Ethical rules

Prudence. If there is some doubt over the treatment of a particular transaction, income should be underestimated and expenditure overestimated, so that losses are more likely to be overstated and profits understated.

Consistency. Accounting rules should not be amended unless there is a fundamental change in circumstances that necessitates a reconsideration of the original rules.

Objectivity. Personal prejudice must be avoided in the interpretation of the basic accounting rules.

 

Relevance. Accounting statements should not include information that prevents the user from obtaining a true and fair view of the information being communicated to him.