Accounting concepts means the rules or the principles that govern accounting. The are fundamental accounting rules that must be followed by all concerns. Accounting concepts means the necessary assumptions on which accounting is based. We can say concepts are like the grammer for any language 1} ENTITY CONCEPT’s:- According to this concept the business is different from the person doing business. It simply means that the business man and business or organization’s are different person. 2} HISTORICAL COST CONCEPT:- It means that the assets should be recorded and valued only at cost and not at realizable value or market value, in the normal course of business. 3} ONGOING CONCERN CONCEPT:- According to this concept, the business has permanent life, it will continue for very long period of time. It will not be closed at the end of the year. 4} ACCOUNTING PERIOD CONCEPT:- This concept is also known as periodicity concept. According to this concepts the calculation of profit or loss made cannot be postponed indefinitely or till the business is closed. Therefore, the accounting period is to be separated as per one year. 5} MONEY MEASUREMENT CONCEPT:- According to this concept, only such transactions are recorded which can be expressed in terms of money. Which means if there is any event that cannot be recorded in terms of money. We’ll not be recording such transactions. 6} COST ATTACH CONCEPT:- This concept is also know as Cost Merge Concept. In order to produce any goods or article it is necessary to purchase raw-materials, and thereafter process it to get the finished goods. In this process the services of various factors are required. These factors are also called the factors of production. 7} VERIFIABLE OBJECTIVE EVIDENCE CONCEPT:- According to this concept all accounting transactions should have documentary poor. These documents may be purse orders, delivery challans, invoice or bills, vouchers, pass book, cheque books, correspondence, agreements etc. These supporting documents form the basis for accounting entries. These are the evidence which help the auditors to verify the books of accounts. 8} ACCRUAL CONCEPTS:- According to this concepts we have to record the expenses for the given period say one year even if the said expenses is paid or not. 9} MATCHING COST AND REVENUE CONCEP’s:- It means the expenses and revenue have to be matched to determine income for a particular period. This is one of the most important concept of accountancy. This concept is related to accounting period concepts. Once the accounting period is determined then with in that period the revenue and its related cost are matched. 10} DUAL ASPECT CONCEPT:- According to this concept every transaction has two aspects. This is followed in double entry book-keeping system. Every entry must have minimum two effects.
Posted on: Tue, 04 Nov 2014 15:50:44 +0000
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