1. a) Accounting concept refers to the basic assumptions and rules and principles which work as the basis of recording of business transactions and preparing accounts. Accounting Concepts Business entity Money Measurement/stable monetary unit Going Concern Historical Cost Prudence/conservatism Materiality Objectivity Consistency Accruals/matching Realization Uniformity b) The main objective is to maintain uniformity and consistency in accounting records. These concepts constitute the very basis of accounting. All the concepts have been developed over the years from experience: Business entity concept, Money measurement concept, Going concern concept, Accounting period concept, Accounting cost concept, Duality aspect concept, Realisation concept, …show more content…
Or profit and loss. 2. a) Money Measurement: Financial accounting is concerned only with items, which can be quantified and expressed in monetary terms. The business assets to which a monetary value cannot reasonably be attributed (e.g. skills of the workforce) are normally ignored in the financial statements, even though those assets might be of great worth to the business concerned. b) The following points highlight the significance of money measurement concept: This concept guides accountants what to record and what not to record ,It helps in recording business transactions uniformly ,If all the business transactions are expressed in monetary terms, it will be easy to understand the accounts prepared by the business enterprise ,It facilitates comparison of business performance of two different periods of the same firm or of the two different firms for the same period. c) Financial statement: As per the MMC, company can record only the transactions which are in terms of money value. Employees information can not be reflected in the balance sheet. However, those employees salaries can be included as expenses In profit and loss …show more content…
a) separate determination and precedence concept: b) c) Financial statement: The Company cannot set off the losses 400 against the profit 6000. As per the prudence concept ,anticipated profits and sales should not be considered for financial statement. However predicted losses one be considered and make provisions for those future losses. 7. Consistency concept a) There are several methods available in recording items in the accounts. Once one method has been selected, it should be used in the next period and thereafter. b) E.g. if the straight-line method is used for depreciation in year one, it should be used in year two and so on. If the business decides to change to reducing balance method, the effects on the account must be disclosed. This concept is applied to prevent mis-representation of the information obtained from the accounts must be disclosed. 8. Business Entity concept a) Business is separate and distinct from its owner. For accounting purpose, the business exists in its own right. Transactions affecting the business are recorded from the viewpoint of the business, and in the books of the business. They are not to be mixed up with the private affair of the
When I record the transactions of the company in the UBS system, it required both debit effect and credit effect of the transactions, the total debits must be equal to the total credits. Besides that, the theory of money measurement also apply in the workplace. We record all the economic events and transactions of the client companies in monetary unit which is Ringgit Malaysia. Sometimes, the client companies having some investments in foreign countries and the amount is in foreign currency, we need to convert it into Ringgit Malaysia before we key into the UBS system. In addition, the assumption of business entity also apply during my undergone internship. For example, we need to ask the client when they bought non-current assets such as television or sofa because we need to know that television or sofa is for their company use or for their personal use. If the television or sofa is for their personal use, we cannot record it into the non-current asset account and we need to credit from the company’s capital. Furthermore, I also apply the theory of consistency in the workplace. For instance, we need to use the same accounting principles from one period to the nest for the company’s
Accrual accounting is a system of accounting that is based on the accrual principal accounting. This principal requires revenue to be recognized and recorded when earned. Expenses are to be recorded when they occur. The accrual basis of accounting is used by most companies. Very small businesses and individuals use cash basis accounting.
The records shall contain all assets, income, expenses liabilities, and all business transactions. Our company is committed to an independent, robust internal and external audit process. • Conclusion The company seeks to be a perfect company.
Management accounting in organisation is very important for decision-making and to make the business more efficient and therefore increasing its profits. Is the process of preparing accounts that can help managers to make day-to-day and short-term decisions, by providing them with accurate and timely key financial and statistical information...
This paper will discuss these steps in detail. Because I work at home, I am not currently involved in any of the steps of the accounting cycle. The examples I give in this paper will be from various jobs I have held in the past.
