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Accounting is a systematic process of identifying, recording measuring and classifying, summarizing, interpreting and communicating economic information to others to make decisions accordingly. It is also known as the “language of business”. It analyses and conveys the result of an organization’s economic activities to investors, creditors, regulators and management. Accounting Concepts and Principles consists of set of broad convention that is designed to provide a basic framework for financial reporting. As financial reporting is related to significant professional judgments by accountants, these concepts and principles verifies that the user of financial information are not deluded by the selection of accounting policies and practices that go against the spirit of accountancy profession. Therefore, the accountants must actively consider whether the accounting principles considered are consistent with the accounting concepts and principles. These principles are the building blocks that form the basis of more complex and specialized principles called generally accepted accounting principles (GAAP) like the International Financial Reporting Standards, US, etc. They deal with matters like accounting for revenue, accounting for business combinations, accounting for income taxes etc.Accounting Concepts and Principles Assignment Help Online Service provides basis knowledge and a depth idea about accounting principles.
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Basic Accounting Concepts and principles
The Basic accounting concept is explained in Accounting Concepts and Principles Assignment Help Online Service
- 1. Accruals Concept
This principle requires that the revenue and expenses should be recorded only when they occur regardless of the time cash is received or paid out.
- 2. Consistency Concept
These principles ensure that once an accounting principle is chosen, that method should be used unless change is necessary.
- 3. Going Concern
It assumes that the business entity for which accounts are being prepared is in good condition and will continue to operate indefinitely.In this basis, assets are recorded on their general cost rather than their market value.
- 4. Matching
This principle requires that the transaction affecting both revenue and expense, should have an equal expense recorded, in order to show the true profit of the business,in a given accounting period.
- 5. Objectivity
This principle states that the financial statements should have some form of impartial supporting device or verifiable elements, including an audit trail.
- 6. Materiality
This principle states that minor events in accounting procedures, which involves immaterial or small amount, may not need attention or correction but the major ones should be finally disclosed.
- 7. Business Entity
A business is considered a separate legal entity and should be treated separately. The accounting records reflect the financial activities of a specific business or organization and not of the person who is carrying out the business.
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