Measurement rules

Money measurement. Quantifiable information must be translated into monetary terms before being included in an accounting system.

Historic cost. Transactions should be recorded in the books of account at their historic cost, that is, at their original purchase cost.

Realisation. Transactions should be entered in the books of account when the legal title to them has been transferred from one party to another party, irrespective of when the cash settlement takes place.

 

Matching. Cash received and cash paid during a particular accounting period should be adjusted in order to match the cost of sales against the sales revenue for the same period.

Dual aspect. All transactions should be recorded in a double-entry format so that the giving and the receiving effect of each transaction is reflected within the accounting system.

Materiality. The basic accounting rules must not be rigidly applied if the treatment of some transactions would be out of all proportion to the results obtained by adopting an inflexible interpretation of the rules.