2 money measurements principle according to the money

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2. Money Measurements Principle : According to the Money Measurement Principle, transactions and events that can be measured in money terms are recorded in the books of accounts of the enterprise. 3. Accounting Period Principle : According to the Accounting Period Principle, the life of an enterprise is broken into smaller periods so that its performance is measured at regular intervals. 4. Full Disclosure Principle : According to the Principle of Full Disclosure, “there should be complete and understandable reporting on the financial statements of all significant informat ion relating to the economic affairs of the entity.”
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20 Address: Plot No 420, Behind Shopprix Mall, Vaishali Sector 5, Ghaziabad 201010 M: 9999907099, 9818932244 O: 0120-4130999 Website: , 5. Materiality Principle: The Materiality Principle refers to the relative importance of an item or an event. According to the American Accounting Association, “an item should be regarded as material if there is a reason to believe that knowledge of it would influence the dec ision of an informed investor.” 6. Prudence or Conservation Principle : The Prudence Principle is many a time described using the phrase “Do not anticipate a profit, but provide for all possible losses.” 7. Cost Concept or Historical Cost Principle : According to the Cost Concept, an asset is recorded in the books of accounts at the price paid to acquire it and the cost is the basis for all subsequent accounting of the asset. 8. Matching Concept or Matching Principle : This concept is based on the accounting period concept. An important objective of business is to determine profit periodically. 9. Dual Aspect or Duality Principle : According to the Dual Aspect Concept, every transaction entered into by an enterprise has two aspects, a debit and a credit of equal amount. Owner’s equity or capital + Claims of outsider = Assets Or Assets = Owner’s equity + Claims of outsiders 10. Revenue Recognition Concept : According to the Revenue Recognition Concept, revenue is considered to have been realised when a transaction has been entered into and the obligation to receive the amount has been established. 11. Verifiable Objective Concept : The Verifiable Objective Concept holds that accounting should be free personal bias. Q.4. What is the meaning and nature of Accounting Standards ? Ans. The Accounting Standards are set of guidelines, i.e., Generally Accepted Accounting Principles, issued by the accounting body of the country such as The Institute of Chartered Accountants of India, that are followed for preparation and presentation of Financial Statements. NATURE OF ACCOUNTING STANDARDS Following points highlight the nature of Accounting Standards : 1. Accounting Standards are guidelines providing the framework so that credible Financial Statements can be produced.
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