Accounting concept refers to the fundamental assumptions and rules and principles that work because the basis of recording of business transactions and making ready accounts. There square measure eight basic ideas in accounting.
1.Business entity Concept
This concept assumes that, for accounting functions, the commercial enterprise and its house owner’s square measure 2 separate freelance entities. Thus, the business and private transactions of its owner square measure separate. For instance, once the owner invests cash within the business, it's recorded as liability of the business to the owner. This idea is that the terribly basis of accounting.
This concept states that revenue from any business dealing ought to be enclosed within the accounting records only it's completed. Revenue is alleged to possess been completed once money has been received or right to receive money on the sale of products or services or each has been created.
Cost idea states that each one assets square measure recorded within the books of accounts at their terms, which incorporates value of acquisition, transportation and installation and not at its market value. Cost Accounting Assignment Help , cost accounting homework help, cost accounting basics, cost accounting. It implies that fastened assets like building, plant and machinery, furniture, etc square measure recorded within the books of accounts at a value acquired them.
4. Accounting period Concept
All the transactions square measure recorded within the books of accounts on the idea that profits on these transactions square measure to be observed for an amount. Further, this idea assumes that, indefinite lifetime of business is split into elements.
5. Going Concern Concept
This concept states that a house can still stick with it its activities for AN indefinite amount of your time. Merely explicit, it implies that each business entity has continuity of life. Thus, it'll not be dissolved within the close to future.
6. Matching Concept
The matching idea states that the revenue and also the expenses incurred to earn the revenues should belong to constant accounting amount. Therefore once the revenue is completed, consequent step is to allot it to the relevant accounting amount.
7. Money measurement Concept
Money menstruation idea states that solely financial dealing square measure recorded within the books of accounts of the house which may be expressed within the style of financial terms like rupees, dollar, yen etc.
8. Dual concept
Dual side is that the foundation or basics of accounting. It provides the terribly basis of recording business transactions within the books of accounts. This idea assumes that each dealing contains a twin impact, i.e. it affects 2 accounts in their several opposite sides. Therefore, the dealing ought to be recorded at 2 places. It means each the aspects of the dealing should be recorded within the books of accounts. Thus, the duality idea is usually expressed in terms of elementary accounting equation: Assets = Liabilities + Capital
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The various types of accounting concept