Page 155 - DCOM409_CONTEMPORARY_ACCOUNTING

Contemporary Accounting Neha Tikoo, Lovely Professional University

Notes Unit 13 : Critical Evaluation of Principles and Practices

CONTENTS
Objectives
Introduction
13.1 Meaning and Concept of Accounting Principles
13.2 Analysis of Accounting Principles and Practices
13.2.1 The Money Measurement Concept
13.2.2 Entity Concept

13.2.3 The Going Concern Concept
13.2.4 The Cost Concept
13.2.5 The Dual Aspect Concept
13.2.6 The Accounting Period Concept
13.2.7 The Conservatism Concept
13.2.8 The Realisation Concept
13.2.9 The Matching Concept
13.2.10 The Consistency Concept
13.2.11 The Materiality Concept

13.2.12 The Objectivity Concept
13.3 Summary
13.4 Keywords
13.5 Review Questions
13.6 Further Readings

Objectives

After studying this unit, you will be able to:
Explain the concept of accounting principles
Evaluate the accounting principles and practices

Introduction

Externally communicated accounting information must be prepared in accordance with
accounting standards that are understood by both the senders and the users of that information.
These standards are known as Generally Accepted Accounting Principles (GAAP) and provide
the general framework for determining what information is included in financial statements
and how this information is to be presented. Since accounting is a service activity, these principles
reflect the society needs and not those of accountants or any other single constituency. These are
the guidelines for measurement and presentation of accounting information and are used by
professional accountants in preparing accounting information and reports.

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