According to the business entity concept, Rs.1,00,000 will be assumed by a business as capital i.e. ![]() These are the assets of the business and not of the business owner. He purchased goods for Rs 50,000, furniture for Rs. Thus, the accounting transactions are recorded in the books of accounts from the organization's point of view and not the person owning the business. Similarly, when the owner takes away from the business cash/goods for his/her personal use, it is not treated as a business expense. For example, when the business owner invests his money in the business, it is recorded as a liability of the business to the owner. Hence, the business translation and personal transaction of its owner are different. This concept assumes that the organization and business owners are two independent entities. What are the Different Accounting Concepts?įollowing are the different accounting concepts that are widely used all around the world and hence are termed as universally accepted accounting rules. It aims to understand the business rules and regulations that are required to be followed by all types of business entities, and hence simplifying the detailed and comparable financial information. The primary aim of accounting is to maintain uniformity and regularity in the preparation of accounting statements.Īccounting concepts act as an underlying principle that helps accountants in the preparation and maintenance of business records. ![]() What are the Objectives of the Accounting Concept? “The term accounting concepts refer to basic rules, assumptions, and principles which act as a primary standard for recording business transactions and maintaining books of accounts”. They may be termed as accounting concepts. Similarly, there are accounting rules that an accountant should follow while recording business transactions or recording accounts. In India, there are several rules which need to be followed while walking or driving on the road as it enables the smooth flow of traffic.
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