Professional Documents
Culture Documents
CONCEPTS &
CONVENTIONS
• Presentation By
Prof. DEEPAK
TANDON
IILM Gurgaon
ACCOUNTING
PRINCIPLES
-related to the growth of the
business
Well being, solvency,earning
potential
Arisen from
experiences,precedents,statements,
Govt agencies
INPU PROCES OUTPU
T S T
Recording
Economic events Classifying Information to
Measured in Summarising User
Financial terms Interpreting s
PROCESS OF ACCOUNTING
In order to accomplish its main objective of communicating information
to the users accounting performs the following functions:
Step 1 : JOURNALISIN
G
Step 2: POSTIN
G
Step 3: BALANCIN
G
Step 4: TRIAL
BALANCE
Step 5: INCOME
STATEMENT
Step 6: BALANCE
SHEET
CONCEPTS &
CONVENTIONS
• Concept=Accounting postulates:-
• A.Entity concept
• B.Dual Aspect Concept
• C.Going Concern Concept
• D.Accounting period Concept
• E.Money measurement concept
• F.Cost concept
G.Periodic matching of the cost & revenue
Concept
• H. Variable Objective evidence Concept
• CONVENTIONS:
• --Disclosure/ Materiality/
Consistency/conservatism
BUSINESS ENTITY
CONCEPT
• 1.Convention of Disclosure
• 2.Convention of Materiality
• 3.convention of Consistency
• 4. Convention of Conservatism
FULL DISCLOSURE
• CAPITAL +LIABILITIES
=ASSETS
• NET WORTH =ASSETS-
LIABILITIES
• II.OWNERS EQUITY =TOTAL EQUITY
– EQUITY OF THE
CREDITORS
• TOTAL EQUITY = TOTAL
ASSETS
• OWNER EQUITY =
TOTAL
EQUITY+REVENUE-EXPENSE – EQUITY
THE
OF
CREDITORS
Nature Of Accounts & Rules
ANY CAPITAL
ACCOUNT
• RULES A/cs Dr Cr
Dr Cr
• PERSONAL -- The receiver The
Giver
• REAL -- What comes in What goes out
• Nominal-- All Losses & All Gains &
Expenses Incomes
•