Question

What Are The Accounting Principles, Assumptions, And Concepts?

Answer 1

Answer:

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Accounting principles and assumptions are the essential guidelines under which businesses prepare their financial statements. These principles guide the methods and decisions for a business over a short and long term. For both internal and external reporting purposes,  

 

Accounting concepts rules of accounting that should be followed in preparation of all accounts and financial statements. The four fundamental concepts are;

(1) Accruals concept: revenue and expenses are recorded when they occur and not when the cash is received or paid out;

(2) Consistency concept: once an accounting method has been chosen, that method should be used unless there is a sound reason to do otherwise;

(3) Going concern: the business entity for which accounts are being prepared is in good condition and will continue to be in business in the foreseeable future;

(4) Prudence concept (also conservation concept): revenue and profits are included in the balance sheet only when they are realized (or there is reasonable "certainty" of realizing them) but liaibilies are included when there is reasonable 'possibility' of incurring them