ACCOUNTING CONCEPTS AND CONVENTIONS

This concept assumes that, for accounting purposes, the business enterprise and its owners are two separate independent entities

• Money Measurement Concept

• Going Concern Concept

• Business Entity Concept

• Cost Concept

If all the business transactions are expressed in monetary terms, it will be easy to understand the accounts prepared by the business enterprise.

• Business Entity Concept

• Revenue Recognition Concept

• Money Measurement Concept

• Going Concern Concept

This concept states that a business firm will continue to carry on its activities for an indefinite period of time.

• Money Measurement Concept

• Historical Cost Concept

• Going Concern Concept

• Dual Aspect Concept

It helps in calculating tax on business income calculated for a particular time period.

• Dual Aspect Concept

• Revenue Recognition Concept

• Accounting Period Concept

• Going Concern Concept

This concept requires asset to be shown at the price it has been acquired, which can be verified from the supporting documents.

• Historical Cost Concept

• Accounting Period Concept

• Revenue Recognition Concept

• Matching Concept

It encourages the accountant to post each entry in opposite sides of two affected accounts

• Money Measurement Concept

• Full disclosure convention

• Dual aspect Concept

• Realisation concept

It helps in knowing actual expenses and actual income during a particular time period.

• Matching Concept

• Accrual Concept

• Revenue Recognition Concept

• Cost Concept

It guides how the expenses should be matched with revenue for determining exact profit or loss for a particular period.

• Accrual Concept

• Matching Concept

• Revenue Recognition Concept

• Going Concern Concept

It is very helpful for the investors/shareholders to know the exact amount of profit or loss of the business.

• Business Entity Concept

• Matching Concept

• Revenue Recognition Concept

• Historical Cost Concept

Making the provision for doubtful debts and discount on debtors and valuation of the stock at cost price or market price which ever is less follows the convention of

• Full disclosure

• Materiality

• Consistency

• Conservatism