First, historical cost concept means all transactions are recorded in their original costs incurred at the time that those transactions took place.
This means assets should be valued based on the purchase price or the money actually paid for the assets. In consequent periods when there is thankfulness is esteem, the esteem is not perceived as an increase in assets esteem with the exception of where permitted or required by accounting standards. Therefore, recordingof transactions should be based on the amounts stated in the invoice/bills.
Accrual concept refer to revenue and expenses are noted when they happen in a financial statement and when the money received or paid around then they are not recorded. Accrual are expected to guarantee that all revenue and expenses are perceived inside the right announcing period, independent of the planning of the related cash flow.Without accrual the measure of income, cost, and benefit or loss in a period would not really mirror the genuine level of financial movement inside a business.Consistency concept is once an accounting method has been picked it should be maintained until and unless there is a solid reason to go for the alternative. Just change an accounting principle or strategy if the new form here and there enhances announced money related outcomes. in the event that you roll out such an improvement, completely archive its belongings and incorporate this documentation in the notes going with the financial statements.