company,
and the recording of the financial data has to occur in one currency only.
For instance, dollar, euro or yen.
Third, Matching Principle
This principle requires that all revenues and expenses are recorded
when the transaction occurs rather than when payment is received or made.
In accounting terms, this is the so-called "Accrual Principle".
Fourth: Consistency Principle
This principle demands that, once a business has decided on an accounting methodology,
it needs to follow it consistently in future accounting periods
so that the results reported from period to period are comparable.
Fifth: Accounting Year Principle
Here, every organization choses a time period to complete its accounting cycle
which can be a fiscal year or a calendar year.
And lastly, the sixth principle: Profit Realization Principle
According to this principle, profit is only recognized once it is earned.
Generally, profit realization occurs when goods are sold or a service is delivered.