Accounting principles versus absolutes

I don’t like absolutes. Absolutes are it when people make statements that are said with authority and are generally taken as gospel truth. These statements are often incorrect anyway, eg: ALL businesses should be on TikTok. REALLY? Why? Is there data to confirm this? NO! With technology and everything in everyday life moving at such a fast pace, there are no longer statements that can be absolute!

Absolutes can be likened to rules. I like rules and humanity, based on rules, thrives on routine and order that these create. There are certain industries that there are rules in place and advice given on these rules that have either not changed in many years or may never change or will only change slightly.

Basic Structure

Accounting principles at the very basic structure, have not changed in hundreds of years. The basic “double entry” structure will never change either. This is just like day and night or Ying and Yang. They are absolute!

Tax is a great example of rules that change but very slowly and only slightly. Even tough they don’t change often, there are still no absolute statements because changes make sure of this. The classic, “except when…” statement or “unless…” statements are always there.

Coming back to the question, Are there checks in place? there are certain processes and balances that have to be done in the accounting process. These are again “rules” or “absolutes” that you can ALWAYS fall back on and make sure they happen. This ensures the accuracy and completeness of the data.

No cheating these

Unlike many things in business, these are always in place and can be checked regularly whenever you do any sort of accounting work in your business. The best example is a bank reconciliation. A bank reconciliation is making sure that every transaction that occurred in the bank statement(s) has been recorded accurately and completely – down to the cent! The difference is ALWAYS ZERO!

There are no ways to cut corners or “cheat the system”.

Having said that, this is only true IF you use an accounting system based on the accounting principles. If you don’t use these systems, you can cheat the system. This is not something that you should be doing and BC Accounting Services will not condone or entertain these practises.

Have you got these checks and balances in place?

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Contact us to make sure that you do. We offer a service where we review your systems and make recommendations accordingly.

This article was written in May 2023

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