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Accounting Concepts

            
             An Accounting Entity is an economic activity owned by one or more owners, Under this concept the business affair of the organization are kept serparte from the affair of the owners and other organizations. This means that when the owners of the business take cash or goods for their own use they must record it as Drawings. In the accounting records of the entity.
             Monetary Measurment.
             Money values are used in an accounting system to record all financial events affecting the entity. Everything is measured in dollar terms. Users of accounting information must understand that only things that can be valued this way are represented. E.g the value of inventory is include but the state of the owner's health is not include.
             Historical Cost.
             The historical Cost Concept means that transactions are recorded at the dollar value of money at the time they took place. For example a machine is recorded at the original cost when it was purchased. The machine may increase or decrease in value but the historical cost remains in the accounts, reduced only by depreciation . Some assets, such as animals born on a farm are not purchased, They can still be recored in the accounts of an entity but must be given a dollar value and the basis of this valuation must be recorded.
             The going concern.
             The going concern concept assumes that the business will continue to operate into the foreseeable future - e.g fixed assets are valued at their historical cost not at market value than is shown in the accounts.
             The Accounting Period.
             The accounting Period concept Is used to divide the life of the business into equal lengths of time. This is often one month for management accounts and one year for accounting to shareholders and government agencies.
             Accrual Accounting.
             The Accrual Accounting concept means that transctions are recognised when they occur and are reported in the accounting period to which they relate. This differs from cash accounting where only transactions resulting in cash flows are recorded.


Essays Related to Accounting Concepts

1. Accounts

INTRODUCTION Accounting systems have been used for thousands of years. ... Modern accounting measures and communicates financial information about an economic entity. ... ACCRUAL ACCOUNTING All businesses need to choose one of these methods of accounting: cash or accrual. ... Tax Years and Accounting Periods Income and expenses must be reported to the IRS for a specific period of time, called your tax year, your accounting period or your fiscal year. ... For example, if you make a sale on account (or, on credit), you would record the transaction at the time of the sale, with an ent...

  • Word Count: 3170
  • Approx Pages: 13
  • Grade Level: Undergraduate

2. Definition of Accounting

We can distinguish four phases of accounting: Stewardship accounting. ... These concepts originate from the merchants of the Italian City States. ... Social welfare accounting is an entirely new phase in accounting development. ... This concept is the nucleus of accounting theory, and a benchmark that affords a fixed point of reference for accounting discussions." ... The interpretation of the accounting results is a new concept. ...

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3. international accounting

This problem faces the accounting standards themselves. ... The third difference in preferred accounting practises. ... The cost of an accounting system in an multinational is increased both by the cost of designing and running different accounting systems in different countries, and the cost of adjusting accounts from different countries to the accounting system of the country of the holding company for consolidation. ... The languages of lesser-developed countries don't easily assimilate words or concepts that denote new technical of business developments. ... A common internationa...

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4. Accounting

This concept stops the business decisions, made on reports, from being over pessimistic. ... Another rule is the accruals concept. ... Next is the objectivity concept. ... Many businesses these days are highly violating this concept. ... Another concept is the concept of stable money. ...

  • Word Count: 2465
  • Approx Pages: 10
  • Has Bibliography
  • Grade Level: High School

5. Benefits of International Accounting Standards

The International Accounting Standards Board constituted these universal guidelines. ... When formulating these rules, the board consults widely and takes into account the various cultures spread across all nations. ... Essentially, the concept behind the creation of these standards was for each company to make financial statements that are reasonable, understandable and useful. ... The use of international accounting standards provides an opportunity for greater flexibility on the same. ... The stock exchange market also stands to gain from a harmonization of international accounting standard...

  • Word Count: 1396
  • Approx Pages: 6
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6. Tax Effect Accounting

ABSTRACT The purpose of this essay is to identify the differences between the current tax-effect accounting with the new method purposed for tax accounting as part of Australia's move towards international accounting standards. ... INTRODUCTION The current practice of accounting for company income tax is known as "tax-effect accounting". ... Sims and Cliff (2001, p.314) states that "AASB 1020 Accounting for Income Tax (Tax-Effect Accounting) was issued in 1989". ... The deferred tax liability arising satisfies the definition of a liability under Statement of Accounting Concepts ...

  • Word Count: 2770
  • Approx Pages: 11
  • Has Bibliography
  • Grade Level: Undergraduate

7. Tax Effect Accounting

ABSTRACT The purpose of this essay is to identify the differences between the current tax-effect accounting with the new method purposed for tax accounting as part of Australia's move towards international accounting standards. ... INTRODUCTION The current practice of accounting for company income tax is known as "tax-effect accounting". ... Sims and Cliff (2001, p.314) states that "AASB 1020 Accounting for Income Tax (Tax-Effect Accounting) was issued in 1989". ... The deferred tax liability arising satisfies the definition of a liability under Statement of Accounting Concepts ...

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8. Operations & Accounting

Interfaces of Operations Management in Accounting Abstract The interfaces of operations management in accounting are many. ... From there, the concept of just-in-time is analyzed and described. The concepts of material requirements planning and total quality management are then presented. ... Another solution to stockouts is the concept of safety stock, which will be discussed in a later section. ... If the demand and purchase-order lead time are uncertain, the concept of safety stock comes into play. ...

  • Word Count: 3560
  • Approx Pages: 14
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9. Envrionmental Accounting

What is environmental management accounting? ... Before we can even begin to understand environmental accounting we must first understand the social significance of accounting. ... This allows for traditional accounting norms to serve purposes beyond conventional accounting. ... Environmental management accounting refers to internal operations of environmental accounting within a corporation. ... Internal environment accounting or cost accounting traces the costs of the corporation's activities on the environment. ...

  • Word Count: 3332
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