It provides the very basis of recording business transactions in the books of accounts. This concept assumes that every transaction has a dual effect, i.e. it affects two accounts in their respective opposite sides It is commonly expressed in terms of fundamental accounting equation Assets = Liabilities + Capital The knowledge of dual aspect helps … Read more
The cost concept requires that all assets are recorded in the book of accounts at their purchase price, which includes cost of acquisition, transportation, installation and making the asset ready to use. The concept of cost is historical in nature as it is something, which has been paid on the date of acquisition and does … Read more
This concept assumes that, indefinite life of business is divided into parts. These parts are known as Accounting Period. It may be of one year, six months, three months, one month, etc. But usually one year is taken as one accounting period which may be a calendar year or a financial year As per accounting … Read more
This concept states that a business firm will continue to carry on its activities for an indefinite period of time i.e. every business entity has continuity of life. it provides a basis for showing the value of assets along with depreciation in the balance sheet Significance– facilitates preparation of financial statements On the basis of … Read more
Business entity This concept is the very basis of accounting. This concept assumes that, for accounting purposes, the business enterprise and its owners are two separate independent entities. The business and personal transactions of its owner are separate. the accounting records are made in the books of accounts from the point of view of the … Read more