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Accountancy

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Published in: Accountancy | B.Com Tuition
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Accounting Concepts & Convention And Basic Accounting Terms.

Sukhbinder S / Durgapur

9 years of teaching experience

Qualification: ICWA (The Institute of Road Transport Perunthurai Medical College,Perunthurai - 2013), B.Com (Burdwan University - 2011)

Teaches: Advanced Excel, GST Training, Tally ERP 9, CA - CPT, CMA Foundation, CMA Intermediate, CS - Foundation, Accountancy, Business Studies, Commerce Subjects, Costing, B.Com Tuition, BBA Tuition, BCA Tuition, BBA Entrance, BBA Subjects, Management Subjects

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  1. Accounting Concepts 1. 2. 3. 4. 5. 6. 7. 8. Business entity concept: A business and its owner should be treated separately as far as their financial transactions are concerned. 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. Dual aspect concept: For every credit, a corresponding debit is made. The recording of a transaction is complete only with this dual aspect. 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. 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 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. 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. 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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