Accounting Principle Vs Accounting Convention

Question 1

What does Accounting Concept refer to?

Answer 1

Fundamental principles and assumptions that underlie the preparation of financial statements

Accounting Concepts are essential for the consistency and transparency of financial reporting.

Question 2

What is the basis of Accounting Concept?

Answer 2

Logic and reason

This foundation ensures that financial statements are prepared in a systematic manner.

Question 3

Is it mandatory to follow Accounting Concepts?

Answer 3

Yes

Adherence to these concepts is required for accurate financial reporting.

Question 4

Are Accounting Concepts universal?

Answer 4

Yes, they apply to all entities

This universality helps maintain consistency across different organizations.

Question 5

What is the nature of Accounting Concepts?

Answer 5

Objective and based on evidence

This objectivity enhances the reliability of financial statements.

Question 6

What does Accounting Convention refer to?

Answer 6

Established practices and procedures that are commonly accepted and followed in accounting

Accounting conventions guide the practical application of accounting principles.

Question 7

What is the basis of Accounting Convention?

Answer 7

Tradition and custom

This means conventions may evolve over time as practices change.

Question 8

Is it mandatory to follow Accounting Conventions?

Answer 8

No, it is optional

Organizations may choose whether or not to adhere to these conventions.

Question 9

Do Accounting Conventions vary by location?

Answer 9

Yes, they may vary depending on the country or region

This variability reflects local practices and regulations.

Question 10

What is the nature of Accounting Conventions?

Answer 10

Subjective and based on judgement

This subjectivity can lead to differences in financial reporting among entities.