Constrints of Accounting Principles

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Accounting Constraints:

Constraint#1. Estimates and Judgments
Certain measurements cannot be performed completely accurately, and must therefore utilize conservative estimates and judgments.
For example, a company cannot fully predict the amount of money it will not collect from its customers, who having purchased goods from it on credit, ultimately decide not to pay. Instead, a company must make a conservative estimate based on its past experience with bad customers.
 
Constraint#2. Materiality
Inclusion and disclosure of financial transactions in financial statements hinge on their size and effect on the company performing them.
Note that materiality varies across different entities; a material transaction (taking out a $1,000 loan) for a local lemonade stand is likely immaterial for General Electric, whose financial information is reported in billions of dollars.
 
Constraint#3. Consistency
For each company, the preparation of financial statements must utilize measurement techniques and assumptions that are consistent from one period to another.
Keep in mind that, companies can choose among several different accounting methods to measure the monetary value of their inventories. What matters is that a company consistently applies the same inventory method across different fiscal years.
 
Constrai nt#4. Conservatism
Financial statements should be prepared with a downward measurement bias. Assets and revenues should not be overstated, while liabilities and expenses should not be understated.
  http://accounting-financial-tax.com/2009/08/basic-accounting-assumptions-principles-constraints/