Question

Explain the following:

(a) What is the objective of Accounting Period Principle?
(b) What is verifiable concept?
(c) Why we don't record non-monetary transactions in Accounting?​

Answer 1

a. Accounting Period Principle:

It states that the life of a business concern is divided into shorter perīods called accounting perīod, which is usually 1 year long and starts on 1 Apr and ends on 31 March, the next calander year.

Its objective is to ascertain the profit/loss of the business at regular intervals.

b. Verifiable Objective Concept:

It states that all business transactions should be verifiable by source documents like vouchers, cash memo, invoice etc.

c. Money Measurement Principle:

This principle states that only those transactions should be recorded which can be recorded in terms of money. For example, the effieciency of a management team or the caring nature of a manager can't be recorded in books of accounts.

It is because of this principle that non-monetary transactions aren't recorded in books of accounts.

Answer 2

1. What is the objective of Accounting Period Principle ?

Ans:- The life of business is divided into shorten periods called as accounting principle. Which starts from 1st April and ends in next year of March 31.

5 important basic accounting Principle are:-

1. The Revenue Principle
2. The expense Principle
3. The Matching Principle
4. The Cost Principle
5. The Objectivity Principle

2. What is verifiable concept ?

Ans:- Verifiability concept states that the business transactions must be verifiable by independent accountants.

3. Why we don't record non-monetary transactions in Accounting ?

Ans:- It states that only those transactions can be recorded in terms of money.