MODULE - 1 Accounting Concepts Basic Accounting 2 Notes ACCOUNTING CONCEPTS In the previous lesson, you have studied the meaning and nature of business transactions and objectives of financial accounting. In order to maintain uniformity and consistency in preparing and maintaining books of accounts, certain rules or principles have been evolved. These rules/principles are classified as concepts and conventions. These are foundations of preparing and maintaining accounting records. In this lesson we shall learn about various accounting concepts, their meaning and significance. OBJECTIVES After studying this lesson, you will be able to : explain the term accounting concept; explain the meaning and significance of various accounting concepts : Business Entity, Money Measurement, Going Concern, Accounting Period, Cost Concept, Duality Aspect concept, Realisation Concept, Accrual Concept and Matching Concept. 2.1 MEANING AND BUSINESS ENTITY CONCEPT Let us take an example. In India there is a basic rule to be followed by everyone that one should walk or drive on his/her left hand side of the road. It helps in the smooth flow of traffic. Similarly, there are certain rules that an accountant should follow while recording business transactions and preparing accounts. These may be termed as accounting concept. Thus, this can be said that : Accounting concept refers to the basic assumptions and rules and principles which work as the basis of recording of business transactions and preparing accounts. 17 ACCOUNTANCY MODULE - 1 Accounting Concepts Basic Accounting 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 and thus they are universally accepted rules. Following are the various accounting
Previous Page Next Page Page 1 of 17