Bookkeeping relies on a set of Principles and Assumptions to operate by.
These Principles are the foundation for which the industry stands on.

Full Disclosure – Principle

All information that is relative to the business and is important to a lender or investor
has to disclosed in financial statements or in the notes of the statements.

Example – If a worker files workmans comp, then this needs to be
included in the notes of the financial statements.

Materiality – Principle

An accounting standard can be ignored if the impact has such a small
effect on financial statements that it would not be misleading. This is very
subjective and bookkeepers should ask for advice from colleagues or an
accountant when needed.

Full Disclosure – Principle

All information that is relative to the business and is important to
a lender or investor has to be disclosed in financial statements or in
the notes of the statements.
Example: If a worker files worker’s comp, then this needs to be included in
the notes of financial statements.

Materiality – Principle

An accounting standard can be ignored if the impact has such a small
effect on financial statements that it would not be misleading. This is very
subjective and bookkeepers should ask for advice from colleagues or an
accountant when needed.
Example: When recording documentation, round to the nearest whole dollar, not cents.

Consistency – Principle

When a business adopts a specific accounting method, it will enter all
similar items in the exact same way in the future. This principle applies
to line items on all financial statements and reports. Only change an
accounting principle or method if the new version improves reporting.
Example: If you hire a new bookkeeper who handles depreciation calculations
differently, your expenses may look different from previous statements,
without an actual change in finances.