THE EVOLUTION OF ACCOUNTING PRINCIPLES OVER PERIODS AND THEIR IMPACT ON FINANCIAL ACCOUNTING IN THE CURRENT ERA

Abstract

The development of financial accounting is inseparable from the evolution of accounting principles. These principles, which serve as the theoretical foundation, have shaped how businesses recognize, measure, and present financial information in their reports. In the past, when the economy was simpler, accounting principles focused on objectivity and the historical cost principle. The main goal was to provide reliable information about transactions that had already occurred. However, the increasing complexity of the market and the needs of investors have driven the emergence of new principles, such as the fair value principle. This principle allows assets and liabilities to be recognized at their current market value, providing a more timely and realistic view of a company’s financial position.

Today, with global economic integration, international accounting standards (IFRS) have been established, making accounting principles more consistent. This not only makes financial reports easier to compare but also increases their transparency. Financial accounting is no longer just a system for recording but has become a powerful management tool, helping information users make effective investment and business decisions. Thus, the evolution of accounting principles has been, and continues to be, shaping and elevating the role of financial accounting in the modern economy