ACCOUNTING POSTULATE

A fundamental assumption in the field of accounting. Like any field, the present system of accounting has certain underlying axioms which form the basis of the all further work. Accounting postulates are generally very well agreed upon and form the foundation of the discipline.

Accounting postulates include statements that economic activity conducted by certain identifiable entities will be continuous, that transactions occur at identifiable times and that the entity will continue as a going concern. None of these postulates are controversial, however they do highlight how difficulties can arise in advanced accounting practices.

For example, for certain transactions, there may be disagreement upon the timing for recording items of revenue and expense. In cases of mergers, there are certain issues with how to most accurately account for certain items. Guidelines must be developed for these advanced topics so that they fit within the accounting framework.