Accounting Concepts
Accounting Principles, Concepts and Conventions
Accounting principles are guidelines & standards, which have been accepted by the accounting profession in preparation and presentation of accounts of the business. It is approved and normally accepted by the government bodies &controlling authorities.
Accounting principles are uniform in order to understand in the same sense by those using it. Also they are not rigid (i.e. inflexible) like principle of gravity but they are flexible. This is because mainly the account principles are social science. Accounting principles are not universal and permanent as they are not discovered but are developed by man from time to time. Thus the development of accounting principles is a continuous process.
Accounting principles are evolved over the year by following:
1. The Professional Institutions like the
“INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA” 2. The legislation of the country like:
“COMPANY LAW BOARD (CLB)” “CENTRAL BOARD OF DIRECT TAXES (CBDT)” etc
ACCOUNTING CONCEPTS AND CONVENSIONS
The financial accounting model processes the economic transactions to produce financial statements as shown below:
The main objective is to maintain uniformity and consistency in accounting records. These concepts constitute the very basis of accounting. The framework of financial accounting is based on several concepts (also referred to as postulates, conventions and principle). The important concepts are as follows:
* Business entity concept * Money measurement concept * Going concern concept * Accounting period concept * Accounting cost concept * Duality aspect concept * Realization concept * Accrual concept * Matching concept * Conservatism Concept * Stable Monetary Unit Concept
* Business entity concept: This concept assumes that, for accounting purposes, the business enterprise and its owners are two separate independent entities. Thus, the
Accounting principles are guidelines & standards, which have been accepted by the accounting profession in preparation and presentation of accounts of the business. It is approved and normally accepted by the government bodies &controlling authorities.
Accounting principles are uniform in order to understand in the same sense by those using it. Also they are not rigid (i.e. inflexible) like principle of gravity but they are flexible. This is because mainly the account principles are social science. Accounting principles are not universal and permanent as they are not discovered but are developed by man from time to time. Thus the development of accounting principles is a continuous process.
Accounting principles are evolved over the year by following:
1. The Professional Institutions like the
“INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA” 2. The legislation of the country like:
“COMPANY LAW BOARD (CLB)” “CENTRAL BOARD OF DIRECT TAXES (CBDT)” etc
ACCOUNTING CONCEPTS AND CONVENSIONS
The financial accounting model processes the economic transactions to produce financial statements as shown below:
The main objective is to maintain uniformity and consistency in accounting records. These concepts constitute the very basis of accounting. The framework of financial accounting is based on several concepts (also referred to as postulates, conventions and principle). The important concepts are as follows:
* Business entity concept * Money measurement concept * Going concern concept * Accounting period concept * Accounting cost concept * Duality aspect concept * Realization concept * Accrual concept * Matching concept * Conservatism Concept * Stable Monetary Unit Concept
* Business entity concept: This concept assumes that, for accounting purposes, the business enterprise and its owners are two separate independent entities. Thus, the