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the concepts of accounting

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by

Ekta sarda

on 11 November 2014

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Transcript of the concepts of accounting

CONCEPTS
OF ACCOUNTING

MONEY MEASUREMENT CONCEPT
This concept states that only those transactions that can be expressed in monetary terms are to be recorded in the books of accounts.
Non - monetary transactions fall outside the scope of accounts.
For Example :
MONETARY TRANSACTIONS
NON-MONETARY TRANSACTIONS
ACCOUNTING PRINCIPLES :-
"Generally Accepted Accounting Principles (GAAP)".
Standard or the general rules to be followed while maintaining books of accounts.
Universal application
Standardising the recording and reporting of financial information.
These are classified as :
Going Concern Concept :-
This concept states that the books of accounts are to be maintained under the assumption that the business will last for ever.
It helps in recording of transactions and decision making.
BUSINESS ENTITY
CONCEPT

MONEY MEASUREMENT
CONCEPT

COST CONCEPT
DUAL ASPECT
CONCEPT
GOING CONCERN
CONCEPT
ACCOUNTING
PERIOD
CONCEPT
MATCHING
CONCEPT
. Fixed assets should be recorded in the book of account at their original purchase price.
. BOOK VALUE = COST - DEPRECIATION
* ACCRUAL CONCEPT
* REALIZATION CONCEPT
CONCEPTS
Business Entity Concept:-
. This concept states that business and business man are different.
. All the transaction should are to be recorded from the business point of view not the proprietor.
. The personal transactions of the owner should not be mixed with the business transactions.
For Example :-

Dual Aspect
Concept
Dual Aspect Concept :
Every transaction has two aspects - A Receiving and A Giving aspect.Both the aspects of each and every transaction must be recorded in the books of accounts.
COST CONCEPT:-
Accounting Period Concept :
Financial statements of an enterprise are prepared.
Earned profits or incurred losses during that period
Position of its assets and liabilities at the end of that period.
Life of business is to be divided into equal period of 12 months each known as "Accounting Year".

EXAMPLE :
At the time of retirement of partner the accounting period can be different from 12 months period.
THANK YOU
ACCOUNTING EQUATIONS :
CAPITAL = ASSETS

CAPITAL + LIABILITIES = ASSETS

(OR)

CAPITAL = ASSETS - LIABILITIES

1. An oil and gas firm operating in Nigeria is stopped by a Nigerian court from carrying out operations in Nigeria. The firm is not a going concern in Nigeria, because it has to shut down.
EXAMPLES :
2. A nationalized refinery is in cash flows problems but the government of the country provided a guarantee to the refinery to help it out with all payments, the refinery is a going concern despite poor financial position.
DREAM
CATCHERS

BY,
MEGHA KEDIA
ASHMITA DOSHI
BHAVNA AGARWAL
EKTA SARDA
VAISHNAVI
SHUBHASHREE
POOJITHA
Full transcript