Basic Accounting Principles and Concepts — Flashcards

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Accounting principles are concepts, conventions, and standards widely accepted and adopted by accountants while recording and reporting financial information. They are the basic rules used to prepare …

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They are needed to identify and classify transactions correctly, ensure uniformity in records, make financial statements comparable, guide accountants in recording business transactions, and build con…

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These are man-made rules of accounting that are widely accepted and used by accountants. They make financial statements comparable and useful to users.

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This concept treats a business firm as separate and distinct from its owner. Business transactions are recorded from the firm’s point of view. The owner’s capital is treated as a liability of the firm…

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It helps find the true profit and financial position of the business. Without it, business affairs and personal affairs would get mixed up, and the true picture of the business would not be clear.

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It is the assumption that a business will continue to exist for a long time in the future. Because of this, fixed assets are recorded at original cost less depreciation, not at market value.

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It justifies the distinction between fixed assets and current assets. It also supports the idea that existing liabilities will be paid at maturity. Unsold stock is carried forward to the next year.

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It states that only transactions that can be expressed in money terms are recorded in the books of account. Non-monetary facts, such as health or qualifications, are not recorded if they cannot be mea…