The following postulations and principles provide general descriptions of existing accounting practices，which help accountants analyze unfamiliar situations and develop procedures to account for those situations.This is especially important for developing uniform practices for the quality of financial report.

The Business Entity Concept.Every business unit or enterprises is treated in accounting as a separate entity.With the affairs of the business and those of the owners being kept entirely separate.

The Ongoing-Concern Concept.Unless there is strong evidence to the contrary，it is assumed that a business will continue to operate as a going concern，earning a reasonable profit for a period longer than the life expectancy of any of its assets.

The Stable-Dollar Concept.Under this concept it is held that the function of accounting is to record“dollars invested”and“dollars borrowed”，to trace the various commitments of these“dollars of capital”as they are invested and reinvested in the business activities，and finally to measure out of gross“dollars of revenue”and the recapture of“dollars of capital”with any excess being designated as“dollars of income”.It is conceded that value can only subjectively be measured.It is also recognized that the“value”(purchasing power)of the accountants unit of measure，the dollar，is itself constantly changing.Therefore，it is recognized that a balance sheet prepared under this concept simply shows the number of dollars received from all sources and shows where these dollars are committed.A reader cannot interpret the dollar amounts of the various assets as the values of these assets.

The Time-Period Concept.The environment in which accounting operates requires that the life of a business be divided into relatively short periods and that changes be measured over these short periods.Yet，it is generally agreed that earning cannot be measured precisely over a short period and that it is impossible to learn the exact earnings of a business until it has completed its last transactions and converted all its assets to cash.