Accounting assumptions are fundamental principles that underlie the preparation of financial statements, which include the going concern, consistency, and accrual concepts. These assumptions ensure logical consistency in recording transactions and adherence to established accounting practices. They help improve the comparability of financials over time and address expected future cash transactions.

2. What are Accounting
Assumptions?
The financial statements are prepared based on
certain assumptions which are neither disclosed
nor required to be disclosed as the same are
understood, so they are called Fundamental
Accounting Assumptions.

3. Need of Accounting
Assumptions
Need of Accounting Assumptions
arises from two reasons
• To be logical & consistent in recording the
transaction
• To conform to the established practices &
procedures

4. Three Basic Accounting
Assumptions
1. Going Concern
2. Consistency
3. Accrual

5. Going Concern
State that business will continue to exist & carry on
its operation for an indefinite period in future
Entity is assumed to remain in operation sufficiently long to
carry out its objects and plans
Values attached to assets will be on the basis of its current
worth,

6. Consistency
Consistency Refers to the practice of using same
accounting policies for similar transactions in all periods.
Improves comparability of financial statements through
times.
Material changes, if any, should be disclosed even though
there is improvement in technique.

7. Accounting Policy can be if changed if the
change is required
• By a statue
• By An accounting Standard
• For more appropriate presentation of financial
statements

8. Accruals
Accruals is concerned with expected future cash
receipts and payments.
Accounting process of recognizing assets, liabilities or
income amounts expected to be received or paid in
future.
Common Examples :
>>>> Purchases and sales of goods or services on credit,
interest, rent ( unpaid ), wages and salaries, Taxes

9. THE END