Accounting concepts
- 1. CONCEPTS OF ACCOUNTING Mr. Satyanath Mohapatra PRESENTED BY
- 2. Accounting concept refers to the • Basic assumptions • Rules • Principles which work as the basis of recording of business transactions and preparing accounts. The main objective is to • Maintain uniformity • Clarity in accounting records.
- 3. • Business entity concept • Money measurement concept • Going concern concept • Accounting period concept • Accounting cost concept • Duality aspect concept • Realisation concept • Accrual concept • Matching concept Various Accounting concepts
- 4. Business Entity Concept The business enterprise and its owners are two separate independent entities. Thus, the business and personal transactions of its owner are separate.
- 5. Money measurement concept Only those business transactions will be recorded which can be expressed in terms of money.
- 6. This concept states that a business firm will continue to carry on its activities for an indefinite period of time. Going concern concept
- 7. Accounting period concept All the transactions are recorded in the books of accounts on the assumption that profits on these transactions are to be ascertained for a specified period.
- 8. Accounting cost concept The price of an asset must be recorded as actual cost paid to acquire it. Which includes cost of acquisition, transportation and installation. It doesn’t consider the market value.
- 9. Duality aspect concept The dual aspect concept states that every business transaction requires recordation in two different accounts. Where you are giving some value means you are also receiving some value. The concept is commonly expressed as the accounting equation, which states that:
- 10. Realisation concept This concept states that revenue from any business transaction should be included in the accounting records only when it is realised. It Implies the accounting should not take in to consideration any anticipated profit.
- 11. Accrual concept The revenues are recorded when they become receivable whether received or not, and the expenses are recognized when they become payable whether paid or not.
- 12. Matching concept The revenue and the expenses incurred to earn the revenues must belong to the same accounting period.
- 13. Accounting concept refers to the basic assumptions which serve the basis of recording actual business transactions.