Entity and Going Concern Concept Video Lecture - Commerce

in our first session be seen the
importance of record keeping
in accountancy
my friend peter is now a bear a
different terminologies that I used in
accounting
which we have studied about in our
second session this is
the third month the fifth business and
his grocery store business
is now really going big so Peter
also needs to learn accounting in more
detail to manage its business in a
proper manner
So in this session we're going to try to
learn
the basic accounting concepts of
principle
which helpus to prepare our accounts
in a more systematic manner now
accounting reports are kept by account
all over the word for different
different businesses
that on many parties that need to know
about your business
oil company like in Bath does our credit
dead or shareholder
individuals who want to in bed
bank to provide loans to them government
agencies who collect taxes ejup
this means accounting recalled of your
business
is just not meant for you there are many
more state called us are outside parties
who need to read and understand your
accounting recall it
not support base for fans after then be
outside body
and all the company's our businesses
kept records differently
that means in different manners and
different style
it would be very difficult for this
person
are other bodies to understand these
accounting reports
so it would be much more
easier in their with certain basic
guidelines
and rules as to how everyone should
maintain their accounting reports
right
now so that there is uniformity
in maintaining the is recalling there
are 13 concept and guidelines that are
known as
generally acceptor did accounting
principal or gap which is universally
accepted now we will learn about these
basic accounting principles as we come
across
what is happening in my friend be dead
business in the third month of operation
you this month be to try to maintain his
own dick gone but when I checked it
I felt there was something wrong let's
look at his report
he's recorded his friend his salaries is
electricity
he is regarded his breath and then
maintenance bail
and he's also recorded a washing machine
but chase
all residents maintain N
bill if if the boss to be confident as a
business expand
and this washing machine is for personal
use
but he has recorded it as his acted
in his business accounts well these
accounting treatment are wrong
it is not possible to find the correct
state of affairs of his business
if he makes his personal expenses into
his business
so all affairs personal expenses are
acted for che's do not form part of its
business
activity either he should have babies
expenses from it but no
bank account or he needs to show these
payments at
Forstner an account for it separately
basically on personal matters of the
own art on totally separate from his
business big the concept in accounting
call dad the ended a concept where the
business
its confidante a separate entity from it
owner
ended the main had a distinct identity
not the boys be there had two other
businesses baby does car repairs and
X Y then bookstore he would keep
all undoubted guard separate as well
separate books about balance will be
death car repairs
step in books for XY that bookstore and
separate books for his cross restore
for the entity concept
stayed that a business if separate
entity from its
own at we think that the owners of
businesses or companies
change we also see that ownership is
passed on to their children of somebody
else but does the company
are the business closed down no
the businesses on companies dilute phase
in it own plate without own distinct
identity
in other words bet or infirmity of the
owner
me not affect the continuation of in
business so business is independent from
it
or not they are to separate entities
this was me entity concept
wealthy what happened next beat out
Bochy is
a grocery weighing machine for two
thousand dollars
which is going to benefit his business
or 10 United
so we will treat although this 2011
as his expense but guarantee or well
any business needs to be treated as
continue it because usually
every business phone companies stop
would be intention to stay in business
for a very very long period
unless there's a specified command you
do which it is mentioned
that the business is going to last only
for indefinite period
so what is important here
is this machine will be used
for 10 your and since we are going to a
doomed added business is going to be
continued for a very long period we do
not have to record the
entire amount Avonex pen in the car
interior
the entire cost for weighing machine
needs to be split
into ten years all the death toll house
in dollars will not be treated
as an expense in the yard the asset
worth but chased
only one tenth Bart that'd be X bike
cost on the comment here
will be treated as expense that is two
hundred dollars and the remaining 1000
800
will be shown as an affect at this main
machine
is an asset to the business it going to
be used for a long period
not every yard the value of this acted
will be reduced by 1:10 and then it will
be shown
under expenses here we are believing
or deal-making are we at retain that our
business is
long-term all continues and that in the
reason
we will provide for the remaining
expenses in future
so this as the emotion that the business
is going to always be going on
is known as the going concern concept
concern here is nothing but the business
that think another example supports pdf
spend huge amount for advertisement safe
six thousand dollars but
it would be beneficial for his business
at least for think feared
so only one think of the entire amount
that is one thousand dollars will be
shown as current year's a
Ben and the remaining five thousand
dollars will be shown
at aphid and it will be reduced
one fake every your now what Dave
a business needs a long term loan when
the bank relied
a long term loan if it has been
mentioned that
the business will only last for
indefinite period in their regards
what they may not provide the loan but
if a business
is that going cunt then and has provided
for payment in future
and have a good reputation only then
will the bank provide
long term loan I hope you're getting me
for the flaws the going concern concept
you always love you that a business is
going to be
continues our long-term so miss when the
end of
the June month and we learned a lot of
new pain
we came across the entity concept
and the going concern concept we will
come back and see the operations in
feeder
grocery store for the month of July and
14 more accounting principles in our
next session
so stay tuned I hope you enjoyed this we
do.
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