Objectivity The objectivity concept requires an accountant to draw up any accounts, and further analysis, only on the basis of objective and factual information. The cash flow statement of a business shows the balance between the amount of cash earned and the cash expenditure incurred.
Every financial transaction behaves in this dual way. For example, because there can be no single rate of depreciation chargeable on all fixed assets, every business has potentially a lot of discretion over the precise rate it chooses to use.
An advance or fee paid is not considered a profit until the goods or services have been delivered to the buyer. The problem, of course, is in deciding what is and what is not material: An Enterprise should change its accounting policy in any of the following circumstances only.
That is the one of value. Since money in the medium of exchange and the standard of economic value, this concept requires that these transactions alone that are capable of being measured in terms of money be only to be recorded in the books of accounts.
However, how long will this van be in service? Periodic Matching of Cost and Revenue Concept: Verifiable Objective Evidence Concept: One must, therefore, keep in view these limitations while studying the profit and loss account and balance sheet of the firm.
The job of accounting is done by professionals who have educational degrees acquired after years of study. There is a problem in this area. This observance of accounting principles has helped developed a widely understood grammar and vocabulary for recording financial statements.
According to this concept all accounting transactions should be evidenced and supported by objective documents. The proposals have an outline question, consideration of the theoretical basis, a short literature review and a suggested schedule. In order to produce an article it is necessary to purchase raw-material, process it and convert into finished article.
This concept is based on the accounting period concept. The only really meaningful accounting directive ever enacted on this subject was withdrawn by the accounting bodies in the UK several years ago. Income profit earned by the business during a period can be measured only when the revenue earned during the period is compared with the expenditure incurred to earn that revenue.
The materiality of a fact depends on its nature and the amount involved. Here are brief explanations. The meaning of accrual is something that becomes due especially an amount of money that is yet to be paid or received at the end of the accounting period. It only means that cost becomes the basis for all subsequent accounting for the asset.
It is because of this concept that fixed assets are recorded at their original cost and depreciation in a systematic manner without reference to their current realizable value. Lack of Precision 2. Separate entity concept, business entity concept, economic entity concept or accounting entity concept:Therefore, accounting principles based on certain concepts, convention, and tradition have been evolved by accounting authorities and regulators and are followed internationally.
These principles, which serve as the rules for accounting for financial transactions and preparing financial statements, are known as the “ Generally. May 11, · Accounting Concept defines the assumptions on the basis of which Financial Statements of a business entity are prepared.
Certain concepts are received assumed and accepted in accounting to provide a unifying structure and internal logic to accounting process. Accounting Communication Matters. Conclusion You are here. UTAS Home. Accounting Communication Matters. Writing an Essay or Report.
Starting to Write. Conclusion. The final task in the writing process is to write the conclusion. An essay/report conclusion should: remind the reader in general terms of the main point(s) of the essay.
Accounting Concept and Conventions Words | 7 Pages. ACCOUNTING CONCEPT AND CONVENTIONS In drawing up accounting statements, whether they are external "financial accounts" or internally-focused "management accounts", a clear objective has to be that the accounts fairly reflect the true "substance" of the business and the results.
GAAP includes the standards, conventions, and rules accountants follow in recording and summarizing, and in the preparation of financial statements. We will write a custom essay sample on. Accounting Principles. or any similar topic specifically for you indicate to the reader whether or not the information contained within the.
How to Write an Accounting Case Study Accounting case studies must be written according to various standard rules and regulations. These are the same guidelines followed by organizations during their accounting process.Download