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Theory Base of Accounting, AS and IFRS
Chapter 3
Theory Base of Accounting,
Accounting Standards and 
International Financial Reporting Standards 
(IFRS)
1
Page 2


Theory Base of Accounting, AS and IFRS
Chapter 3
Theory Base of Accounting,
Accounting Standards and 
International Financial Reporting Standards 
(IFRS)
1
Theory Base of Accounting, AS and IFRS
Learning Objectives
This chapter enables you to understand:
1. Meaning and Nature of Accounting Principles
2. Features of Accounting Principles
3. Necessity of Accounting Principles
4. Fundamental Accounting Assumptions
a. Going Concern
b. Consistency 
c. Accrual
2
Page 3


Theory Base of Accounting, AS and IFRS
Chapter 3
Theory Base of Accounting,
Accounting Standards and 
International Financial Reporting Standards 
(IFRS)
1
Theory Base of Accounting, AS and IFRS
Learning Objectives
This chapter enables you to understand:
1. Meaning and Nature of Accounting Principles
2. Features of Accounting Principles
3. Necessity of Accounting Principles
4. Fundamental Accounting Assumptions
a. Going Concern
b. Consistency 
c. Accrual
2
Theory Base of Accounting, AS and IFRS
Learning Objectives
5. Accounting Principles or Concepts
a. Accounting Entity b. Money Measurement
c. Accounting Period d. Full Disclosure
e. Materiality f. Prudence or Conservatism 
g. Cost h. Matching
i.  Dual Aspect j. Revenue Recognition 
(Realisation) 
k. Verifiable Objective
3
Page 4


Theory Base of Accounting, AS and IFRS
Chapter 3
Theory Base of Accounting,
Accounting Standards and 
International Financial Reporting Standards 
(IFRS)
1
Theory Base of Accounting, AS and IFRS
Learning Objectives
This chapter enables you to understand:
1. Meaning and Nature of Accounting Principles
2. Features of Accounting Principles
3. Necessity of Accounting Principles
4. Fundamental Accounting Assumptions
a. Going Concern
b. Consistency 
c. Accrual
2
Theory Base of Accounting, AS and IFRS
Learning Objectives
5. Accounting Principles or Concepts
a. Accounting Entity b. Money Measurement
c. Accounting Period d. Full Disclosure
e. Materiality f. Prudence or Conservatism 
g. Cost h. Matching
i.  Dual Aspect j. Revenue Recognition 
(Realisation) 
k. Verifiable Objective
3
Theory Base of Accounting, AS and IFRS
Learning Objectives
6. Accounting Standards
a. Meaning of Accounting Standards
b. Nature of Accounting Standards
c. Utility of Accounting Standards
d. Accounting Standards issued by the Accounting
Standards Board of the Institute of Chartered
Accountants of India
7. IFRS (International Financial Reporting 
Standards)
4
Page 5


Theory Base of Accounting, AS and IFRS
Chapter 3
Theory Base of Accounting,
Accounting Standards and 
International Financial Reporting Standards 
(IFRS)
1
Theory Base of Accounting, AS and IFRS
Learning Objectives
This chapter enables you to understand:
1. Meaning and Nature of Accounting Principles
2. Features of Accounting Principles
3. Necessity of Accounting Principles
4. Fundamental Accounting Assumptions
a. Going Concern
b. Consistency 
c. Accrual
2
Theory Base of Accounting, AS and IFRS
Learning Objectives
5. Accounting Principles or Concepts
a. Accounting Entity b. Money Measurement
c. Accounting Period d. Full Disclosure
e. Materiality f. Prudence or Conservatism 
g. Cost h. Matching
i.  Dual Aspect j. Revenue Recognition 
(Realisation) 
k. Verifiable Objective
3
Theory Base of Accounting, AS and IFRS
Learning Objectives
6. Accounting Standards
a. Meaning of Accounting Standards
b. Nature of Accounting Standards
c. Utility of Accounting Standards
d. Accounting Standards issued by the Accounting
Standards Board of the Institute of Chartered
Accountants of India
7. IFRS (International Financial Reporting 
Standards)
4
Theory Base of Accounting, AS and IFRS
MEANING AND NATURE OF ACCOUNTING PRINCIPLES
"Principles of Accounting are the general law or rule
adopted or proposed as a guide to action, a settled
ground or basis of conduct or practice."
-The American Institute of Certified Public Accountants
Accounting Principles are the rules of action or
conduct adopted by accountants universally while
recording accounting transactions. They are the
norms or rules which are followed in treating various
items of assets, liabilities, expenses, incomes, etc.
5
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FAQs on PPT - Theory Base of Accounting - Accountancy Class 11 - Commerce

1. What is the theory base of accounting?
Ans. The theory base of accounting refers to the set of principles, concepts, and assumptions that guide the preparation and presentation of financial statements. It provides a framework for recording, analyzing, and reporting financial information in a consistent and reliable manner.
2. What are the main components of the theory base of accounting?
Ans. The main components of the theory base of accounting include the conceptual framework, which sets out the objectives, qualitative characteristics, and elements of financial statements. Additionally, accounting standards and principles, such as the Generally Accepted Accounting Principles (GAAP) or International Financial Reporting Standards (IFRS), form an integral part of the theory base.
3. Why is having a theory base of accounting important?
Ans. Having a theory base of accounting is important because it provides a common set of guidelines and standards that ensure consistency and comparability in financial reporting. It helps users of financial statements to understand and interpret the information presented, make informed decisions, and assess the financial performance and position of an entity.
4. How does the theory base of accounting impact financial reporting?
Ans. The theory base of accounting impacts financial reporting by providing a framework for the preparation, measurement, and presentation of financial information. It guides the selection and application of accounting policies, the recognition and valuation of assets, liabilities, income, and expenses, and the disclosure requirements for relevant information.
5. Can the theory base of accounting change over time?
Ans. Yes, the theory base of accounting can change over time. As the business environment evolves and new challenges arise, accounting standard-setting bodies may revise or update the existing theory base to ensure its relevance and effectiveness. Changes in technology, globalization, and regulatory requirements can also influence the development of the theory base of accounting.
82 videos|105 docs|42 tests
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