Accounting principles are a set of rules and guidelines that guide the preparation and presentation of a company's accounting information. These principles are important because they guarantee the uniformity and reliability of accounting information, allowing users of financial statements to make decisions based on accurate and consistent information.
Basic accounting principles
Basic accounting principles are as follows:
- Accounting entity: the company is an entity distinct from its owners and must have its own accounting records;
- Continuity: it is assumed that the company will continue in operation in the future, unless there is evidence to the contrary;
- Realization: revenues must be recognized when realized and expenses when incurred, regardless of the moment of receipt or payment;
- Competency: income and expenses must be recognized in the period in which they occurred, regardless of the moment of receipt or payment;
- Objectivity: accounting information must be based on facts, evidence and measurable data;
- Consistency: accounting information must be presented consistently over time, to allow comparisons between periods;
- Materiality: only material information should be presented in the financial statements;
- Prudence: financial statements should reflect a conservative view of transactions and events, avoiding overestimating revenues and underestimating expenses;
- Relevance: accounting information must be relevant to users of the financial statements, that is, it must be useful for decision-making;
- Reliability: accounting information must be reliable and adequately represent the financial situation of the company.
Adoption of accounting principles
The adoption of accounting principles is mandatory for all companies that adopt Brazilian accounting standards, known as NBC (Normas Brasileiras de Contabilidade). These standards are issued by the Federal Accounting Council (CFC) and are intended to establish guidelines for the preparation and presentation of financial statements.
In addition, companies must follow international accounting standards, known as IFRS (International Financial Reporting Standards), if they are listed on a stock exchange or have foreign investors.
In short, accounting principles are essential to ensure the reliability and uniformity of accounting information, allowing users of financial statements to make decisions based on accurate and consistent information. It is important that companies follow these principles and applicable accounting standards to ensure the transparency and credibility of their financial information.
