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Entity unit assumption: as the name indicated, the business is a separate and distinct from its owner(s), which in effect means that the entity accounts and finances are totally separated from the financial of owners, and the business is treated as a person by itself.
Going concern assumption: meaning that the business is going to be operated for non predefined period, in other words, there is no ending date for business life.
Monetary unit assumption: meaning that the business should have one money unit to record its transactions, for example U.S. dollar.
Time period assumption: meaning that business profit or loses are measured on timely basis, for example one year, six months, 3 months.
Consistency: meaning that the business should use the same accounting techniques, as change of methods used could change the outcome.
Key accounting assumptions state how a business is organized and operates. They provide structure to how business transactions are recorded. ... Transactions are recorded using the accrual basis of accounting, where the recognition of revenues and expenses arises when earned or used, respectively.
