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Define accounting concept in detail?

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Jun 2 '19 at 5:50:8

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Accounting Concepts

Business entity: A business and its owner should be treated separately as far as their financial transactions are concerned.

Money measurement: 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.

Dual aspect: For every credit, a corresponding debit is made. The recording of a transaction is complete only with this dual aspect

Going concern: 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.

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.

Accounting year: Each business chooses a specific time period to complete a cycle of the accounting process i.e monthly, quarterly, or annually

Matching: 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.

Realization : According to this concept, profit is recognized 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.
Jun 3 '19 at 11:18:40
8 months ago
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