Concepts of Financial Accounting:-
The concepts of financial accounting are as follow:
A. Separate Entity
This concept describes that the businessman is dissimilar from business. So if X starts his business termed as X and Sons, X as a person shall be dissimilar from his firm, that is X and Sons. In fact in Law, separate entity concept is identified only in the case of joint stock companies registered within Companies Act, 1956. In case of partnerships and sole proprietorship business, separate entity concept is not identified within Law. Though in accounting, separate entity concept is identified and the accounting entries are passed in the books of the business and not in the books of the proprietor that type of. So when X initiates his business and invests his own money as capital, it is displayed as liability in the Balance Sheet of the business. Alternatively, if the proprietor acquires any private expenditure from the resources of the business, it is displayed as recoverable in the books of accounts of the business. So the principle of separate entity is applied in practice.
B. Double Entry
This principle can be termed as 'Heart' of the whole accounting mechanism. The meaning of double entry is 'a transaction is recorded at two places in the books of accounts, the cause being that any transaction has two fold effects and therefore it is to be recorded at two places'. The following instance will make clear the point.
1. The cash goes out and goods come in, if goods are purchased for cash. So one influence is the cash going out and the second influence is that goods come in.
2. While goods are sold for cash, the first influence is that the cash comes in and the second influence is that the goods are going out.
3. In case of credit transactions such as purchase of goods, one influence is that goods come in and the person from whom the goods are purchased becomes the creditor of the business. So in double entry system, each and every transaction has the two fold effects. There is other system of recording the transactions that is termed as single entry system. In single entry system, each transaction is recorded only one time and therefore no double effect is provided.
There are extremely few organizations in which single entry system is still implemented. Though, the double entry system is now being accepted in all places.
C. Money Measurement Concept
Other significant concept of financial accounting is the money measurement concept. The meaning of this concept is that only the transactions that are capable of being expressed in monetary terms will be kept in the books of accounts. In other words, transactions that cannot be expressed in monetary terms cannot be kept in the books of accounts. For instance, in books of accounts monetary value of assets or goods will be kept and not the quantity of the same. Furniture will not be kept like 1 table or 12 chairs or 100 cupboards, but the values of the same in monetary terms will be kept.
The meaning of this principle is that items such as Human Resources will not be kept in the books of accounts because they cannot be converted into monetary terms. This principle is significant because it brings uniformity in recording transactions in the books of accounts.
D. Going Concern Concept
According to the Glossary of terms, International Accounting Standards, in year 1999, the definition of 'Going Concern' is as follows 'That enterprise is generally viewed like a going concern which is as continuing in operation for the predictable future. It is supposed that the enterprise has neither the intention nor the requirement of liquidation or curtailing materially the scale of its operations.' The implementation of this idea is that the financial statements, fixed assets are displayed at the cost of acquisition less depreciation accumulated up to the date of closure. The reason behind that is, it is supposed that the enterprise is going continuously for a long period of time and there is no intention to close it down in the near future. So the market values of similar are not applicable at all, the cost prices are applicable and hence the assets should be displayed at the cost value.
E. Matching Concept
Matching of costs and revenues idea is described in the International Accounting Standards 'Expenses are identified in the income statement on the source of a direct association among the costs acquired and the earnings of particular items of income. This process includes the concurrent or combined recognition of revenues and expenses which result directly and jointly from similar association or other events. Though, the application of the matching concept does not permit the recognition of items in the Balance Sheet that do not meet the definition of assets or liabilities.'
Other words, the meaning of matching concept is it is essential to periodically match the costs and revenues to observe the results of a specific period. This period is termed as accounting year. For every business it is necessary to find out the profit or loss after periodic intervals. In fact, real profit or loss can be observed only after the business is closed down. But in the previous concept we have observed that any business organization is a going concern and not probable to shut down in the near future. So it is essential to match the revenue and expenditure on periodic basis. This period is generally for one year and is termed as accounting year. In example of limited companies established within the Companies Act, 1956, 1st accounting year in case of a company can be of one and half year but consequent accounting years must be of one year duration. A business organization is free to choose the accounting year that is a calendar year can be adopted like accounting year or financial year starting from 1st April to 31st March could be an accounting year. The assessment year for income tax reason is all the time from 1st April to 31st March and therefore many organizations adopt this period like accounting year.
Latest technology based Cost Accounting Online Tutoring Assistance
Tutors, at the www.tutorsglobe.com, take pledge to provide full satisfaction and assurance in Concepts of Financial Accounting homework help via online tutoring. Students are getting 100% satisfaction by online tutors across the globe. Here you can get homework help for Concepts of Financial Accounting, project ideas and tutorials. We provide email based Concepts of Financial Accounting homework help. You can join us to ask queries 24x7 with live, experienced and qualified online tutors specialized in Concepts of Financial Accounting. Through Online Tutoring, you would be able to complete your homework or assignments at your home. Tutors at the TutorsGlobe are committed to provide the best quality online tutoring assistance for Cost Accounting homework help and assignment help services. They use their experience, as they have solved thousands of the cost accounting assignments, which may help you to solve your complex issues of Concepts of Financial Accounting. TutorsGlobe assure for the best quality compliance to your homework. Compromise with quality is not in our dictionary. If we feel that we are not able to provide the homework help as per the deadline or given instruction by the student, we refund the money of the student without any delay.
Methodology Used In Job Costing - It is essential to recognize the costs related with the job and represent it in the form of job cost sheet for showing several types of costs.
Theory and lecture notes of How to find Global Deadlocks all along with the key concepts of how to find global deadlocks, lock management pragmatics, local deadlock detector. Tutorsglobe offers homework help, assignment help and tutor’s assistance on How to find Global Deadlocks.
build up the layout of a lap winding for a 3 phase ac machine comprising 4 pole and 24 slots. there are 2 coil sides per slot.
Schrodinger Equation tutorial all along with the key concepts of Derivation of the schrodinger equation, Interpretation of the equation and its solutions
tutorsglobe.com chemical agents assignment help-homework help by online control of microorganisms tutors
tutorsglobe.com classification of algae assignment help-homework help by online algae tutors
Theory and lecture notes of Impedance and Resistive-Capacitive Impedance in AC Circuits all along with the key concepts of Impedance, Resistive-Capacitive, Rationalising and Combined Resistive-Inductive Impedance. Tutorsglobe offers homework help, assignment help and tutor’s assistance on the Concept of Impedance and Resistive-Capacitive Impedance.
www.tutorsglobe.com offers polymorphism homework help, assignment help, case study, writing homework help, online tutoring assistance by computer science tutors.
www.tutorsglobe.com offers reactions at the a-carbon homework help, reactions at the a-carbon assignment help, online tutoring assistance, organic chemistry solutions by online qualified tutor's help.
tutorsglobe.com contact process assignment help-homework help by online chemical equilibrium tutors
tutorsglobe.com change of electron affinity along a period assignment help-homework help by online electron affinity tutors
tutorsglobe.com puberty assignment help-homework help by online functioning of male reproductive system tutors
Magnetic Properties of Matter tutorial all along with the key concepts of Magnetic Dipoles, Magnetization and Susceptibility, Diamagnetism, Paramagnetism, Ferromagnetism and Antiferromagnetism
other properties of liquids tutorial all along with the key concepts of vaporization, differences between evaporation and boiling, trouton's rule, liquid crystals and liquid crystal phases
www.tutorsglobe.com offers software design homework help, assignment help, case study, writing homework help, online tutoring assistance by computer science tutors.
1941924
Questions Asked
3689
Tutors
1440598
Questions Answered
Start Excelling in your courses, Ask an Expert and get answers for your homework and assignments!!