This document discusses accounting principles, concepts, and the accounting equation. It outlines key accounting concepts like the separate entity concept and going concern concept. It also describes common accounting conventions like conservatism and full disclosure. Additionally, it provides an example of how the accounting equation balances when assets, liabilities, and capital amounts change as a result of business transactions.

1. ACCOUNTING FOR MANAGEMENT
PRINCIPLES, CONCEPTS AND
ACCOUNTING EQUATION
JITHIN K THOMAS
BIMS

2. ACCOUNTING PRINCIPLES
 They are a body of doctrine commonly associated
with theory and procedures of accounting, serving a
an explanation of current practices and as a guide
for selecting conventions or procedures where
alternatives exists.
 Accounting Concepts: Basic assumptions up on which the
science of accounting is based on
 Accounting conventions: Customs and traditions which
guide the accountant while preparing accounting statements

3. ACCOUNTING CONCEPTS
1. Separate Entity Concept
2. Going Concern Concept
3. Money Measurement Concept
4. Cost Concept
5. Dual Aspect Concept
6. Accounting Period Concept
7. Periodic Matching of Costs and Revenues
Concept
8. Realisation Concept

4. ACCOUNTING CONVENTIONS
1. Conservatism
2. Full Disclosure
3. Consistency
4. Materiality

5. SYSTEM OF BOOK KEEPING
 Single entry system
 Double entry system

6. ACCOUNTING EQUATION
 Asset = Equities
 Asset = Liabilities + Capital
 Asset – Liabilities = Capital

7. ACCOUNTING EQUITATION
 John starts business with a capital of Rs.100,000/-
Capital & Liabilities Rs Asset Rs
Capital 100,000 Cash 100,000
 John purchases furniture for cash worth Rs.20000.
Capital & Liabilities Rs Asset Rs
Capital 100,000 Cash 80,000
Furniture 20,000
100,000 100,000

8. ACCOUNTING EQUITATION
 John purchases banana from B worth Rs.50000/-
on credit
 Sells banana costing Rs.30000 for Rs.40000 and
Rs.10000 for Rs.15000 on credit to P
 John withdraws cash of Rs.1000/- and banana of
Rs.2000