F I N A N C I A L

A C C O U N T I N G

NAME:- HIRAL TUSHAR

PATIL
PRN NO.:-62021000129
 A C C O U N T I N G
P R I N C I P L E S : -

1 . A C C O U N T I N G
C O N C E P T S

2 . A C C O U N T I N G
C O N V E N T I O N S
 Accounting Concepts
The term concept includes those basic assumptions or conditions upon which the science of
accounting is based. The following anre important accounting concepts:-
1. Separate Business Entity Concept
2. Going Concern Concept
3. Money Measurement Concept
4. Historical Cost Concept
5. Dual Aspect Concept
6. Accounting Period Concept
7. Periodic Matching and Revenue Concept
8. Realization Concept
 Accounting Conventions and its Types

Conservatism

Full disclosure

Consistency

Materiality
Separate Business Entity Concept

• In accounting business is considered to be a separate entity from the proprietors. It may appear to be ludicrous that one per son can sell
goods to himself but this concept is extremely helpful in keeping business affairs strictly free from the effect of private affairs of the
propreitors.

Going Concern Concept

• According to this concept it is assumed that the business will continue for a fairly long time to come . There is neither the intention nor the
necessity to liquidate the particular business venture in the foreseeable future .

Money Measurement Concept

• Accounting records only monetary transactions. Events or Transactions which cannot be expressed in money do not find place in the
books of accounts though they may be very useful for the business .

Historical Cost Concept

• This concept is closely related to going concern concept. According to this concept an asset is ordinarily entered in accounting records at
the price paid to acquire it and this cost is the basis for all subsequent accounting for the assets.
Dual Aspect Concept

• Every business transaction has a dual effect .

• Capital(equities)=cash (assets).
• Liabilities + Capital= Assets

Accounting Period Concept

• According to this concept , the life of the business is divided into

appropriate segments for studying the results shown by the business
after each segment .

Periodic Matching of Costs and Revenue Concept

• This is based on the accounting period concept . The paramount

objective of running a business is to earn profit. In order to ascertain the
profit made by the business during a period ,it is necessary that revenues
of the period should be matched with the costs of the period.
• This concept is called as accrual or cash concept .

Realization Concept

• According to this concept revenue is recognized when a sale is made sale

is considered to be made ar the point when the property in goods passes
to the buyer and he becomes legally liable to pay.
Conservatism
• In the initial stages of accounting , certain
anticipated profits which were recorded , did
not materialised .This resulted in less
acceptability of accounting figures by the end-
users.

Full Disclosure
• According to this convention accounting
reports should disclose fully and fairly the
information they purport to represent they
should be honestly prepared and sufficiently
disclose information which is of material
interest to proprietors , present and potential
creditors and investors .
 Consistency Materiality

According to this According to this

convention , accounting convention the accountant
practices should remain should attach importance
unchanged from one period to material details and
to another . ignore insignificant details.