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what are concepts and conventions of accounting
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Answer Posted / sanjay mulia
Accounting concepts define the assumptions on the basic of
which financial statements of a business entity are
prepared. Certain concepts are perceived,assumed and
accepted in accounting to provide a unifying structure and
internal logic to accounting process. The word concept means
idea or notion,which has universal application. Financial
transactions are interpreted in the light of the
concepts,which govern accounting methods.Concepts are those
basic assumptions and conditions, which form the basic upon
which the accountancy has been laid. Unlike physical
science, accounting concepts are only results of broad
consensus. These accounting concepts lay the foundation on
the basic of which the accounting principles are formulated.
Accounting conventions emerge out of accounting
practices, commonly known as accounting principles, adopted
by various organization over a period of time. These
conventions are derived by usage and practice. The
accountancy bodies of the world may change any of the
convention to improve the quality of accounting information.
Accounting conventions need not have universal application.
The following are the widely accepted accounting concepts:-
1.Entity concept
2.Money measurement concept
3.Periodicity concept
4.Accrual concept
5.Matching concept
6.Going concern concept
7.Cost concept
8.Realisation concept
9.Dual aspect concept
10.Conservatism
11.Consistency
12.Materiality.
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