This document discusses accounting concepts and standards. It defines accounting as recording, verifying, and reporting financial information about a business entity. Accounting concepts provide uniform rules for preparing and maintaining accounting records. The key concepts discussed are the business entity concept, which treats a business separately from its owners, and the money measurement concept, which records business transactions and events in monetary terms. Adhering to accounting concepts and standards helps ensure consistency and comparability in financial reporting.
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This document discusses accounting concepts and standards. It defines accounting as recording, verifying, and reporting financial information about a business entity. Accounting concepts provide uniform rules for preparing and maintaining accounting records. The key concepts discussed are the business entity concept, which treats a business separately from its owners, and the money measurement concept, which records business transactions and events in monetary terms. Adhering to accounting concepts and standards helps ensure consistency and comparability in financial reporting.
This document discusses accounting concepts and standards. It defines accounting as recording, verifying, and reporting financial information about a business entity. Accounting concepts provide uniform rules for preparing and maintaining accounting records. The key concepts discussed are the business entity concept, which treats a business separately from its owners, and the money measurement concept, which records business transactions and events in monetary terms. Adhering to accounting concepts and standards helps ensure consistency and comparability in financial reporting.
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prohibited in any case Financial and Management Accounting MB0041 previous year papers and notes 1
Q1. What do you mean by accounting? Explain the various concepts of accounting and the need for having accounting standards? Sol Accountancy or accounting is the art of communicating financial information about a business entity to users such as shareholders and managers. The communication is generally in the form of financial statements that show in money terms the economic resources under the control of management Such financial information is primarily used by managers, lenders, investors, tax authorities, regulators, and other decision makers to make resource allocation decisions between and within companies, organizations, and public agencies. It involves the process of recording, verifying, and reporting of the value of assets, liabilities, income, and expenses in the books of account (ledger) to which debit and credit entries (recognizing transactions) are chronologically posted to record changes in value. Accounting has also been defined by the AICPA as "The art of recording, classifying, and summarizing in a significant manner and in terms of money, transactions and events which are, in part at least, of financial character, and int`erpreting the results thereof. ACCOUNTING CONCEPTS
In the previous lesson, you have studied the meaning and nature of business transactions and objectives of financial accounting. In order to maintain uniformity and consistency in preparing and maintaining books of accounts, certain rules or principles have been evolved. These rules/principles are classified as concepts and conventions. These are foundations of preparing and maintaining accounting records. In this lesson we shall learn about various accounting concepts, their meaning and significance.
OBJECTIVES
After studying this lesson, you will be able to: explain the term accounting concept; explain the meaning and significance of various accounting concepts : Business Entity, Money Measurement, Going Concern, Accounting Period, Cost Concept, Duality Aspect concept, Realisation Concept, Accrual Concept and Matching Concept.
MEANING AND BUSINESS ENTITY CONCEPT
Let us take an example. In India there is a basic rule to be followed by everyone that one should walk or drive on his/her left hand side of the road. It helps in the smooth flow of traffic. Similarly, there are certain rules that an accountant should follow while recording business transactions and preparing accounts. These may be termed as accounting concept. Thus, this can be said that :