Do you know that accounting concepts are the foundation of the accounting system? Accounting is a subject that students choose as a major in their university life. Indeed, accounting is an art and science. Students who choose this subject in their educational career come across many projects, assignments, and quizzes on multiple accounting concepts. It became hard for students to understand such difficult and vast concepts of accounting. Students must need to understand the accounting concepts to understand the foundation of the accounting system. Accountants prepare and maintain accounting records with the help of accounting concepts.
Due to the difficulty in understanding the various complex accounting terms, students suffer a lot. They find it hard to grasp the concepts and terminology of accounting. That is why they look for someone who can help them with accounting homework. If you are struggling with your accounting assignments and finding it hard to grasp the accounting concepts, you can get help from online professionals accounting homework helpers. Getting help from accounting homework help services can improve your academic grades and give you a better understanding of the subject matter.
What are the Basic Accounting Concepts?
There are numerous accounting concepts that you need to understand to have a good grip on the subject matter. Here in this blog, I will discuss the 11 accounting concepts that students need to understand to have a better understanding of the subject matter.
Business Entity Concept
This concept states that the business and its owners are two separate entities for accounting purposes. As a result, its owner’s business and personal transactions are distinct from each other. For example, when the owner invests money in the business, it is recorded as the owner’s liability. Similarly, when the owner withdraws cash or goods from the business for personal use, it is not considered a business expense.
In other words, this accounting concept distinguishes the company from its owner. In accounting terms, the owner and the business are two distinct entities. It will help the accountant in distinguishing between business and personal transactions.
Money Measurement Concept
Money measurement is an accounting concept that assumes that all business transactions must be conducted in terms of money. For example, the sale of goods worth Rs.300000, the purchase of raw materials worth Rs.200000, the rent of Rs.20000, should be expressed in terms of money in the books of accounts.
Here are the points that highlight the importance of the money measurements concept.
According to this accounting concept, only financial transactions have a place in accounting. Thus, the accounting will only record business activities that can be expressed in monetary terms. Any other transaction, no matter how significant, will be excluded from the financial statements.
- This accounting concept guides accountants on which transaction has to record and which has not.
- It aids in recording business transactions consistently.
- It will be easier to understand the business accounts if all business transactions will be recorded in monetary value.
Going Concern Concept- One of the Focal Accounting Concepts
The going concern concept assumes that a company will continue to exist indefinitely. This implies that the company will not have to sell its assets anytime soon and will be able to meet all of its obligations. It is a significant accounting concept that focuses on justifying the non-liquidation asset valuation. This is an important accounting assumption because it provides a foundation for displaying the value of assets in the balance sheet; for example, a company purchases a plant and machinery for Rs.200,000 with a life span of 10 years.
Accounting Period Concept
All transactions are recorded in the books of accounts under the assumption that profits from these transactions will be calculated over a specified period. It is known as the accounting period concept.
According to this concept, every company uses a specific period to complete an accounting cycle. Accountants mention accounting year in financial statements. As a result, an organization’s indefinite life is divided into shorter, generally equal periods. This facilitates performance comparison and provides stakeholders with timely information.
Accounting Cost Concept
According to the accounting cost concept, add record assets in the books of accounts at their purchase price, which includes all the costs such as cost of acquisition, cost of transportation, and installation cost, rather than their market price. It means that you should record fixed assets such as buildings, plants, machinery, and furniture on the books of accounts at the purchase price.
- It aids in the calculation of depreciation on fixed assets.
- The cost concept says that if a business entity does not pay anything, don’t record it in books of accounts.
Dual Aspect Concept- One of the Golden Accounting Concepts
The dual aspect concept is a foundation of accounting. It is one of the golden accounting concepts that states that every transaction has a dual aspect. That means it affects two accounts on opposing sides. Also, it implies that both aspects of the transaction should be recorded in the books of accounts. For example, goods purchased for cash have two components: cash given and goods received.
Assume the company purchases a Rs 20,000/- asset. As a result, the company’s fixed assets will increase by 20,000/-. However, the bank or cash balance will be reduced by 20,000/-. As a result, the transaction will have two accounting effects. In addition, the Balance Sheet will remain balanced.
According to this concept, record the revenue from any business transaction in accounting records only when it occurs. The term “realization” refers to the establishment of a legal right to receive money. Now, revenue is the cash inflow that comes from the sale of goods or services for a business. In other words, according to this rule, record the profit when earned.
According to the accrual concept, revenue will occur when it becomes receivable. Whether you receive cash or not, you should record expenses when they become payable.
This accounting concept states that you should recognize revenues when you earn an asset and recognize the expense when you consume an asset. Moreover, this concept implies that a company’s revenue, profits, and losses may occur in amounts that differ from what would occur based on cash received from customers or cash paid to suppliers and employees.
Matching Concept-One of the Crucial Accounting Concepts
According to the matching concept, the revenue and the expenses incurred to earn the revenue must be from the same accounting period. So, once the revenue will occur, it must be allocated to the appropriate accounting period. The realization concept is followed by the matching accounting concept. According to this concept, the revenue will occur first and then match the cost of the revenue. The matching concept specifies how expenses and revenue should match to calculate the exact profit or loss for a given period.
This is one of the accounting concepts that encourage accounting prudence. According to this concept, don’t include profit in financial statements of accounts until it is realized. However, you can include the losses, even those not realized but have a remote possibility of occurring. Accounting conservatism is a financial reporting principle that requires accountants to prepare financial statements with caution with proper account entry verification.
According to the matching concept, the revenue and the expenses incurred to earn the revenue must be from the same accounting period. So, once the revenue is realized, it must be allocated to the appropriate accounting period. The materiality concept requires that all material facts be included in the accounting process. However, immaterial facts and insignificant information should be avoided. If the information has the potential to influence a person’s investment decision, it is unquestionably a material fact.
Finding Hard to Grasp Accounting Concepts? Seek Help from Accounting Homework Help Services
Until now, I have discussed 11 accounting concepts that you have to understand to get a grip on accounting. Sometimes students who choose accounting as a major subject find it difficult to understand the complicated principles and rules of accounting. That is why they look for some expert guidance. Indeed, accounting is a complicated subject with lots of terminologies and concepts. If you are still unable to understand accounting, you need to seek accounting homework help from online professional writers. Online accounting assignment help services are offering homework assistance to students struggling with academic burdens. If you are going through a similar situation, seek accounting assignment help from experienced and qualified accountants.
Online professional academic writers are available in the market, offering assignment assistance to the students. They know how to craft a high-quality paper that can impress your professor. So, hire a professional writer and say bye to your academic burden.
Are you struggling to write an accounting assignment? Do you find it hard to understand the accounting concepts? We know that students struggle with their academic burden. They look for someone who can help them in completing their assignments. No doubt, accounting is difficult and consists of many concepts, terminologies, and theories. That is why students find it tedious to have a grip on accounting concepts. Earlier in this blog, I have discussed the 11 accounting concepts that can help you understand accounting better. You can refer to the guide mentioned earlier to have a clearer understanding of the subject matter. But still, if you are not comfortable composing your accounting assignment yourself, hire an accounting homework help service to get your work and say bye to your academic pressure.