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
Breif notes about accounting standards
Expand----------CMST
closing stock at the end is comprised of %a purchase price of $60000,10% discount and 15% import duty.The stock can be sold for $70000 after incurring costs of $1950.Included in the purchase price is abnormal wastage of $2000.Transportation costs are $1000 and storage costs are $500,what is the value of the closing stock?
Can any one explain me how profitability analysis s implemented in Sap & tell me which tables get effected by this... i want to know about copa_derive msgtypes also...
WHAT IS THE DIFFERENCE BETWEEN SEND FOR APPROVAL (WITHOUT PARKING) AND ASSIGNMENT CORRECT IN MYSAP FI POSTING?
cash sales and credit sales both are asset or liability?
What will be entry pass in tally if TDS paid by Credit Card.?
Short Answer on _________Business
tell me about roll model as father
Expand CCIT?
What are the question asked for accounts associate
How can you actualize cah flows of 5 years at 8%
How do you handle lack of direction or working in chaos
What are the major responsibility's of an accountant? what are the qualities he /she requires?
what type of questions are asking for fund administration???
