This part presents the accounting principles for a company. It specifies that the figures included in a company's financial statements for the reported items should be identified as per the principles given from paragraphs 12 to 17, except where paragraph 18 offers an exception.

The presumption for a company is that of continuing operations. Consistency in applying accounting policies and measurement bases between financial years is required.

Certain requirements are outlined for determining the amount of any item in the financial statements. It should be found on a careful basis, with specific considerations:

• Profits realised at the end of the financial year are the only ones to be included in the profit and loss account
• All liabilities whether incurred in the financial year under consideration or a previous one must be factored in, provided they become apparent between the financial year end date and the signing of the financial statements
• All value adjustments for value reduction must be accounted for, irrelevant of whether the outcome for the financial year under consideration is profit or loss

All income and expenses relating to the financial year under examination must be included, irrespective of when they were received or paid. For determining the total amount of any item, the amount of each individual asset or liability that should be considered needs to be calculated separately.

Revenue should account for items in the profit and loss account and balance sheet while reflecting the real essence of the reported transaction or arrangement, in compliance with applicable accounting standards. However, the provisions given here need not be followed if the amounts concerned do not materially affect a true and fair view.

Provided there are sound reasons, directors of a company may choose to deviate from any of the above principles in preparing the company's financial statements for a specific year. If such a scenario arises, details of the deviation, the reasons behind it, and its influence on the balance sheet and profit and loss account of the company must be mentioned in a note to the financial statements.