Due to increasing globalization, there is increasing cross-border flow of goods, services, capital and technology and the role of multinational corporations is increasing.
As a result of this, financial statements produced in one country are used in other countries more and more frequently. To enable cross-border investment, it is essential that investors understand the financial statements of different countries. This is possible only when a set of uniform and consistent accounting norms are adopted which
ensures transparency and comparability. The purpose of IFRS is to integrate domestic businesses with the global investor and financial community.

There are two principal rules which stem directly from the prudence principle:
(i) Accountants should not anticipate income and should provide for all possible losses.
(ii) When there are many alternative values of an asset, an accountant should choose the method which leads to the lesser value.

Money Measurement Concept: Money measurement concept means that only those transactions which can be expressed in terms of money are recorded in the books of accounts. It means that transaction and facts, which cannot be expressed in terms of money, will not be recorded. For example, general health condition of the managing director, working conditions, sales policy, industrial relations, quality of the products etc. are very useful facts of the business but are not shown in the books of accounts because these cannot be expressed in terms of money. This concept restricts the scope of accounting to the information which can be expressed in terms of money. In this way, the scope of personal judgement and bias is restricted. Further, this concept makes accounting data homogenous and helps in understanding the affairs of the business.

(i) Materiality: This is a reception to the full disclosure principle. Financial statements should disclose all items that are material enough to influence decision making. Items are accounted on the basis of significance rather than accurate adherence to principles. We do classify expenses into revenue expenses and capital expenses (assets) on the basis of this principle. Purchase of a pencil is treated as an expense, not as an asset, but purchase of machine is treated as purchase of asset not as expense.
(ii) Accounting Period Principle: As per the going concern assumption the life of the business is indefinite. To assess the performance of a business, it is illogical to wait for the life of the business to come to an end and then calculate the profit or loss. To overcome this problem and for the purpose of calculation of profits, the life of the business is divided in smaller parts called 'accounting period'. An Accounting period is a segment of one year in the indefinite life of a business. This assumption helps us to : (a) Measure the progress of business accurately and on a consistent basis; (b) Facilitates comparison; (c) Match periodic revenues with expenses for getting correct business results; (d) Calculate income tax and other government dues. In India we practice two types of accounting years:
(i) Calendar Year (1Jan. - 31 Dec.)
(ii) Fiscal or Financial Year (1 Apr. - 31 Mar.)