Interested to Buy Any Domain ? << Click Here >> for more details...
Answer Posted / ranjeesh.k.k
Ground rules of accounting that are (or should be) followed
in preparation of all accounts and financial statements. The
four fundamental concepts are (1) Accruals concept: revenue
and expenses are taken account of when they occur and not
when the cash is received or paid out; (2) Consistency
concept: once an entity has chosen an accounting method, it
should continue to use the same method, except for a sound
reason to do otherwise. Any change in the accounting method
must be disclosed; (3) Going concern: it is assumed that the
business entity for which accounts are being prepared is
solvent and viable, and will continue to be in business in
the foreseeable future; (4) Prudence concept: revenue and
profits are included in the balance sheet only when they are
realized (or there is reasonable 'certainty' of realizing
them) but liabilities are included when there is a
reasonable 'possibility' of incurring them. Also called
conservation concept. Other concepts include (5) Accounting
equation: total assets of an entity equal total liabilities
plus owners' equity; (6) Accounting period: financial
records pertaining only to a specific period are to be
considered in preparing accounts for that period; (7) Cost
basis: asset value recorded in the account books should be
the actual cost paid, and not the asset's current market
value; (8) Entity: accounting records reflect the financial
activities of a specific business or organization, and not
of its owners or employees; (9) Full disclosure: financial
statements and their notes (footnotes) should contain all
pertinent data; (10) Lower of cost or market value:
inventory is valued either at cost or the market value
(whichever is lower) to reflect the effects of obsolescence;
(11) Maintenance of capital: profit can be realized only
after capital of the firm has been restored to its original
level, or is maintained at a predetermined level; (12)
Matching: transactions affecting both revenues and expenses
should be recognized in the same accounting period; (13)
Materiality: relatively minor events may be ignored, but the
major ones should be fully disclosed; (14) Money
measurement: accounting process records only those
activities that can be expressed in monetary terms (with
some exceptions, as in cost-accounting); (15) Monetary
measurement: only the activities measurable in terms of
money should be recorded; (16) Objectivity: financial
statements should be based only on verifiable evidence,
comprising an audit trail; (17) Realization: any change in
the market value of an asset or liability is not recognized
as a profit or loss until the asset is sold or the liability
is paid off (discharged); (18) Unit of measurement:
financial data should be recorded with a common unit of
measure (dollar, pound sterling, yen, etc.). Also called
accounting conventions, accounting postulates, or accounting
principles.
| Is This Answer Correct ? | 4 Yes | 2 No |
Post New Answer View All Answers
what is the difference between cash flow and funds flow
I WANT ACCOUNT ASSISTANCE INTERWIEV QUETION IN L&T
is anybody attended interview in ernst&young for EMS PROCESS , pls let me know abt the written test and what type of report writing
What problems might be encountered if there were no accounting standards?
wages posted twice what is the entry for that?
Hello Frd's This is Mohd NaseerUddin. Is Anyone can help me out to findout a Accounting Peachtree 7.2 note's aswel as Focus notes also Plsssssss helpme out to find it. My E-mail id is mohd_naseeruddin43@yahoo.com
how to calculate IT? if bank intrest:1036 , long term capital gain:448841 short term capital gain :894 , income from rent 225000, and income from other source 347478, Advance tax paid 25000,lic 101508, medicliam 6990 and tds recd.25000
Respective sir I'm bcom 1st sem student. I have very interest in banking sector. I finished my pu with 88% how I can prepare for banking exam (especially po)yet I have no any practice but I hope if I get good guidance I can pass my banking exam so kindly inform me how I can prepare for po exams. My email address is- 98anjuma@gmail.com. I'm really counting second when I will get ans by u. Thank you sir
Short Answer on ________Adjusting Entries
how to pass journal entry or where to show forein transaction reserv in Bal sheet. pls explain basic
I have been interview in next week my posting is accounts officer i have be manage with AP,AR,BRS and GL what Books i have read.
Guest expenses Rs 5500/-on behalf of partner Aravind was written as Hospitality. Rectify it
I customized the tax procedures, after posting normal g&l (f-02), i got an error, error is complete lineitem display, its popup error message num, how can i find the message error, whats the t-code
How Frequently shall a company file the service tax returns and how frequently shall a company pay the service tax to the Government ?
Define Salry for the following purpose 1.To calculate HRA
