Accounting_concept - Accounting Concepts Accounting and...

Info iconThis preview shows pages 1–16. Sign up to view the full content.

View Full Document Right Arrow Icon
1 Accounting Concepts Accounting Concepts and Principles and Principles
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
2 Introduction Actually there are a number of accounting concepts and  principles based on which we prepare our accounts These  generally accepted accounting   principles  ( GAAP lay down accepted assumptions and guidelines and are  commonly referred to as accounting concepts
Background image of page 2
3 Accounting Concepts Accounting Concepts
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
4 Accounting Concepts Business Entity Concept Money Measurement Concept Going Concern Concept Historical Cost Concept Accruals/Matching Concept          Realization Concept
Background image of page 4
5 Business Entity Business Entity
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
6 Business Entity Meaning The business and its owner(s) are two separate  existence entity Any private and personal incomes and expenses of the  owner(s) should not be treated as the incomes and  expenses of the business
Background image of page 6
7 Examples Insurance premiums for the owner s house should be  excluded from the expense of the business The owner s property should not be included in the  premises account of the business Any payments for the owner s personal expenses by  the business will be treated as drawings and reduced  the owner s capital contribution in the business
Background image of page 7

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
8 Money Measurement Money Measurement
Background image of page 8
9 Money Measurement Meaning All transactions of the business are recorded in terms  of money It provides a common unit of measurement Examples Market conditions, technological changes and the  efficiency of management would not be disclosed in  the accounts
Background image of page 9

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
10 Going Concern Going Concern
Background image of page 10
11 Going Concern Meaning The business will continue in operational existence for  the foreseeable future Financial statements should be prepared on a going  concern basis unless management either intends to  liquidate the enterprise or to cease trading, or has no  realistic alternative but to do so 
Background image of page 11

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
12 Example  Possible losses form the closure of  business will not be  anticipated in the accounts Prepayments, depreciation provisions may be carried  forward in the expectation of proper matching against  the revenues of future periods Fixed assets are recorded at historical cost
Background image of page 12
13 Historical Cost Historical Cost
Background image of page 13

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
14 Historical Cost Meaning Assets should be shown on the balance sheet at the  cost of purchase instead of current value Example The cost of fixed assets is recorded at the date of  acquisition cost. The acquisition cost includes all  expenditure made to prepare the asset for its intended  use. It included the invoice price of the assets, freight  charges, insurance or installation costs
Background image of page 14
15 Concept of Accruals/Matching Concept of Accruals/Matching
Background image of page 15

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 16
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 12/20/2011 for the course MBA 1036 taught by Professor Sn during the Spring '11 term at Great Lakes Christian college.

Page1 / 45

Accounting_concept - Accounting Concepts Accounting and...

This preview shows document pages 1 - 16. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online