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Accounting Concepts Explained
- Dual Aspect Concept
- Business is a "Living Entity" and owns
resources known as assets. Owners
have a claim in the form of capital
investment
- Transactions have both a credit and
debit. Liabilities represent a debit
to the company while assets
represent a credit
- Assets = Liabilities + Equity
- Business is a "Living Entity" and owns
resources known as assets. Owners
have a claim in the form of capital
investment
- Busines Entity Concept
- Business must be treated seperately as
a "Living Entity" but only applies to
Limited companies
- Records are kept of the business entity
and not the owners and must be
labelled with the busness name
- Business must be treated seperately as
a "Living Entity" but only applies to
Limited companies
- Money Measurement
Concept
- The classification of financial
records relating to which monetary
values can be attached
- Exception: Cannot put a monetary value on skill or
motivation (and as such are not recorded)
- The classification of financial
records relating to which monetary
values can be attached
- Historic Cost Concept
- Assets are recorded at there original
value and don't change until sold or
retired
- Gives a historic account of
goods that are bought and sold
- Assets are recorded at there original
value and don't change until sold or
retired
- Please dont forget to give me
credit for creating this and
leaving it shared with the
community - Murdy
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