How Automation is Driving Efficiency Through the Last Mile of Reporting
Accounting Principles and Conventions
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2.
3. CONTENTS
A ccounting C oncepts…
Meaning…
Types…
A ccounting C onventions…
Meaning…
Types…
Difference B/w A ccounting C oncepts &
4. ACCOUNTING
CONCEPTS
In ord er to m ake the accounting language convey the
sam e m eaning to all people & to m ake it m ore
m eaningful, m ost of the accountants have agreed on a
num ber of concepts which are usually followed for
preparing the financial statem ents. These concepts
provid e a found ation for accounting process. N o
enterprise can prepare its financial statem ents without
consid ering these concepts.
5.
6. Business is treated as
separate & d istinct from
its m em bers
Separate set of books
are prepared .
Proprietor is treated as
cred itor of the business.
For other business of
proprietor d ifferent
books are prepared .
7.
8. Business will continue
for a long period .
As per this concept, fixed
assets are record ed at
their original cost &
d epreciation is charged
on these assets.
Because of this concept,
outsid e parties enter into
long term contracts with
the enterprise.
9.
10. Assets are record ed at
their original price.
This cost serves the
basis for further
accounting treatm ent
of the asset.
Acquisition cost
relates to the past i.e.
it is known as
historical cost.
12. Revenue m eans the
ad d ition to the capital
as a result of business
operations.
Revenue is realized on
three basis-:
3. Basis of cash
4. Basis of sale
5. Basis of prod uction
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16. An accounting convention m ay be
d efined as a custom or generally accepted
practice which is ad opted either by
general agreem ent or com m on consent
am ong accountants.
