Accounting In Business Flashcards
Business Entity Convention
Individuals are separated from the business itself
Accounting
Recording
Reporting
Forecasting
Realisation Convention
Revenue as having been earned at the time when goods and services have been supplied or invoice issued
Dual Aspect Convention
Every transaction has double effect
Money Measurement Convention
Recognise accounting events that can be expressed in money terms
Historic Cost Convention
Historic Cost of Asset is original amount paid when acquired
Going Concern Convention
Business will continue operating for at least a year
Accruals and matching convention
Expenditure incurred in period should be accounted for in that period, irrespective paid or invoiced. Same for Revenue
Matching Convention
Revenue earned in period is matched to its expenses
Periodicity Convention
Transaction can be identified with particular period
Objectivity convention
Financial statement figures should be objective
Prudence convention
Apply caution when judging uncertainty about some transaction
Consistency Convention
Acc treatment of like items should be consistently applied from one period to next
Materiality convention
Info provider to user groups is clear. Omit items that are not significant to user
Stable Currency Convention
Monetary value of currency is stable from one period to the next
