Q2. Differentiate between Accounting Concepts and Accounts
Conventions.with table
Answers
Explanation:
Comparison Table Between Accounting Concepts and Accounting Convention (in Tabular Form) Accounting concepts are theoretical notions on the preparation of financial statements. ... Accounting conventions are concerned with the preparation and presentation of financial statements.
- Accounting Concept vs Convention
The key difference between Accounting Concept and Convention lies in the fact that accounting concepts refer to the rules and regulations of accounting, while accounting convention refers to the set of practices discussed by the accounting bodies before preparing final accounts.
Accounting concept is a theoretical statement regarding accounts, whereas the accounting concept is a procedure agreed by the accounting bodies for preparing final accounts.
Accounting is vital in delivering a firm’s information to its stakeholders on its performance, position, and profitability for decision making.
Notably, accounting concepts and conventions are employed in developing financial statements based on accuracy and consistency.
Accounting concepts are set by accounting bodies with the backing of the law and governance bodies.
Accounting conventions, on the other side, are formulated from common accounting processes of accounting, which are agreed upon without the backing of governance bodies.
The formulation process of the accounting concepts and conventions is essential in the determination of legal recognition of either of the accounting terms.