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In order to prepare the financial statements, it is important to adhere to certain fundamental accounting concepts. Going Concern, unless there is evidence to the country, it is assumed that a business will continue to trade normally for the foreseeable future.

Accruals and Matching, revenue earned must be matched against expenditure when it was incurred Prudence, if there are two acceptable accounting procedures choose the one gives the less optimistic view of profitability and asset values. Consistency, similar items should be accorded similar accounting treatments. Entity, a business is an entity distinct from its owners. Money Measurement, accounts only deal with items to which monetary values can be attributed.

Helps existing and potential investors and creditors and other users to assess the amounts, timing, and uncertainty of prospective net cash inflows to the enterprise

Separate Valuation each asset or liability must be valued separately.
Materiality, only items material in amount or in their nature will affect the true and fair view given by a set of accounts. Historical Cost, tTransactions are recorded at the cost when they occurred. Realization, revenue and profits are recognized when realized. Duality, every transaction has two effects.

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Under EU law, the standard rate of VAT in any EU state cannot be lower than 15%.Each state may have up to two reduced rates of at least 5% for a restricted list of goods and services. The European Council must approve any temporary reduction of VAT in the public interest.

The default VAT rate is the standard rate, 20% since 4 January 2011. Some goods and services are subject to VAT at a reduced rate of 5% (such as domestic fuel) or 0% (such as most food and children’s clothing).

VAT is an indirect tax because the tax is paid to the government by the seller (the business) rather than the person who ultimately bears the economic burden of the tax (the consumer). Opponents of VAT claim it is a regressive tax because the poorest people spend a higher proportion of their disposable income on VAT than the richest people.Those in favour of VAT claim it is progressive as consumers who spend more pay more VAT.

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Financial statements are prepared according to agreed upon guidelines. In order to understand these guidelines, it helps to understand the objectives of financial reporting. The objectives of financial reporting, as discussed in the Financial Accounting standards Board (FASB) Statement of Financial Accounting Concepts No. 1, are to provide information that

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