Situation Principle or Assumption

$1.$ Information is based on actual costs incurred in transactions.

$2.$ Financial statement details that would impact decisions are often disclosed in the footnotes.

$3.$ A company records the expenses incurred to generate the revenues reported.

$4.$ The life of a company can be divided into time periods, and useful reports can be prepared for those periods.

$5.$ Transactions and events are shown in monetary units.

$6.$ Financial statements reflect the assumption that the business continues operating.