Accounting concept refers to the basic assumptions and rules and principles which work as the basis of recording of business transactions and preparing accounts.
(Sinhgad Engineering Institutes.com)
Accounting concepts refers to the rules of accounting which are to be followed, while recording business transactions and preparing Financial Statements. The Major accounting concepts in IGCSE/O/A-Levels syllabus are:
- Business Entity Concept: The concept assumes that the business enterprise is independent of its owners.
- Money Measurement Concept: As per this concept, only those transaction which can be expressed in monetary terms are recorded in the books of accounts.
- Cost concept: This concept holds that all the assets of the enterprise are recorded in the accounts at their purchase price
- Going Concern Concept: The concept assumes that the business will have a perpetual succession, i.e. it will continue its operations for an indefinite period.
- Dual Aspect Concept: It is the primary rule of accounting, which states that every transaction effects two accounts.
- Realization Concept: As per this concept, revenue should be recorded by the firm only when it is realized.
- Accrual Concept: The concept states that revenue is to be recognized when they become receivable, while expenses should be recognized when they become due for payment.
- Periodicity Concept: The concept says that financial statement should be prepared for every period, i.e. at the end of the financial year.
- Matching Concept: The concept holds that, the revenue for the period, should match the expenses.