What Is Modified Accrual Accounting?

The principle of accounting amendment refers to the importance of different transactions in the process of accounting, and different accounting methods should be used. The requirement for accounting work is that the criterion for determining the importance depends on the degree of influence on the decisions made by users of information and the principle of substance over form. Businesses should conduct accounting in accordance with the economic substance of transactions or events, that is, they should not simply use their legal forms as the basis for accounting

Accounting corrective principle

Right!

The principle of accounting amendment refers to the importance of different transactions in the process of accounting, and different accounting methods should be used. The requirement for accounting work is that the criterion for determining the importance depends on the degree of influence on the decisions made by users of information and the principle of substance over form. Businesses should conduct accounting in accordance with the economic substance of transactions or events, that is, they should not simply use their legal forms as the basis for accounting

Chinese name

Accounting corrective principle

Claim

Substance over form

Explanation

Accounting for the economic substance of a transaction or event

Features

Minimal profit method when choosing accounting method

In the process of accounting, the importance of transactions shall be differentiated, and different accounting methods shall be adopted.

Criteria of materiality depend on the degree of influence on the decisions made by the users of the information;

Important accounting matters must be handled in accordance with prescribed accounting methods and procedures, and fully and accurately disclosed in financial reports;

Minor accounting matters can be appropriately simplified without affecting the quality of accounting information.

(1) Accounting is based on the substance and financial facts of its transactions or events, not its legal form; (2) The recognition of financial leases, the cost method and equity method of long-term stocks reflect substance over form;

(3) The principle of caution

In accounting, it is not necessary to calculate assets or liabilities, or to understate liabilities or expenses.

(1) When selecting the accounting method, the method with the lowest profit is used; (2) The accounting method embodying the principle of prudence includes provision for bad debts, inventory depreciation reserve, short-term investment depreciation reserve, advanced advanced method, and accelerated depreciation.