Accounting concepts are the basic assumptions or ideas upon which the science of accounting is based. These are the fundamentals of accounting practice. These include: Accounting conventions are the customs and traditions that guide accountants when preparing accounting statements. Some important accounting conventions are:Accounting Concepts
Accounting Conventions
Accounting Concepts and Conventions FAQs
Accounting concepts are the basic assumptions or ideas upon which the science of accounting is based. These are the fundamentals of accounting practice. These include: separate entity concept, going concern concept, money measurement concept, cost concept, dual aspect concept, accounting period concept, matching principle realization principle.
Separate entity concept state that all business transactions should be recorded in an independent manner, without concern for the owner's personal transactions.
The going concern concept assumes that the business will continue to operate indefinitely, without an owner or with a new one. The value of long term assets are amortized over their useful life.
Accounting conventions are the customs and traditions that guide accountants when preparing accounting statements. Some important accounting conventions are: convention of conservatism, convention of consistency, convention of materiality and convention of full disclosure.
The 'Convention of Conservatism' states that a company should make a provision for a doubtful liability only if it can be ascertained with reasonable certainty that such an obligation exists.
True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.
True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.
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