The revenue recognition principle in accrual accounting requires income to be reported when earned, or when cash payment is made. Revenue is recorded when goods or services are completed, and exceptions include repurchase agreements and long-term contracts. In some cases, revenue must be recorded before a sale is made, such as in agriculture. The revenue […]
The reality principle, developed by Sigmund Freud, is the ability of the mature mind to prioritize long-term satisfaction over immediate gratification. It is a production of the ego, while the pleasure principle emanates from the id. People who can judge situations with long-term goals in mind can avoid the id’s constant plea for pleasure now. […]
The principle of charity suggests being open and receptive to others’ statements, viewing them positively rather than dismissing them. Factors like culture, dialect, education, and genetics shape people’s thinking and speech. Applying this principle helps in understanding others’ perspectives, including those with different backgrounds or language barriers. It also acknowledges that misunderstandings may arise from […]
The alphabetic principle uses single letters or combinations to represent all regular speech sounds, forming the basis for many languages. English has a complex spelling system due to various factors. Phonics is used to teach children to read, starting with simpler letters and sounds before introducing more complex ones. The alphabetic principle states that there […]
The Elliott Wave principle is a technical analysis of stock and commodity markets, based on charting market cycles using behavioral economics. It divides market cycles into Impulse and Corrective Waves, with further wave structures. The theory is reliable and still widely accepted today, and was formulated by Ralph Nelson Elliott in the 1930s. The Elliott […]
The principle of sufficient reason states that all things have a root cause, which can be external or internal. It explains seemingly unplanned events through the idea that there is a sufficient reason behind them. Leibniz identified two principles, the principle of contradiction and the best principle, which explain all truths. The principle of reason […]
The Pareto principle suggests that 80% of results come from 20% of effort or resources used. It’s a general rule of thumb used in business and economics, but not a hard and fast rule. It’s named after economist Vilfredo Pareto and is used to improve productivity and decision-making. The Pareto principle is a concept used […]
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