Albrecht, W. S., Stice, J. D., Stice, E. K., & Skousen, k. F. (2002). Accounting Concepts and Applications. Cincinnati: South-Western.
This example is how I will manage recording or analysing my profit and loss figures. On the next page it shows us how figures would compromise if they were high and low. METHOD/AMMOUNTS List of Items £ Stock Purchases During the Period 90,000 Miscellaneous Expenses 1,900 Interest Expenses 3,000 Sales 174,000 Rent from Sub-Letting Part of Workshop 400 Provision for Income Tax 3,275 Opening Stock ...
Financial accounting is the analysis, classification, and recording of financial transactions and reporting such information to respective users especially external users who use the information to make decisions about their engagements with the entity. In financial accounting general purpose financial statements are used for external reporting. The public by standards imposes the development of the statements through respective national professional bodies, International Accounting Standards Board and respective company Acts for various nations.
Accounting is the pillar of every company to measure its growth, loss, revenue , capital, its really specify the real terms in foam of figures and sometimes in tables, in accounting there are certain rules are obtained to make more accuracy while playing with figures.
Equity in business means an owner cannot own 100% of the business shares ownership with others and accounting for business should be separate from all personal affairs of its own. This means the person(owner) should not place any personal assets to the business balance sheet. For e.g.Expenditure of car should not be written on the balance sheet.
The purpose of this document is to describe the nature, purpose and scope of accounting and it deliberately explains the details of each category in accounting. Accounting involves in preparing financial documents of an entity by analyzing, verifying, and reporting this records. It emphasizes its major characteristic role in field of banking and finance, with a mixture of supportive sub topics.
Accounting itself is a system that people has been using for thousands of years, the system records financial information about a person or business, businesses use it in order to be able to keep and track their financial accounts and other financial information in a safe and efficient way. (Brooks, 2012)
Accounting dates back as far as first centuries, is the language of business. As everything has gone through many changes, accounting has also changed many times through out the centuries. It went from the use of abacus to the most advanced softwares, and computers. With these drastic improvements nowadays accounting, financial accounting and management are facing big challenges. From the presentation of the reports to communication to the users, investors, and owners, the accounting field has gained totally a new shape from two decades ago. Today with the dynamic change in every aspect of life, the accounting field has to act fast and be able to adapt these new changes and challenges in order to survive.
The Financial Accounting Standards Boards (FASB) defined conceptual framework as a consistent of underlying concepts and the ideas that describe the nature and general purpose of financial reporting which may lead to consistent standard in accounting (Deegan 2010). The role of the conceptual framework is to ensure that financial statements in accounting are free from bias and to provide useful information that is useful for user’s decision making. The standard-setting board also formulated a range of perceptions and theories related to accounting to trigger the objectives of financial reporting. The standard-setting board keeps issuing the conceptual framework over time to ensure that the conceptual framework’s objectives are improving to provide useful financial information. The innovative work on conceptual framework was embraced in the United States by the FASB in the early 1970s. The FASB accomplished disappointment in attempting to generate a standard that at the outset might not appear to present, especially testing theoretical issues. Regardless, while attempting to achieve concession on Statement of Financial Accounting Standard, tending to the theoretical issues produced critical matter for the board members. In this manner, throughout the outset the FASB understood the requirement for an obvious conceptual framework. Based on Hines’s argument, the conceptual framework is mean to provide the ability to increase self-regulate of a profession in order to neutralizing government interference from arising. Whether this argument has been accepted or not will be discussed in more detail with supported evidence to clarify the main point about Hines’s argument. Further details about this argument will discuss below.
Accounting is so important in our modern society. It serves a variety range of place in our society. It serves a variety range of place in our soceity, from school to hospital, from business firm to government agencies. It's also the main force in regulation of taxation and industrial activity. It serves a great aspects on the development of mass-production systems, any way, it's a very important term in our modern soceity.