Professional Documents
Culture Documents
CONCEPTS AND
PRINCIPLES
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INTRODUCTION
ACCOUNTING CONCEPTS
Business entity
concept
Money
Measurement/stable
monetary unit concept
Going Concern
concept
Historical Cost concept
Prudence/conservatis
m concept
Materiality concept
Accounting period
Meaning
The
Examples
Insurance
Meaning
All
Examples
Market
Meaning
The
Example
Possible
Meaning
Assets
Example
The
PRUDENCE/CONSERVATISM CONCEPT
Meaning
Revenues
Example
Stock
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MATERIALITY CONCEPT
Meaning
Immaterial
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Example
Small
Meaning
+Entire life of the firm is divided into time
intervals for ascertaining the profits/losses
are known as accounting periods.
+Accounting period is of two types- financial
year(1st Apr to 31st March) & calendar
year(1st Jan to 31st Dec).
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Meaning
+Every transaction recorded in books affects at
least two accounts.
+ If one is debited then the other one is credited
with same amount.
+ This system of recording is known as DOUBLE
ENTRY SYSTEM.
+ ASSETS = LIABILITIES + CAPITAL
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Meaning
+ Revenue means the addition to the capital as a
result of business operations.
+ Revenue is realised on three basis-:
1. Basis of cash
2.Basis of sale
3.Basis of production
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MATCHING CONCEPT
Meaning
+ All the revenue of a particular period will be
matched with the cost of that period for determining
the net profits of that period.
+ Accordingly, for matching costs with revenue,
first revenue should be recognized & then costs
incurred for generating that revenue should be
recognized.
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ACCRUAL CONCEPT
Meaning
+In this concept revenue is recorded when sales
are made or services are rendered & it is
immaterial whether cash is received or not.
+Same with the expenses i.e. they are recorded
in the accounting period in which they assist in
earning the revenues whether the cash is paid for
them or not.
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OBJECTIVITY CONCEPT
Meaning
The
Example
The
TIMELINESS
Meaning
+ This principle states that the information
should be provided to the users at right time for the
purpose of decision making.
+ Delay in providing accounts serves no
usefulness for the users for decision making.
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CONSISTENCY CONCEPT
Meaning
Companies
Examples
If
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Meaning
Financial
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UNIFORMITY CONCEPT
Meaning
Different
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RELEVANCE CONCEPT
Meaning
Financial
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THANK YOU!!
:::::::::::::::::::::::::::::::::::::Submitted
To:::::::::::::::::::::::::::::::::::::::::::
Mrs. Sarika Bhatnagar
Lecturer
Financial Accounting And Auditing
:::::::::::::::::::::::::::::::::::::Submitted
By:::::::::::::::::::::::::::::::::::::::::::
Isha Setia (76)
Simran Yadav (1746)
Sonia Bansal (1680)
Akansha Goel (423)
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