Accounting Principles. Concepts & Conventions

1. Presented By;
Ahmad Umair Hashmi
18MBAB-17
GE-3215
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2.  Accounting Principles
i) Accounting Concepts
ii) Accounting Conventions
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3. Accounting Principles:
Accounting Principles refers to the rules or guidelines adopted
for recording and reporting of business transactions, in order
to bring uniformity in the preparation and presentation of
financial statements.
Adopted by Accountants universally while recording
accounting transactions.
Principles are classified into two categories.
i) Accounting Concepts.
ii)Accounting Conventions.
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4. Accounting
Principles
Accounting
Concepts
Accounting
Conventions
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5. Based on real Assumptions & are Man-Made.
Simple and Explanatory.
Generally Accepted.
Reflect Future Predictions.
Informational.
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6. Accounting Concepts are basic assumptions or conditions
upon which accounting operates.
 Generally accepted set of accounting rules based on
which transactions are recorded.
 Enables the user to understand the financial statements
of the enterprise.
 Forms the basis upon which accountancy has been laid.
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7. 1. Business Entity Concept:
Business and business owner are two separate identities.
2. Going Concern Concept:
Business will continue its operations for a long period of
time & will not be sold or liquidated in the near future.
3.Money Measurement Concept:
Only those transactions are recorded which can be
measured in terms of Money.
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8. 4.Cost Concept:
Assets are recorded in the books of account at their
purchase price.
5.Dual Aspects Concept:
Every Business transaction have two aspects i.e debit and
credit of equal amount.
6.Accounting Period Concept:
Refers to span of time at the end of which the financial
statements of enterprise are prepared.
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9. 7.Matching Concept:
Ensures that Revenues and all their associated expenses
are recorded in same accounting period.
8. Revenue Concept:
Revenue is considered as realized when transaction has
taken place and obligation to receive its payment has
been established.
9. Accural Concept:
The revenue is recorded when sales are made and not
when the cash is received.
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10. 10. Verifiable Objective Concept:
Accounting should be free from personal bias and should
be recorded in an objective manner.
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11. Accounting Conventions are the common practices
which are universally followed in recording &
representing accounting information of business.
It helps in comparing accounting data of different
business or of same units for different periods.
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12.  Financial statements make complete, adequate and fair
disclosure of all information.
Information must be relevant & significant to users of
accounting service.
Material facts which helps in appraisal of operating and
financial performance must be disclosed.
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13.  Accounting practices once selected and adopted should
be applied consistently year after year.
 Helps in better understanding of accounting
information.
 Make it comparable with that of previous years.
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14. If management anticipates loss, provision should be
made for loss.
If it anticipates profit, it should not be recorded in the
book of accounts.
Record when realized.
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15. Refers to the relative importance of an item or an event.
Items having significant economic effect on business.
Should be disclosed in the financial statement.
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16. THANK YOU
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