Question

Discuss the basic accounting concept and fundamental accounting conventions

Answer 1

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Accounting concepts: Accounting concepts are the basic assumptions or fundamental propositions within which accounting operates . They are generally accepted accounting rules based on which transactions are recorded and financial statements are prepared. It is important to follow the accounting concepts because it enables the users of financial statements to understand them better and in the same manner.


Accounting conventions: Accounting conventions are the outcome of accounting principles being followed by the enterprises over a period of time. Conventions may undergo a change with time to bring about improvement in the quality of accounting information.


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