Video Transcript: The Financial Accounting Process

hello and welcome back, and now we're going to discuss the financial  accounting process, or concepts of accounting in recording business  transactions, accountants rely on certain underlying assumptions or concepts,  both prepares and users of financial statements must understand these  assumptions, money measurement concept. This concept explains the  economic activity is initially recorded and reported in a common monetary unit of measure, the dollar in the United States, this form of measurement is known as  the money measurement, the exchange price or cost concept or principal. Most  of the amounts in an accounting system are the objective money price  determined in the exchange process. As a result, we record most assets.  Excuse me, we record most assets at their acquisition cost. What did you pay to acquire this asset? Cost of the sacrifice made, or the resource given up,  measured in money terms, to acquire some, some desired thing, such as a new  truck, which is considered an asset the going concept, continuing continuity  concept, unless strong evidence exists to the contrary, accountants assume that the business entity will continue operations into the indefinite future.  Accountants call this assumption they're going concern, or continuity concept,  assuming that the entity will continue indefinitely, allows accountants to value  long term assets, such as land at cost on the balance sheet, since they are to be used rather than sold, market values of these assets would be relevant only if  They were for sale. For instance, accountants would still record land purchase in 1988 at its cost of $100,000 on December 31 2010 balance sheet, even though  its market value has risen to $300,000 the time periods concept, according to  the time periods concept, or assumption an industry's life can be meaningfully  subdivided into time periods, such as months or years to report the results of the economic activities.