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PPT : Principles and Conventions
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Page 1
CPT Section A Chapter 1 Unit 2
CA. S.S.Prathap
Page 2
CPT Section A Chapter 1 Unit 2
CA. S.S.Prathap
Accounting principles are a body of
doctrines commonly associated with the
theory and procedures of accounting.
Page 3
CPT Section A Chapter 1 Unit 2
CA. S.S.Prathap
Accounting principles are a body of
doctrines commonly associated with the
theory and procedures of accounting.
Accounting
principles
should be
Based on real
assumptions
Followed
consistently
Reflect future
predictions
Informational
to users
Page 4
CPT Section A Chapter 1 Unit 2
CA. S.S.Prathap
Accounting principles are a body of
doctrines commonly associated with the
theory and procedures of accounting.
Accounting
principles
should be
Based on real
assumptions
Followed
consistently
Reflect future
predictions
Informational
to users
Accounting Convention refer to the general
agreement on the usage and practices in social or
economic life.
GAAP - Generally Accepted Accounting Principles
Page 5
CPT Section A Chapter 1 Unit 2
CA. S.S.Prathap
Accounting principles are a body of
doctrines commonly associated with the
theory and procedures of accounting.
Accounting
principles
should be
Based on real
assumptions
Followed
consistently
Reflect future
predictions
Informational
to users
Accounting Convention refer to the general
agreement on the usage and practices in social or
economic life.
GAAP - Generally Accepted Accounting Principles
Read MoreFAQs on PPT : Principles and Conventions
| 1. What are the main accounting principles and conventions I need to know for SSC CGL Tier 2? |  |
Ans. Accounting principles are fundamental rules guiding financial record-keeping, while conventions are established practices followed by accountants. Key principles include the entity concept, money measurement, and historical cost principle. Conventions include consistency, disclosure, materiality, and conservatism. Together, they ensure financial statements remain accurate, comparable, and reliable for decision-making in examinations and professional practice.
| 2. How do the accounting entity concept and business entity convention differ from each other? | |
Ans. The entity concept treats a business as separate from its owner, while the entity convention emphasises recording transactions from the organisation's perspective only. The business entity principle provides the foundational framework, whereas the convention operationalises this separation in accounting practice. Both ensure personal and business finances remain distinct, preventing confusion in financial reporting and maintaining accuracy in SSC CGL Tier 2 accounting questions.
| 3. Why is the conservation principle important in accounting, and how does it affect financial statements? | |
Ans. The conservation principle (or prudence convention) requires accountants to recognise losses immediately but delay profit recognition until certain. This prevents overstatement of assets and profits, protecting stakeholders from misleading information. By applying conservative valuation methods and accounting estimates, financial statements become more trustworthy and realistic, which is why SSC CGL Tier 2 emphasises this principle heavily in numerical problems and case studies involving asset valuation and liability assessment.
| 4. What's the difference between the going concern assumption and the accrual concept in accounting? | |
Ans. The going concern assumption presumes a business will operate indefinitely, justifying asset valuation at cost rather than liquidation value. The accrual concept records transactions when they occur, regardless of cash flow timing. While going concern affects how assets appear on balance sheets, accrual ensures revenue and expenses match reporting periods accurately. Both principles work together to create meaningful financial statements for SSC CGL Tier 2 candidates analysing company accounts.
| 5. How do I remember all the accounting principles and conventions for my SSC CGL Tier 2 exams? | |
Ans. Use memory aids, mnemonics, and visual study tools to organise principles systematically. Refer to mind maps and flashcards available on EduRev that categorise principles, conventions, and key distinctions clearly. Create comparison charts grouping similar concepts-such as entity vs. business entity convention, or accrual vs. cash basis. Regular revision through MCQ tests and worksheets strengthens retention and builds confidence in applying these fundamental accounting concepts under exam pressure.
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Apr 18, 2026 Last updated
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