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Lecture

Accounting Concepts

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School
Department
Business
Course
BUSI 1010U
Professor
Baglay
Semester
Fall

Description
Accounting Concepts Four important accounting concepts underpin the preparation of any set of accounts: Going Accountants assume, unless there is evidence to the contrary, that a Concern company is not going broke. This has important implications for the valuation of assets and liabilities. Transactions and valuation methods are treated the same way from year to Consistency year, or period to period. Users of accounts can, therefore, make more meaningful comparisons of financial performance from year to year. Where accounting policies are changed, companies are required to disclose this fact and explain the impact of any change. Prudence Profits are not recognised until a sale has been completed. In addition, a cautious view is taken for future problems and costs of the business (the are "provided for" in the accounts" as soon as their is a reasonable chance that such costs will be incurred in the future. Matching (or Income should be properly "matched" with the expenses of a given "Accruals") accounting period. Key Characteristics of Accounting Information There is general agreement that, before it can be regarded as useful in satisfying the needs of various user groups, accounting information should satisfy the following criteria: Criteria What it means for the preparation of accounting information Understandability T
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