3. CONTENTS
A ccounting C oncepts…
Meaning…
Types…
A ccounting C onventions…
Meaning…
Types…
Difference B/w A ccounting C oncepts &

4. ACCOUNTING
CONCEPTS
In ord er to m ake the accounting language convey the
sam e m eaning to all people & to m ake it m ore
m eaningful, m ost of the accountants have agreed on a
num ber of concepts which are usually followed for
preparing the financial statem ents. These concepts
provid e a found ation for accounting process. N o
enterprise can prepare its financial statem ents without
consid ering these concepts.

6.  Business is treated as
separate & d istinct from
its m em bers
 Separate set of books
are prepared .
 Proprietor is treated as
cred itor of the business.
 For other business of
proprietor d ifferent
books are prepared .

8.  Business will continue
for a long period .
 As per this concept, fixed
assets are record ed at
their original cost &
d epreciation is charged
on these assets.
 Because of this concept,
outsid e parties enter into
long term contracts with
the enterprise.

10.  Assets are record ed at
their original price.
 This cost serves the
basis for further
accounting treatm ent
of the asset.
 Acquisition cost
relates to the past i.e.
it is known as
historical cost.

11. 6) DUAL ASPECT CONCEPT

12.  Revenue m eans the
ad d ition to the capital
as a result of business
operations.
 Revenue is realized on
three basis-:
3. Basis of cash
4. Basis of sale
5. Basis of prod uction

16. An accounting convention m ay be
d efined as a custom or generally accepted
practice which is ad opted either by
general agreem ent or com m on consent
am ong accountants.

17. 1) CONVENTION OF FULL
DICLOSURE