Assignment 1

Accounting for business

Accounting concepts

Student ID – S199804

BA in Business Studies
University of Suffolk

Date of submission – 16.05.2022

Table of contents
Introduction........................................................................................................................................3
Accounting Concepts ..........................................................................................................................3
1 Business Entity Concept ...............................................................................................................3
2 Money Measurement Concept .....................................................................................................4
3 Dual Aspect Concept ....................................................................................................................4
4 Going Concern Concept ................................................................................................................5
5 Accounting Period Concept ..........................................................................................................5
6 Cost Concept ................................................................................................................................5
Conclusion ..........................................................................................................................................6
References..........................................................................................................................................6
 Accounting Concepts

Introduction

Accounting concepts are the fundamental rules, presumptions, and conditions

that characterize the parameters and imperatives inside which accounting works.
Accounting concepts are the thoughts, components and terms that make up the world
of accounting, back and financial matters. These terms offer assistance people, businesses or
organizations record all of their money
related data, counting exchanges. Accountants allude to these concepts to plan money
related reports and other reports for people and businesses. Knowing
common accounting concepts and how to work with them is pivotal for
an bookkeeper to translate monetary circumstances and legitimately track cash.
Learning almost these concepts can moreover offer
assistance commerce proprietors organize their trade records, get
ready for reviews and guarantee they are winning sufficient income to preserve operations.
(Elliott, 2009)

Accounting Concepts

1 Business Entity Concept

It is the foremost fundamental of the bookkeeping concept.

The commerce substance concept accept that trade proprietors are totally partitioned subst
ances from the commerce. It implies that the trade could be a standalone substance.
The bookkeeping books are kept isolated from the books of the trade proprietors. The books
are kept from the point of see of the trade. The trade entity concept states that
the exchanges related with a trade must be independently recorded from those of
its proprietors or other businesses. (Smith, 1992) Doing so requires
the utilize of isolated bookkeeping records for the organization
that totally prohibit the resources and liabilities of any other substance or the proprietor.
Without this concept, the records of numerous substances would be blended, making
it very troublesome to perceive the money related or assessable comes about of a
single trade. (Bragg, 2006)
Examples –
The proprietor of a company actually procures an office building, and rents space in it to his
company at £5,000 per month. This lease consumption may be a substantial cost to the
company, and is assessable pay to the proprietor. (Burton S. Kaliski, 2007)

2 Money Measurement Concept

The money estimation concept alludes to the exchange recorded by a trade as it were in
terms of cash. What it implies is that for a commerce, an account book can record as it
were those exchanges which include financial exchanges. Any
other transfers or exchanges which don't include any cash exchange are not recorded into
the accounts books. (Bragg,
2012)This implies that numerous imperative exchanges which don't incorporate cash are
not famous within the accounts book of the commerce. This concept moreover requires that
a trade moreover put a money related esteem on its intangible resources such as
brand title or mental property. (Weirich, 2012)

For example, a tall level of client back will likely lead to expanded client maintenance and a
better penchant to purchase from the company once more, which hence impacts incomes.
(Salek, 2005)

3 Dual Aspect Concept

The dual aspect concept alludes to the double-entry bookkeeping strategy.

It implies each exchange must be famous twice. Once on the charge side and furthermore on
the credit side; the double angle concept is exceptionally vital since it makes a
difference adjust the bookkeeping books. When a exchange is famous two times on
the inverse sides of the same balance sheet, it makes it inconceivably simple to check
whether the exchanges recorded within the balance sheets are rectify or off-base.
It altogether decreases the chances of any money related disasters happening.
For example, a buyer pays cash in return for a obtained thing whereas the vender picks
up cash for the sold thing. (Thomas Riggs, 2008)
4 Going Concern Concept

The bookkeepers utilize this concept when there's a critical concern with respect to the
liquidation of the resources. The going concern concept is connected when the chances
are tall that the company would be exchanged within the another two or four quarters.
As a rule, when keeping books, bookkeepers don't think that the businesses would before
long be bankrupt or be sold; this permits the bookkeepers to put a cost on resources that
can be adjust for a long time. But, on the off chance that there are genuine concerns with
respect to the money related wellbeing of the company, meaning the company is going
bankrupt or would be exchanged or sold, the accounts put a esteem on the assets of the
company.
For example - A state-owned company is in a intense money related circumstance and
is battling to pay its obligation. The government gives the company a bailout
and ensures all installments to its lenders. The state-owned company may be a going
concern in spite of its destitute budgetary position. (P., 2008)

5 Accounting Period Concept

The bookkeeping period concept alludes to the division of accounts records

into comparative different measured times. The time can be a quarter, semi year or a entire year.
The execution of the company is measured and after that uncovered to the financial
specialists in standard time periods. The time period for which a
company unveils the data primarily depends upon whether the company is secretly held or
publically recorded. On the off chance that it is publically recorded, it
must uncover its execution each quarter, on the off chance that it could be a private company, it
is cleared out to the company on how or whether it uncovers its money related execution. (Gerber &
Root, 2011)

For example, an substance may be closing the monetary records for the month of June.
This shows the bookkeeping period is the month (June), in spite of the fact
that the substance may too wish to total bookkeeping information by quarter (April through
June), half (January through June), and a complete calendar year.

6 Cost Concept

This concept permits for the esteem of an resource to be famous within the adjust sheet at
the cost at which it was obtained, or fetched cost, as contradicted to the current cost of
that resource.
For example, apparatus or hardware obtained would be famous at its obtained cost instead
of its current cost, indeed on the off chance that the apparatus is very ancient,
and isn't worth the purchased price. For this, devaluation is introduced to require under
consideration a lessening within the cost of an resource. (Penman, 2011)
Conclusion
Accounting concepts are the fundamental components of bookkeeping. These can be points,
terms or hypotheses that bookkeepers apply
to shapes of cash, exchanges and financial capacities. Bookkeepers utilize accounting concep
ts to get it and clarify a business's operations, cash flows and budgetary execution. A bit
like most other areas, bookkeeping employments concepts as its claim sort of dialect to
communicate.
A great bookkeeper must have a total get a handle on of all the vital bookkeeping concepts.
These are the bases of the accountings. In case the base isn't great, at that point the
bookkeeping would moreover be not great.

References

Bragg, S. M., 2006. Accounting control best practices. s.l.:s.n.

Bragg, S. M., 2012. Business Ratios and Formulas. s.l.:s.n.

Burton S. Kaliski, 2007. Encyclopedia of business and finance. s.l.:s.n.

Elliott, B. a. E. J., 2009. Financial Accounting and Reporting. s.l.:s.n.

Gerber, M. E. & Root, M. D., 2011. The E-Myth Accountant. s.l.:s.n.

P., J. R. E. a. S., 2008. Routledge companion to accounting history. s.l.:s.n.

Penman, S. H., 2011. Accounting for Value. s.l.:s.n.

Salek, J. G., 2005. Accounts receivable management best practices. s.l.:s.n.

Smith, T., 1992. Accounting for Growth. s.l.:s.n.

Thomas Riggs, 2008. Everyday finance: economics, personal money management, and
entrepreneurship. s.l.:s.n.

Weirich, T. R., 2012. Accounting and Auditing Research and Databases. s.l.:s.n.