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Saturday 17 August 2013

Financial Accounting Fundamentals

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Generally, accounting is subdivided as follows :


a)        Book-keeping


b)        Measuring working results and capital of the economic entity and reporting.


a)   Book-Keeping : Book-keeping is the art and science of recording transactions of a business enterprise or an organisation carrying out non-business activities in a systematic and appropriate manner to measure the working results and capital at periodical interval depending upon needs of an entity.



(b) Measuring working results and capital of the economic entity and reporting : The most important aspect of accounting records is to measure the working results and the capital of the economic entity and interpreting and reporting of results.






Accounting principles are built on a foundation of a few basic concepts. These concepts are so basic that most accountants do not consciously think of them; they are regarded as being self-evident. Non-accountants will not find these concepts to be self-evident. Some accounting theorists argue that certain of the present concepts are wrong and should be changed. But in order to understand accounting, as it now exists, one must understand what the underlying concepts currently are. The different aspects are :—



1.        Business Entity Concept


2.        Money Measurement Concept


3.        Cost Concept


4.        Going Concern Concept


5.        Dual-aspect Concept


6.        Realisation Concept


7.        Accrual Concept



8.        Accounting Period Concept 

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