Accounting Concepts, Principles and Procedures

The revenues of a particular period must match with the expenses of that period.

This concept also required allocation of cost on different accounting periods.

Revenues should only be recorded if there is reasonable certainty about its realization.

The comparison of incomes and expenses of a period gives the net profit or loss for that particular period.

Efficiency and effectiveness of operations

Controls related to the reliability of financial reporting

Controls over classes of transactions

Auditors are equally concerned about each of the issues

Business and owner are treated as separate entities

Personal affairs of the owner should not be considered

Business should not be dissolved in the near future

This concept is followed in all types of businesses

Assets = Liabilities – Stockholder’s equity

Assets + Liabilities = Stockholder’s equity

Assets + Stockholder’s equity = Liabilities

Assets = Liabilities + Stockholder’s equity

ICQs and walkthrough tests

ICQs and judgment samples

ICQs and random samples

ICQs and ICEC

International Financial Reporting Standards

Local Pronouncements/Legislations

Financial Accounting Standards Board

All of the above

The concept provides the basis for the formation of the accounting equation.

This concept refuses allocation of cost on different accounting periods.

This concept discusses the issue of the realization of profit.

This concept assumes that the business will operate for a long period of time and will not be dissolved in the near future.