In this Article you’ll become to know about the Accounting & Accounting Concepts. First we have to define Accounting:
Accounting
Accounting
is the language of the business that provides the financial information to the
business’s or firm’s stakeholders.
Accounting Concepts
Accounting Concepts are the procedures that is uses by the Accountants while doing the accounting process. Accounting Concepts must be kept in eye while performing the Accounting process.
Following
are the Basic Accounting Concepts:
1) Materiality Concept:
Materiality Concept refers to the all events that would be recorded under the accounting process must have an influence on the economic situation. The recorded event must have some value which will be record.
2) Duplex Concept:
Duplex Concept stated that all the financial event which will be record must be recorded with dual effect. For example, if someone pay cash on behalf of raw material the recorded must be of both with a decrease in cash and increase in raw material.
3) Accrual Concept:
Accrual Concept Stated that when any
revenue or expense must be recorded in books of Accounts when they are occurred
without any financial exchange between two parties.
4) Periodicity Concept:
Periodicity Concept refers to that
every business must have a period of closing the financial books of accounts it
may be monthly, quarterly or yearly. At the end of the period the stakeholders
will analyze the books of accounts and will kept financial decisions for the
better performance of their business.
5) Cost Concept:
Cost Concept refers to that the assets and liabilities must be record in books of accounts in their purchasing value (historic value), not in the current market value.
6) Matching
Concept:
Matching Concept states that every account must be recorded in the related account for example if someone pay off debt on cash the recording must shows the debt and cash both related to each other.
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