Accounting concepts

The accounting cycle essentially consists of five steps, most of which are mechanical, but one involves decision-making.

The fundamental accounting equation underlies the accounting process and is supported by double-entry bookkeeping.

Accounting is the language in which financial information is communicated about a company to interested parties.

Your company may or may not be a separate legal entity but its accounts must be kept separate and distinct.

The fiscal period represents a periodic set amount of time for which a business reports on its financial performance.

The fiscal period assumption entails that accounting take place over periodic and set time frames of equal duration.

The going concern concept assumes that a company will stay in business during and beyond the next fiscal period.

The stable dollar assumption is the accounting principle that the definition of the dollar remains constant over time.

In Canada, four ways exist to structure your business: sole proprietorship, partnership, corporation and cooperative.