ACCOUNTING CONCEPTS:- 1. SEPARATE ENTITY CONCEPT – According to this concept, business is considered as a separate legal entity which has its distinct identity separate from its owner. This concept is extremely useful in keeping business affairs strictly free from private affairs of owner. This is the reason why withdrawal by owner from business is treated as drawing. 2. GOING CONCERN CONCEPT – According to this concept, it is assumed that business is established and will continue for a fairly long time in future. This is the reason why while valuing assets of firm current resale value is not taken into account instead depreciation is charge on basis of their expected life. 3. MONEY MEASUREMENT CONCEPT – According to this concept, accounting should necessarily record only those transactions which can be expressed in monetary terms. This is the reason why qualitative facts like change in management are not recorded in books of account. 4. COST CONCEPT – This concept is closely related to going concern concept and emphasizes that asset should be recorded at its cost price and not market price which keeps on changing. 5. DUAL ASPECT CONCEPT – The dual aspect concept states that every business transaction requires recordation in two different accounts. The concept is derived from the accounting equation, which states that: Assets = Liabilities + Equity .The accounting equation is made visible in the balance sheet, where the total amount of assets listed must equal the total of all liabilities and equity. 6. ACCOUNTING PERIOD CONCEPT – According to this concept, accounting should measure transactions at regular intervals for a specified period of time called accounting period. Necessary financial disclosures and reporting need to be made at the end of accounting period which may be quarterly, half-yearly or yearly. 7. MATCHING CONCEPT – This concept is also known as periodic matching of cost and revenue. According to this concept, profits made by business in particular accounting period can be ascertained only when the revenues earned during the period are compared with the expenses incurred in earning the revenue.

1. DEVTECH FINANCE
ACCOUNTING
CONCEPTS &
CONVENTIONS
SEPARATE ENTITY CONCEPT
GOING CONCERN CONCEPT
MONEY MEASUREMENT
CONCEPT
COST CONCEPT
DUAL ASPECT CONCEPT
ACCOUNTING PERIOD CONCEPT
MATCHING CONCEPT

2. ACCOUNTING CONCEPTS
SEPARATE ENTITY CONCEPT
GOING CONCERN CONCEPT
MONEY MEASUREMENT CONCEPT
COST CONCEPT
DUAL ASPECT CONCEPT
ACCOUNTING PERIOD CONCEPT
MATCHING CONCEPT

3. ACCOUNTING CONCEPTS
1. SEPARATE ENTITY CONCEPT – According to this concept, business
is considered as a separate legal entity which has its distinct identity
separate from its owner. This concept is extremely useful in keeping
business affairs strictly free from private affairs of owner. This is the
reason why withdrawal by owner from business is treated as drawing.
2. GOING CONCERN CONCEPT – According to this concept, it is
assumed that business is established and will continue for a fairly long
time in future. This is the reason why while valuing assets of firm current
resale value is not taken into account instead depreciation is charge on
basis of their expected life.

4. ACCOUNTING CONCEPTS
3. MONEY MEASUREMENT CONCEPT – According to this concept,
accounting should necessarily record only those transactions which can
be expressed in monetary terms. This is the reason why qualitative facts
like change in management are not recorded in books of account.
4. COST CONCEPT – This concept is closely related to going concern
concept and emphasizes that asset should be recorded at its cost price
and not market price which keeps on changing.

5. ACCOUNTING CONCEPTS
5. DUAL ASPECT CONCEPT – The dual aspect concept states that
every business transaction requires recordation in two different accounts.
The concept is derived from the accounting equation, which states that:
Assets = Liabilities + Equity .The accounting equation is made visible in
the balance sheet, where the total amount of assets listed must equal the
total of all liabilities and equity.
For e.g. Borrowed 10,000 rupee from Mr. XYZ . Now, as a result of this
transaction asset side in form of cash or bank will increase by 10,000
hence debit and at the same time liability will also increase by 10,000 in
form of creditor to be paid back hence credit.

6. ACCOUNTING CONCEPTS
6. ACCOUNTING PERIOD CONCEPT – According to this concept,
accounting should measure transactions at regular intervals for a
specified period of time called accounting period. Necessary financial
disclosures and reporting need to be made at the end of accounting
period which may be quarterly, half-yearly or yearly.
7. MATCHING CONCEPT – This concept is also known as periodic
matching of cost and revenue. According to this concept, profits made by
business in particular accounting period can be ascertained only when the
revenues earned during the period are compared with the expenses
incurred in earning the revenue.

7. ACCOUNTING CONVENTIONS
1. CONSERVATISM
2. FULL DISCLOSURE
3. CONSISTENCY
4. MATERIALITY
MATERIALITY CONSERVATISM
CONSISTENCY FULL DISCLOSURE

8. ACCOUNTING CONVENTIONS
1. CONVENTION OF CONSERVATISM – According to this convention,
the accountants have to follow the rule, anticipate no profit, provide for all
possible losses while recording business transactions to meet uncertainty
efficiently. It is because of this convention that provision for bad and
doubtful debts are created.
2. CONVENTION OF FULL DISCLOSURE – According to this
convention, there should be adequate disclosure of all material
information in the financial statements prepared for stakeholders like
investors, creditors, government etc.

9. ACCOUNTING CONVENTIONS
3. CONVENTION OF CONSISTENCY – According to this convention, it is
essential that accounting procedures and method should remain
unchanged from one accounting period to another to facilitate
comparison. For e.g. if material issued are priced on basis of fifo method
the same should be followed thereafter.
4. CONVENTION OF MATERIALITY – According to this convention, the
accountants should attach importance to material details and ignore
insignificant ones. In the absence of this distinction accounting will
unnecessary be complex and burdened with minute details. For e.g.
increase in competition, change in demand pattern etc.

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DEVTECH
FINANCE