logging in or signing up Accounting Concepts and Conventions shyne_techwiz Download Post to : URL : Related Presentations : Let's Connect Share Add to Flag Embed Email Send to Blogs and Networks Add to Channel Copy embed code: Embed: Flash iPad Dynamic Copy Does not support media & animations Automatically changes to Flash or non-Flash embed WordPress Embed Customize Embed URL: Copy Thumbnail: Copy The presentation is successfully added In Your Favorites. Views: 5010 Category: Business & Fin.. License: All Rights Reserved Like it (3) Dislike it (0) Added: November 01, 2010 This Presentation is Public Favorites: 2 Presentation Description No description available. Comments Posting comment... Premium member Presentation Transcript Accounting Concepts and Conventions : Accounting Concepts and Conventions Introduction : Accounting principles are man-made. These are based upon the logical and practical experience of day-to-day accounting process. A general law or rule adopted as a guide to action Introduction Accounting Concepts : Business entity concept Reliability concept Money measurement concept Going concern concept Cost concept Accrual concept Accounting period concept and Realization concept Accounting Concepts Business Entity Concept : The business and its owner(s) are two separate existence entity Any private and personal incomes and expenses of the owner(s) should not be treated as the incomes and expenses of the business Business Entity Concept Examples : Insurance premiums for the owner’s house should be excluded from the expense of the business The owner’s property should not be included in the account of the business Any payments for the owner’s personal expenses by the business will be treated as drawings and reduce the owner’s capital contribution in the business Examples Reliability Concept : It is a quality of information that assures decision makers that the information captures the conditions or events it maintains to represent Reliable data require convincing evidence that can be verified by independent auditors Reliability Concept Money Measurement Concept : An Accounting record is made only of information which that can be expressed in monetary terms. All transactions of the business are recorded in terms of money Market conditions, technological changes and the efficiency of management would not be disclosed in the accounts Money Measurement Concept Going Concern Concept : The business will continue in operational existence for the foreseeable future Financial statements should be prepared on a going concern basis unless management either intends to liquidate the enterprise Going Concern Concept Examples : Possible losses form the closure of business will not be anticipated in the accounts Prepayments, depreciation provisions may be carried forward in the expectation of proper matching against the revenues of future periods Fixed assets are recorded at historical cost Examples Cost Concept : Assets should be shown on the balance sheet at the cost of purchase instead of current value Example- The cost of fixed assets is recorded at the date of acquisition cost. The acquisition cost includes all expenditure made to prepare the asset for its intended use. It included the invoice price of the assets, freight charges, insurance or installation costs Cost Concept Accrual Concept : The recording of the financial transaction is made when the transaction takes place itself and not when the cash for the transaction is received, as in cash concept The cash is received after a period of time but the transaction is already noted in the books of transaction Accrual Concept Accounting Period Concept : Monitor the performance of the organization periodically One accounting period will be considered Calculating accounts for more than one accounting period will be tedious Accounting Period Concept Realization Concept : Revenues should be recognized when the major economic activities have been completed Sales are recognized when the goods are sold and delivered to customers or services are rendered Realization Concept To conclude: : Accounting concepts will help process the information effectively at low cost. It helps to obtain reports quickly. It helps in proper planning and decision making. we can know employees performance towards promoting sales. To conclude: You do not have the permission to view this presentation. In order to view it, please contact the author of the presentation.