Financial statements must be made on the basis of the assumption that enterprises

04. Financial statements must be made on the basis of the assumption that enterprises

accounting-services-in-vietnam2are operating continuously and will continue business activities normally in the near future, i.e., they have no intention or are not compelled to cease operation or to substantially downscale their operation.

Where reality differs from the continuous operation assumption, the financial statements must be made on another basis, which must be explained.

Historical cost

05. Assets must be recognized according to their historical cost. The historical cost of an asset shall be calculated according to the cash amount or cash equivalent already paid or to be paid, or according to the reasonable value of the asset at the time the asset is recognized. The assets’ historical costs must not be modified except otherwise prescribed in specific accounting standards .


06. The recognition of revenues and that of costs must match. When a revenues is recognized, a corresponding cost related to the creation of such revenue must be recognized. Costs corresponding to revenues include costs of the period in which revenues are created and costs of the previous periods or payable costs related to the revenues of such period.


07. The accounting policies and methods selected by enterprises must be applied consistently within at least one accounting year. Where appear changes in the selected accounting policies or methods, the reasons for and impacts of such changes must be presented in the explanations of financial statements.


accounting-services-in-vietnam108. Prudence means the examination, consideration and anticipation needed to establish accounting estimates under uncertain conditions. The prudence principle requires that:

a/ The reserves must be set up, which must not be too big;

b/ The values of assets and incomes are not overestimated;

c/ The values of liabilities and costs are not underestimated;

d/ Revenues and incomes shall be recognized only when there are solid evidences of the possibility of obtaining economic benefits, while costs must be recognized when there are evidences of the possibility of arising costs.