Accounting concepts and conventions
In drawing up accounting statements, whether they are external "financial accounts" or internally-focused "management accounts", a clear objective has to be that the accounts fairly reflect the true "substance" of the business and the results of its operation.
The theory of accounting has, therefore, developed the concept of a "true and fair view". The true and fair view is applied in ensuring and assessing whether accounts do indeed portray accurately the business' activities.
To support the application of the "true and fair view", accounting has adopted certain concepts and conventions which help to ensure that accounting information is presented accurately and consistently.
Accounting Conventions
The most commonly encountered convention is the "historical cost convention". This requires transactions to be recorded at the price ruling at the time, and for assets to be valued at their original cost.
Under the "historical cost convention", therefore, no account is taken of changing prices in the economy.
what are the implications of accounting principles
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Strengths of such accounting concepts are: 1. reduce confusing variations in the methods used to prepare accounts. 2. Weakness of such accounting concepts are: 1. rigidity and low flexibility in applying the concepts. 2.
The purpose of Statements of Financial Accounting Concepts is to : A establish GAAP.
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what are the implications of accounting principles
explain using various example, how the major accounting concepts are used in preparing financial statement??
yes
Strengths of such accounting concepts are: 1. reduce confusing variations in the methods used to prepare accounts. 2. Weakness of such accounting concepts are: 1. rigidity and low flexibility in applying the concepts. 2.
The main objective of Accounting concepts is to maintain uniformity and consistency in accounting records. These concepts constitute the very basis of accounting. All the concepts have been developed over the years from experience and thus they are universally accepted rules.
basic principle of accounting
The purpose of Statements of Financial Accounting Concepts is to : A establish GAAP.
basic concepts of accounting
yes
what is the importance of public sector accounting
One of the accounting concepts upon which deferrals and accruals are based i
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