![]() ![]() So, to achieve that purpose, standards were invented that were uniform, scientific, and easily adaptable for all. These rules have evolved over a long period of time they represent the collective wisdom of accounting history.Īdherence to these rules ensures that accounting records are maintained on more or less the same basis by all business units and can, therefore, be relied upon and used for comparison.Īs a business language, accounting must be simple to understand for the people who own or manage the company’s affairs. In this fact-namely, acceptance by all concerned-lies the importance of adhering to these accounting concepts or assumptions.Ĭommon accounting concepts are given below:Īccounting principles are the rules that have emerged from the use of basic accounting concepts. For this reason, we assume that money has a stable value.Įveryone accepts this assumption and all accounting records and statements prepared on the basis of this assumption are generally accepted by all concerned. However, it would be tedious and of no great value to keep amending every company’s accounting records on the basis of an ever-changing value of the monetary unit. We all know that this is not really correct because inflation continuously erodes the value of monetary units. They are the things that we assume but, in certain cases, that may not be correct.įor example, one of the most common assumptions is that money has a stable value. Accounting concepts are basic assumptions on which we base our accounting records. ![]()
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