FINANCIAL ACCOUNTING SSS2 SECOND TERM              

WEEK 8

ACCOUNTING CONCEPTS AND CONVENTIONS

Contents

ACCOUNTING CONCEPTS AND CONVENTIONS

Accounting concepts and conventions are a set of rules or principles that are taken into consideration in the preparation of financial statements. The financial statements include Trading, profit and loss account as well as the balance sheet. For uniformity of purpose, generally accepted rules or principles in the form of assumption for its preparation and presentation are adopted, and these are called accounting concepts and conventions.

ACCOUNTING CONCEPTS

1. BUSINESS ENTITY CONCEPT: The rule here is that the owner and the business are treated separately. Therefore in the preparation of a financial statement, the business is recognized as a separate and distinct entity, only things that affect the business are recorded and not the wealth of the owner(s) apart from those invested.
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