Chapter Ⅱ General Principles



Article l0. The accounting records and financial reports must be based on financial and economic transactions as they actually take place, in order to objectively reflect the financial position and operating results of an enterprise.



Article 11. Accounting information must be designed to meet the requirements of national macro-economy control, the needs of all concernedexternal users to understand an enterprise's financial position and operating results, and the needs of management of enterprises to strengthen their financial management and administration.



Article 12. Accounting records and financial statements shall be prepared according to stipulated accounting methods, and accounting information of enterprises must be comparable and convenient to be analyzed.



Article 13. Accounting methods used shall be consistent from one period to the other and shall not be arbitrarily changed. Changes and reasons for changes, if necessary, and their impact on an enterprise's financial position and operating results, shall be reported in notes to the financial statements.



Article 14. Accounting and financial reports preparation must be conducted in a timely manner.



Article 15. Accounting records and financial reports shall be prepared in a clear, concise manner to facilitate understanding, examination and use.



Article 16. The accrual basis of accounting is to be adopted.



Article 17. Revenue shall be matched with related costs and expenses in accounting.



Article 18. Princip1e of prudence should be followed in reasonably determining the possible loss and expense.



Article l9. The values of all assets are to be recorded at historical costs at the time of acquisition. The amount recorded in books of account shall not be adjusted even though a fluctuation in their value may occur, except when State laws or regulations require specific treatment or adjustments.



Article 20. A clear distinction shall be drawn between revenueexpenditures and capital expenditures. Expenditure shall be regarded as revenueexpenditure where the benefit to the enterprise is only related to the current fiscal year; and as capital expenditure where the benefits to the enterprise last for several fiscal years.



Article 21. Financial reports must reflect comprehensively the financial position and operating results of an enterprise. Transactions relating to major economic activities are to be identified, appropriately classified, and accounted for, and separately reported in financial statements.
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