difference between bookkeeping and accounting and accounting concepts and conventions good for the students of bba and bcom. may be useful for mba students also.

1. Introduction
of Accounting
Presented By: R B Shridhar

2. Bookkeeping Vs. Accounting
Bookkeeping
• Bookkeeping is responsible
for the recording of
financial transactions
Accounting
Accounting is responsible for
interpreting, classifying,
analyzing, reporting, and
summarizing the financial
data.
Bookkeeping and accounting are two functions which are extremely important
for every business organization

3. Accounting Concept
Business Entity Concept
Going Concern Concept
Money Measurement Concept
Accounting Period Concept
Accounting cost concept
Dual aspect Concept
Realization concept
Accrual Concept
Matching Concept

4. Business entity concept
• This concept assumes that, for accounting purposes,
the business enterprise and its owners are two
separate independent entities. Thus, the business
and personal transactions of its owner are separate.

5. MONEY MEASUREMENT CONCEPT
• This concept assumes that all business transactions
must be in terms of money, that is in the currency of
a country. In our country such transactions are in
terms of rupees.

6. GOING CONCERN CONCEPT
• This concept states that a business firm will continue
to carry on its activities for an indefinite period of
time. Simply stated, it means that every business
entity has continuity of life.

7. ACCOUNTING PERIOD CONCEPT
• All the transactions are recorded in the books of
accounts on the assumption that profits on these
transactions are to be ascertained for a specified
period. This is known as accounting period concept.

8. ACCOUNTING COST CONCEPT
• Accounting cost concept states that all assets are
recorded in the books of accounts at their purchase
price, which includes cost of acquisition,
transportation and installation and not at its market
price.

9. DUAL ASPECT CONCEPT
• Dual aspect is the foundation or basic principle of
accounting. It provides the very basis of recording
business transactions in the books of accounts. This
concept assumes that every transaction has a dual
effect, i.e. it affects two accounts in their respective
opposite sides.

10. REALISATION CONCEPT
• This concept states that revenue from any business
transaction should be included in the accounting
records only when it is realised. The term realisation
means creation of legal right to receive money.
Selling goods is realisation, receiving order is not.

11. ACCRUAL CONCEPT
• It means that revenues are recognised when they
become receivable. Though cash is received or not
received and the expenses are recognised when they
become payable though cash is paid or not paid.

12. MATCHING CONCEPT
• The matching concept states that the revenue and
the expenses incurred to earn the revenues must
belong to the same accounting period. So once the
revenue is realised, the next step is to allocate it to
the relevant accounting period.

13. Accounting Conventions
Conservatism
Consistency
Materiality
Full disclosure

14. Conservatism
• Conservatism is the convention by which, when two
values of a transaction are available, the lower-value
transaction is recorded. By this convention, profit
should never be overestimated, and there should
always be a provision for losses.

15. Consistency
• Consistency prescribes the use of the same
accounting principles from one period of an
accounting cycle to the next, so that the same
standards are applied to calculate profit and loss.

16. Materiality
• Materiality means that all material facts should be
recorded in accounting. Accountants should record
important data and leave out insignificant
information.

17. Full disclosure
• Full disclosure entails the revelation of all
information, both favourable and detrimental to a
business enterprise, and which are of material value
to creditors and debtors.

18. Types Of Accounts
Accounts
Personal Accounts
Real Accounts
Nominal Accounts