However the going concern does not account for other

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comes to taxes which can be deferred by individuals and businesses to be paid at a later date. However, the going concern does not account for other events beyond the business control such as natural disasters or unfavorable changes in regulations. This events might affect the business which was previously in good shape to bankruptcy and end its life prematurely. Money Measure principle As per the money measurement concept, all accounting information is recorded in terms of the money involved ( Weil, Schipper and Francis, 2013) . This means that only accounting information measurable in terms of money can be recorded. For example, if a business pays employees’ salaries totaling $5,000 using cash, it will debit the salaries account and credit the cash account. This is because the information in the transaction/event is measurable and will
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CONCEPTS 4 reflect in the books of account. On the other hand, if a manager resigns from a business the information will not be included in the financial information or books. This is because the event cannot be measured in terms of money. However, other information that cannot be measured in terms of money can still be included as notes especially in financial statements. Based on the accounting information being defined as the data on an organization’s business transactions, money measurement concept emphasizes this as business transactions are measured in monetary terms. Despite of that, the non-monetary events still affect the business. For example, the manager could have been an influential person who brought good business to the entity. Accounting period concept The accounting period concept states that all the transactions that are recorded to the books of accounts and reports can be ascertained to be from a specified. A good example of this concept in use is in the headings of the income statement and the statement of financial position. The income statement has the phrase ‘for the period ended’ followed by the date while the statement of financial position has the phrase ‘As of” followed by the date. This applies to other financial reports and records to show when they were incurred ( Weil, Schipper and Francis, 2013) . This is important in the construction of financial statements as it is useful in finding and verifying the data. Accounting cost concept The accounting cost concept does not account for the realizable, replacement or the real worth of an asset. It recognizes the amount that the business used in the transactions and not what is in the market (Thornton, 2018). This done by recording the cost incurred by the business in acquiring an asset and subsequently using the same amount in future transactions. For
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CONCEPTS 5 instance, if a business buys an accounting software that is worth $20,000, this is the amount that will be recorded in the books. The amount will not be affected even if at the time of making the entry to the books the market value of the software had gone up or down. Come the subsequent period, the asset will be evaluated based on the cost incurred in acquiring it which is $20,000 for example in accounting for depreciation. This is important in the construction of accounting information as it ensures the data involved is the actual sum that the business in question incurred ( Horngren, 2009) . This ensures accuracy. This most likely does not however give the
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