Question

What do you mean by accounting concept? Explain any four accounting concepts.

Answer 1

Answer:

Accounting concepts is basically the accounting rules that should be follow while preparing the financial statements and account.

the four accounting concepts are:-

a) Accruals concepts~revenue and expenses are recorded when they occur and not when the cash is received or paid out.

b)consistency concepts~once and accounting method has been chosen, that method should be used unless there is a sound reason to do otherwise;

c) prudence concepts(also conservation concept)~revenue and profits are included in the balance sheet only when they are realized but liabilities are included when there is reasonable 'possibility' of incurring them.

d) Entity~Accounting records reflect the financial activities of a specific business or organisation, not of it's owners or employees;