expain the concepts of accounting
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Answer:
In simple words, accounting can be defined as keeping records of all financial transactions related to an individual or an entity. ... A proper definition of accounting is that it is the process of recording, summarizing, analyzing, and reporting the financial transactions related to a business.
(1) Business entity concept: According to this “the business is treated as a separate and distinct entity from the owner, who invests money or money’s worth”. If there is any branch or unit, is also treated as a distinct entity. (2) Going concern concept: According to this the assumption is made that “Every business is carried on with a view to contiune it for an indefinite period of time in future and not to liquidate the affairs. (3) Money measurement concept: According to this “the accounting entries made in the books are only of those transactions which can be measured and recorded in terms of money”. (4) Cost concept: According to this “All the fixed assets which are acquired by a concern are recorded in the books of accounts at cost price”. (5) Dual-aspect concept: According to this “Every business transactions has a two-fold- aspects (receiving and giving benifit) of same value”. (6) Accounting period concept: As per the going concern concept every business is intended to be continued indefinitely for a long period in future. In that case the trading result cant be ascertained in the life time. For this “The convinient period of time is selected by dividing the estimated period of life of the business for ascertaining the net result of business during a given period as well as financial position of the business as on that date”. (7) Realisation concept: According to the “revenue is said to be recognised from sale of goods, or services only when revenue is actually realised. (8) Matching Concept: Earning prof it is the object of ever}’ business enterprise. It has been the duty of an accountant to calculate exact accurate prof it. The result of there efforts was the introduction of the principle of matching cost and Revenue. According to this principle income can be as curtained by matching revenue of the business with its costs. (9) Accrual Concept: Accrual means recognition of revenue and costs as they are earned or incurred and not as money is received or paid.
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