Accounting concepts define the assumptions on the basis of which financial statements of a business entity are prepared.
The following are the widely accepted accounting concepts:
(a) Entity concept
(b) Money measurement concept
(c) Periodicity concept
(d) Accrual concept
(e) Matching concept
(f) Going Concern concept
(g) Cost concept
(h) Realisation concept
(i) Dual aspect concept
Accounting principles are a body of doctrines commonly associated with the theory and procedures of accounting serving as an explanation of current practices and as a guide for selection of conventions or procedures where alternatives exist.”
Accounting conventions emerge out of accounting practices, commonly known as accounting principles, adopted by various organizations over a period of time.
There are three fundamental accounting assumptions:
(i) Going Concern
Qualitative characteristics are the attributes that make the information provided in financial statements useful to users. Understandability, Relevance, Reliability, Comparability, Materiality, Faithful Representation, Substance over Form, Neutrality, Prudence, Full, fair and adequate disclosure and Completeness are the important qualitative characteristics of the financial statements.