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    Accounting Concepts

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    Shan ali
    1. The document outlines key accounting concepts including the business entity concept, money measurement concept, and dual aspect concept. 2. It also discusses the going concern concept, cost concept, accounting year concept, matching concept, and realization concept. 3. The document then describes four main accounting conventions: conservatism, consistency, full disclosure, and materiality. Conservatism means using lower values, consistency uses the same principles over time, materiality records important facts, and full disclosure reveals all material information.

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    Accounting Concepts

    Uploaded by

    Shan ali
    3 views2 pages
    1. The document outlines key accounting concepts including the business entity concept, money measurement concept, and dual aspect concept. 2. It also discusses the going concern concept, cost concept, accounting year concept, matching concept, and realization concept. 3. The document then describes four main accounting conventions: conservatism, consistency, full disclosure, and materiality. Conservatism means using lower values, consistency uses the same principles over time, materiality records important facts, and full disclosure reveals all material information.

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    1. The document outlines key accounting concepts including the business entity concept, money measurement concept, and dual aspect concept. 2. It also discusses the going concern concept, cost concept, accounting year concept, matching concept, and realization concept. 3. The document then describes four main accounting conventions: conservatism, consistency, full disclosure, and materiality. Conservatism means using lower values, consistency uses the same principles over time, materiality records important facts, and full disclosure reveals all material information.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    3 views2 pages

    Accounting Concepts

    Uploaded by

    Shan ali
    1. The document outlines key accounting concepts including the business entity concept, money measurement concept, and dual aspect concept. 2. It also discusses the going concern concept, cost concept, accounting year concept, matching concept, and realization concept. 3. The document then describes four main accounting conventions: conservatism, consistency, full disclosure, and materiality. Conservatism means using lower values, consistency uses the same principles over time, materiality records important facts, and full disclosure reveals all material information.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 2

    Accounting Concepts

    1. Business entity concept: A business and its owner should be treated


    separately as far as their financial transactions are concerned.
    2. Money measurement concept: Only business transactions that can be
    expressed in terms of money are recorded in accounting, though records of
    other types of transactions may be kept separately.
    3. Dual aspect concept: For every credit, a corresponding debit is made. The
    recording of a transaction is complete only with this dual aspect.
    4. Going concern concept: In accounting, a business is expected to continue
    for a fairly long time and carry out its commitments and obligations. This
    assumes that the business will not be forced to stop functioning and
    liquidate its assets at “fire-sale” prices.
    5. Cost concept: The fixed assets of a business are recorded on the basis of
    their original cost in the first year of accounting. Subsequently, these
    assets are recorded minus depreciation. No rise or fall in market price is
    taken into account. The concept applies only to fixed assets.
    6. Accounting year concept: Each business chooses a specific time period to
    complete a cycle of the accounting process—for example, monthly,
    quarterly, or annually—as per a fiscal or a calendar year.
    7. Matching concept: This principle dictates that for every entry of revenue
    recorded in a given accounting period, an equal expense entry has to be
    recorded for correctly calculating profit or loss in a given period.
    8. Realisation concept: According to this concept, profit is recognised only
    when it is earned. An advance or fee paid is not considered a profit until
    the goods or services have been delivered to the buyer.

    Accounting Conventions
    There are four main conventions in practice in accounting: conservatism;
    consistency; full disclosure; and materiality.
    Conservatism is the convention by which, when two values of a transaction are
    available, the lower-value transaction is recorded. By this convention, profit
    should never be overestimated, and there should always be a provision for
    losses.
    Consistency prescribes the use of the same accounting principles from one
    period of an accounting cycle to the next, so that the same standards are
    applied to calculate profit and loss.
    Materiality means that all material facts should be recorded in accounting.
    Accountants should record important data and leave out insignificant
    information.
    Full disclosure entails the revelation of all information, both favourable and
    detrimental to a business enterprise, and which are of material value to
    creditors and debtors.

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