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Accounting Concepts

            
             An Accounting Entity is an economic activity owned by one or more owners, Under this concept the business affair of the organization are kept serparte from the affair of the owners and other organizations. This means that when the owners of the business take cash or goods for their own use they must record it as Drawings. In the accounting records of the entity.
             Monetary Measurment.
             Money values are used in an accounting system to record all financial events affecting the entity. Everything is measured in dollar terms. Users of accounting information must understand that only things that can be valued this way are represented. E.g the value of inventory is include but the state of the owner's health is not include.
             Historical Cost.
             The historical Cost Concept means that transactions are recorded at the dollar value of money at the time they took place. For example a machine is recorded at the original cost when it was purchased. The machine may increase or decrease in value but the historical cost remains in the accounts, reduced only by depreciation . Some assets, such as animals born on a farm are not purchased, They can still be recored in the accounts of an entity but must be given a dollar value and the basis of this valuation must be recorded.
             The going concern.
             The going concern concept assumes that the business will continue to operate into the foreseeable future - e.g fixed assets are valued at their historical cost not at market value than is shown in the accounts.
             The Accounting Period.
             The accounting Period concept Is used to divide the life of the business into equal lengths of time. This is often one month for management accounts and one year for accounting to shareholders and government agencies.
             Accrual Accounting.
             The Accrual Accounting concept means that transctions are recognised when they occur and are reported in the accounting period to which they relate. This differs from cash accounting where only transactions resulting in cash flows are recorded.


Essays Related to Accounting Concepts

1. Operations & Accounting

... failure costs. Ways of minimizing and manipulating these costs include quality improvement and total quality management concepts, which will also be discussed later (2000, p. 712). 2.2 Inventory models As mentioned in the previous section, operations management provides the accounting field with methods of reducing and manipulating inventory-related costs through various methods and techniques. The ... -time purchasing if they practiced just-in-time manufacturing as well. This applies to the ongoing theme of the relation between accounting and operations management because costs are bei...

  • Word Count: 3560
  • Approx Pages: 14
  • Has Bibliography
  • Grade Level: Undergraduate

2. Tax Effect Accounting

... which represents the future tax consequences that will result from recovering the value of the asset. The deferred tax liability arising satisfies the definition of a liability under Statement of Accounting Concepts SAC 4 "Definition and Recognition of the Elements of Financial Statement" as it represents the future sacrifices of economic benefits which the entity is presently obliged to make as a ... Special circumstances: Most everyday transactions will result in a similar answer under the revised standard, but there are several points organisations need to bear in mind. Any transaction...

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3. international accounting

... Canada try to simplify the language of accounting by publishing by uniform glossary of accounting terms. A common international accounting language with translation based on common uniform concepts rather than on words has been suggested, on the international accounting standards committee (IASC) as recognised this problem by setting international accounting standards that attempt to define carefully the ... 2000, EU laws should not stop harmonisation www.accountancyage.com Perry,M. , 2000, Harmonisation could reduce quality of standards www.accountancyage.com Roberts,C., Weetman,P.,Gord...

  • Word Count: 2830
  • Approx Pages: 11
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4. TAX EFFECT ACCOUNTING

... which represents the future tax consequences that will result from recovering the value of the asset. The deferred tax liability arising satisfies the definition of a liability under Statement of Accounting Concepts SAC 4 "Definition and Recognition of the Elements of Financial Statement" as it represents the future sacrifices of economic benefits which the entity is presently obliged to make as a ... Special circumstances: Most everyday transactions will result in a similar answer under the revised standard, but there are several points organisations need to bear in mind. Any transaction...

  • Word Count: 2774
  • Approx Pages: 11
  • Grade Level: Undergraduate

5. Tax Effect Accounting

... which represents the future tax consequences that will result from recovering the value of the asset. The deferred tax liability arising satisfies the definition of a liability under Statement of Accounting Concepts SAC 4 "Definition and Recognition of the Elements of Financial Statement" as it represents the future sacrifices of economic benefits which the entity is presently obliged to make as a ... Special circumstances: Most everyday transactions will result in a similar answer under the revised standard, but there are several points organisations need to bear in mind. Any transaction...

  • Word Count: 2770
  • Approx Pages: 11
  • Has Bibliography
  • Grade Level: Undergraduate

6. Management Accounting - Measue Of Qualitive Plans And Controls

... are vital to the overall assessment of any organisation. A method of measuring the qualitative aspects of a manager's performance is known as "responsibility accounting". Most organisations are divided into smaller sub units or departments. Responsibility accounting refers to "tools and concepts used to measure the performance of an organisation's people and sub units." To begin with, each department is assigned a responsibility center. There are ... to reach the common goal of the organisation. To achieve this task, managers use information provided a form of accounting known as "Respo...

  • Word Count: 1429
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7. Abstract Accounting

... operations. "As product life cycles shortened, and as more cost must be incurred before production begins [e.g., R&D], ... traditional financial measures such as periodic earnings and accounting ROI become less useful measures of corporate performance." Optimal cost management systems should: allocate costs for periodic financial statements; facilitate process control; compute product costs; ... more expeditious to isolate and improve this key component, than to undertake a full Deming systemic evaluation. Ruhl isolates a subset of constraints in his description of throughput accounting...

  • Word Count: 5316
  • Approx Pages: 21
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  • Grade Level: Undergraduate

8. Envrionmental Accounting

... 's productivity by making sure they have enough rest. Since Chernobyl was the most expensive environmental disasters that have happened to date, environmental accountants came up with concepts to help to start cover the costs of Chernobyl and any other disasters that may occur. Since the Chernobyl disaster, there has been a lot of discussion ... 1992). Gorz, A. "Critique of Economic reason." Verso London. (1989) Yankelovich, D. "Corporate priorities: A continuing study of the new demands of business." Stanford, Ct. (1972). Gray, R.H. "Social and Environmental Accounting Research. (GEC Pro...

  • Word Count: 3332
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9. Historical Perspective of Management Accounting

... made by others. They start from the very beginning exploring as far back as the 18th century by discussing how textile mills started recording in their books accounting information. Accounting emerged as a discipline in the early 18th century, but their underlying purpose was not for internal uses but it was created so that stakeholders could gauge ... World War II itself. As conglomerate firms assayed increasingly complex production efforts, a corresponding increased in the need for evaluation of internal efficiencies emerged. This represents another management accounting development mil...

  • Word Count: 3169
  • Approx Pages: 13
  • Has Bibliography
  • Grade Level: Undergraduate

10. Definition of Accounting

... the evolutionary pattern of social developments. We can distinguish four phases of accounting: Stewardship accounting. The name for stewardship accounting comes from the fact that wealthy man used to employ "stewards" to manage their property. Essentially, stewardship accounting involved the orderly recording of business transactions. These concepts originate from the merchants of the Italian City States. Glautier & Underdown (1991 ... ) point out that the main principles of the Italian Method were set out by Luca Pacioli in his famous work Summa de Arithmetica, Geometrica, Proportioni e...

  • Word Count: 1977
  • Approx Pages: 8
  • Has Bibliography
  • Grade Level: Undergraduate

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