Accounting Concepts, Principles and Conventions

What is matching concept? Why should a business concern follow this concept? Discuss.

Discuss the concept based on the premise ‘do not anticipate profits but provide for all losses’.

Complete the following: The management of a firm is remarkably incompetent, but the firm's accountants cannot take this into account while preparing books of accounts because of the _________ concept.

Complete the following: If a firm receives an order for goods, it would not be included in the sales figure owing to the _________.

Complete the following: A firm may hold stock which is heavily in demand. Consequently, the market value of this stock may be increased. Normal accounting procedure is to ignore this because of the _________.

Complete the following: The _________ concept states that if straight line method of depreciation is used in one year, then it should also be used in the next year.

Complete the following: Everything a firm owns, it also owes out to somebody. This coincidence is explained by the _________ concept.

Complete the following: The fact that a business is separate and distinguishable from its owner is best exemplified by the _________ concept.

Complete the following: If a firm believes that some of its debtors may default, it should act on this by making sure that all possible losses are recorded in the books. This is an example of the _________ concept.

The realisation concept determines when goods sent on credit to customers are to be included in the sales figure for the purpose of computing the profit or loss for the accounting period. When the goods have been:

What is the basic accounting equation?

When should revenue be recognised? Are there exceptions to the general rule?

Why is it necessary for accountants to assume that business entity will remain a going concern?