Enumerate the accounting concepts which guide the accountant at recording stage, and czr (y) explain any one of these with its accounting implications.
Answers
Answer:
Accounting is defined by the American
Accounting Association as “The process of identifying, measuring and
communicating economic information to permit informed judgments and decisions
by users of the information.”
Accounting concepts:
·
Business
entity concept: Financial
transactions of a business and its owner are treated separately.
·
Money
measurement concept: In accounting, the recorded transactions are the business
transactions that are expressed in
terms of money.
·
Dual aspect
concept: For every credit,
a corresponding debit is made. The recording of a transaction is complete only
with this dual aspect.
·
Going concern
concept: In accounting, a business is anticipated to exist for a long time
while fulfilling its
commitments and obligations. This means that the business will liquidate its
assets at “fire-sale” prices.
·
Cost concept: In the first year of accounting, based on the
original cost, the fixed assets of a business are recorded. Subsequently,
depreciation is excluded while recording. On fixed assets, the rise or fall of
market price is excluded.
·
Accounting
year concept: Each business
chooses a specific time period to complete a cycle of the accounting
process—for example, monthly, quarterly, or annually—as per a fiscal or a
calendar year.
·
Matching
concept: In a given
accounting period, it is expected that for every entry of revenue recorded
there should be an equal expense entry for calculating profit or loss.
·
Realization
concept: Profit is recognized
only when it is earned. For example: Any advance is not considered unless
the product is delivered to the customer.
Explanation:
right but what is accounting