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State and explain the concepts and principles of accounting

State and explain the concepts and principles of accounting

Answers

John
1. Consistency concept: this concept States that in preparing accounts consistency should be observed. Similar items within a single set of accounts should be given similar accounting treatment. The same treatment should be applied from one period to another in accounting for similar items.
2. Business entity concept: the concept is that accountants regard a business as a separate entity, distinct from its owners or managers.
3. Monetary measurement concept: this concept States that accounts will only deal with those items to which a monetary value can be attributed.
4. Accruals concept: this concept States that revenue and costs must be recognized as they are earned or incurred, not as money is received or paid.
5. The going concern concept: this implies that the business will continue in operational existence for the foreseeable future, and there is no intention to put the company into liquidation or to make drastic cutbacks to the scale of operations.
6. The Prudence concept: this concept States that where alternative procedures, or alternative valuations, are possible, the one selected should be the one that gives the most cautious presentation of the business's financial position or results.
7. Duality: every transaction has two - fold effects in the accounts and is the basis of double entry bookkeeping. 8. Separate valuation principle: this principle States that, in determining the amount to be attributed to an asset or liability in the statement of financial position, each component item of the asset or liability must be determined separately.
Jonmhumble answered the question on October 27, 2017 at 19:31

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