For example, a company may adopt straight line method, written down value method, or any other method of providing depreciation on fixed assets. The accountant should attach importance to material details and ignore insignificant details.
The job of accounting is done by professionals who have educational degrees acquired after years of study. Current assets are assets that will be used within one year. Lack of Comparability 7. Human assets of an enterprises are an example. Revenue is recognized only when sale is effected or the services are rendered.
A more academic definition of accounting is given by the American Accounting Association: For example, an automobile repair shop that collects Rs.
In materiality principle, all the items having significant economics effect on the business of the enterprises should be disclosed in the financial statement. In accounting, a business is expected to continue for a fairly long time and carry out its commitments and obligations.
In accounting, a record is made only of those transactions or events which can be measured and expressed in terms of money. This concept states that revenue from any business transaction should be included in the accounting records only when it is realized.
More essays like this: The accounting equation, the basis for the double-entry system see belowis written as follows: Only business transactions that can be expressed in terms of money are recorded in accounting, though records of other types of transactions may be kept separately.
Basic Accounting Terms Here is a quick look at some important accounting terms. Transactions or events which cannot be expressed in terms of money do not find place in the books of accounts though they may be very useful for the business. The accounting reports should disclose full and fair information to the proprietors, creditors, investors and others.
In accounting, a business is expected to continue for a fairly long time and carry out its commitments and obligations. Conventions are the customs or traditions or usage which guide of accounting statements. They are the necessary assumptions or conditions upon which accounting is based.
A financial asset and its value, such as cash and goods. It is this concept more than any other that has given rise to the idea that accountants are pessimistic boring people!. Current assets are assets that will be used within one year. The writer gives detailed background information on the topic of study.
It means that revenues are recognized when they become receivable. So his revenue is Rs. This means that the accounts must be honestly prepared and they must disclose all material information. According to this concept profit should be accounted for only when it is actually realized.
Going Concern Concept Continuity of Activity: It prevents business firm from inflating their profit by recording sale and income that are likely to accrue, i. This is the basic concept of accounting. Therefore, accounting principles based on certain concepts, convention, and tradition have been evolved by accounting authorities and regulators and are followed internationally.
These principles, which serve as the rules for accounting for financial transactions and preparing financial statements, are known as the “ Generally. We will write a custom essay sample on The historical cost accounting convention Still historical costs are the standard form of accounting due to its unique features and conventions that make it better than most available alternatives.
We will write a custom essay sample on The historical cost accounting convention specifically for. How to Write an Accounting Case Study Accounting case studies must be written according to various standard rules and regulations.
These are the same guidelines followed by organizations during their accounting process. ACCOUNTING CONCEPT 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.
Accounting Communication Matters.
Conclusion You are here. UTAS Home. Accounting Communication Matters. Writing an Essay or Report. Starting to Write. Conclusion. The final task in the writing process is to write the conclusion.
An essay/report conclusion should: remind the reader in general terms of the main point(s) of the essay. Accounting Communication Matters. Conclusion You are here. UTAS Home. Accounting Communication Matters.
Writing an Essay or Report. Starting to Write. Conclusion. The final task in the writing process is to write the conclusion. An essay/report conclusion should: remind the reader in general terms of the main point(s) of the essay/report.Write a brief essay on accounting conventions