10 Accounting Concepts

1
10 Accounting Concepts

• Accounting Period Cycle-Changes in financial
  information are reported for a specific period of
  time in the form of financial statements.
• Adequate Disclosure-Financial statements contain
  all information necessary to understand a
  businessfinancial condition.

2
Concepts

• Business Entity-Financial information is recorded
  and reported separately from the owners personal
  financial information.
• Consistent Reporting-The same accounting
  procedures are followed in the same way in each
  accounting period.
• Going Concern-Financial statements are prepared
  with the expectation that a business will remain
  in operation indefinitely.

3
Examples of Concepts

• Using Straight-Line Depreciation methods.
• Purchase of a Delivery Truck for a business.
• A financial statement that includes all necessary
  information.

4
Concepts

• Historical Cost-the actual amount paid for
  merchandise or other items bought is recorded.
• Matching Expenses with Revenue-Revenue from
  business activities and expenses associates with
  earning that revenue are recorded in the same
  accounting period.

5
Concepts

• Objective Evidence-A source document is prepared
  for each transaction.
• Realization of Revenue-Revenue is recorded at the
  time goods or services are sold.
• Unit of Measurement-Business transactions are
  state in number that have common values, that is,
  using a common unit of measurement.

6
Examples of Concepts

• John received at receipt showing proof of the
  transaction.
• The transaction amount recorded was 75.85.
• The transaction on June 21 was recorded as having
  taken place in the Month of June.

7
Accounting Concepts

• Do you comprehend the Accounting Concepts which
  supply the basis for Accounting Practices?