Accounting Postulate

AAA

DEFINITION of 'Accounting Postulate'

A fundamental assumption in the field of accounting. Like any field, the present system of accounting has certain underlying axioms which form the basis of the all further work. Accounting postulates are generally very well agreed upon and form the foundation of the discipline.

INVESTOPEDIA EXPLAINS 'Accounting Postulate'

Accounting postulates include statements that economic activity conducted by certain identifiable entities will be continuous, that transactions occur at identifiable times and that the entity will continue as a going concern. None of these postulates are controversial, however they do highlight how difficulties can arise in advanced accounting practices.


For example, for certain transactions, there may be disagreement upon the timing for recording items of revenue and expense. In cases of mergers, there are certain issues with how to most accurately account for certain items. Guidelines must be developed for these advanced topics so that they fit within the accounting framework.

RELATED TERMS
  1. Generally Accepted Accounting Principles ...

    The common set of accounting principles, standards and procedures ...
  2. Financial Accounting Standards ...

    A seven-member independent board consisting of accounting professionals ...
  3. Accounting

    The systematic and comprehensive recording of financial transactions ...
  4. Accounting Method

    The method by which income and expenses are reported for taxation ...
  5. Accrual Accounting

    An accounting method that measures the performance and position ...
  6. Expanded Accounting Equation

    The expanded accounting equation is derived from the accounting ...
Related Articles
  1. Financial Career Options For Professionals
    Professionals

    Financial Career Options For Professionals

  2. Finding The Right Accounting Certification
    Professionals

    Finding The Right Accounting Certification

  3. Spotting Creative Accounting On The ...
    Fundamental Analysis

    Spotting Creative Accounting On The ...

  4. Mark-To-Market Mayhem
    Options & Futures

    Mark-To-Market Mayhem

comments powered by Disqus
Hot Definitions
  1. 80-10-10 Mortgage

    A mortgage transaction in which a first and second mortgage are simultaneously originated. The first position lien has an ...
  2. Passive ETF

    One of two types of exchange-traded funds (ETFs) available for investors. Passive ETFs are index funds that track a specific ...
  3. Walras' Law

    An economics law that suggests that the existence of excess supply in one market must be matched by excess demand in another ...
  4. Market Segmentation

    A marketing term referring to the aggregating of prospective buyers into groups (segments) that have common needs and will ...
  5. Effective Annual Interest Rate

    An investment's annual rate of interest when compounding occurs more often than once a year. Calculated as the following: ...
  6. Debit Spread

    Two options with different market prices that an investor trades on the same underlying security. The higher priced option ...
Trading Center