What is an Accounting Postulate?

An accounting postulate is a key assumption that underlies the practice of accounting. A postulate is derived from common historical practice, and is incorporated into the more formal accounting standards that govern how accounting transactions are recorded and presented. Accounting postulates are generally not stated in the disclosures that accompany a reporting entity’s financial statements.

Examples of Accounting Postulates

Examples of accounting postulates are as follows:

Revenue recognition. Revenues are recognized when earned, and expenses are recognized when assets are consumed. This postulate is incorporated into the accrual basis of accounting.
Consistency. Once a business chooses to use a specific accounting method, it should continue using it on a go-forward basis.
Entity. The transactions of a business are to be kept separate from those of its owners, so that the financial results and financial position of the business can be more clearly discerned.
Completeness. Transactions should be recorded when not doing so might alter the decisions made by a reader of a company's financial statements.