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Accounting Concepts

Rules or guidelines that accoun­tants follow when drawing up accounts.

Last ones

Business Entity
Money Measur­ement
Dual Aspect
Financial affairs of the business should be completely separate from those of the owner
Financial Records should be expressed in monetary terms.
Every transa­ction has 2 effects on the business's accounts.

Statements of Standard Accounting Practice

Going Concern Concept
Consis­tency Concept
Prudence Concept
Accruals or Matching Concept
Assumes that a business will carry on tradinf for the forese­eable future.
States that the accounts of a business should be prepared on the same basis every year.
States that accoun­tants should be cautious when reporting the financial position of a business. revenue and profit should not be recorded unless it is certain; anticipate all possible losses and record them as soon as they are known; choose the lowest value when faced with a choice of asset values or revenue; highest value when referring to costs
Accruals: revenue whould be recorded when it is earned and not hen the money is received. (same goes to costs). Matching: states that when calcul­ating profit, revenue should be matched against expend­iture incurred in earning it.


Historical Cost
Accounts should be based on verifiable evidence rather than personal opinion
Accounting should be based on the original costs incurred in the transa­ction
Revenue shouldn't be recognized until the exchange of goods or services has taken place.
Accoun­tants should avoid wasting time trying to accurately record items of expend­iture which are trivial.


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