Q.2 Explain: (i) Revenue Recognition Concept
(ii) Accrual Assumption
(iii) Going Concern Assumption (iv) Materiality Principle
Answers
Answered by
1
1.Revenue recognition concept- according to this concept,revenue should be brought into account only when it is actually realised.In determining profits,credit sales are also taken into account.
2.Accrual Assumption-Any increase in the owners equity is called revenue and any decrease is known as expense. Income is the excess of revenue over expenses.The accrual concept is an accounting system which recognies revenues and expenses as they were earned or incurred respectively,without regard to the date of receipts and payments.
3.Going Concern-This concept assumes that the business unit will continue operating under the same economic condition and in the same general environment..This concept relates to the future which is by defination,uncertain.Thus this concept does not imply that the business will continue forever.
4.Materiality-The materiality concept permits other concepts to be ignored if the effects are not considered material.The cocept of materiality is the threshold for recognition of a transaction in the accounting process..
Hope it will help you.
2.Accrual Assumption-Any increase in the owners equity is called revenue and any decrease is known as expense. Income is the excess of revenue over expenses.The accrual concept is an accounting system which recognies revenues and expenses as they were earned or incurred respectively,without regard to the date of receipts and payments.
3.Going Concern-This concept assumes that the business unit will continue operating under the same economic condition and in the same general environment..This concept relates to the future which is by defination,uncertain.Thus this concept does not imply that the business will continue forever.
4.Materiality-The materiality concept permits other concepts to be ignored if the effects are not considered material.The cocept of materiality is the threshold for recognition of a transaction in the accounting process..
Hope it will help you.
Similar questions