Advertisements
Advertisements
Question
Explain any two basic concepts of accounting.
Advertisements
Solution
- The Revenue Principle: This principle suggests that revenue should be treated as realised whenever the ownership of goods changes. It is immaterial whether the revenue is received in cash or not.
- The Expense Principle: According to this principle, every cost which is incurred to earn revenue is known as expense. Costs incurred on manufacturing, selling and distributing goods and services are expenses. Expenses should be recognised whenever incurred, irrespective of whether cash is paid or not.
APPEARS IN
RELATED QUESTIONS
According to the ______ Principle of accounting, transactions are recorded on the assumption that the business will exist for an indefinite period of time.
On the basis of this concept, only those transactions are recorded in accounts which can be expressed in terms of money.
According to this principle, revenue is deemed to be realised when the goods have been transferred or the services have been rendered to a customer.
According to Business Entity Concept:
What is business entity concept of accounting?
What is meant by going concern concept of Accounting.
Every transaction has two effects. (with reference to the concept of Accounting). Give a reason either for or against.
Discuss in brief the basic principles of accounting.
Explain matching principle of accounting.
Write short note on the going concern concept.
