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Accounting Concepts - Coggle Diagram
Accounting Concepts
Dual Aspect Concept
Every transaction have debit and credit
Assets = Liabilities + Capital
Based on double entry system
Going Concern Concept
Allows expenses and revenue to be allocated
Allows fixed assets to be written off
Assume business will continue in future
Accrual Concept
Recognize revenue as the goods are delivered
Eg: Accrued/ Prepaid expenses/ revenue
Recognize expenses as they happen
Business Entity Concept
Separate business from owner
All form of business must follow
Consistency Concept
Same method should be followed over the years
Example:
Method to value inventory
Method to calculate depreciation
Materiality Concept
Can affect the economic decision of a user
A GAAP relating to the importance of account or transaction
Accounting Period Concept
Time period reflected by financial statements
Types of time peiord
Weekly
Monthly
Quarterly
Daily
Yearly
Matching Concept
Revenue and expenses incurred belong to same accounting period
Net income = revenue earned-expenses incurred
Conservatism Concept
Ensure company earn more profit
Accounting should be fair and reasonable
Money Measurement Concept
Accounting only record transaction which have monetary value
Eg: RM
Full Disclosure Concept
Provide information that is sufficient importance to influence judgement and decisions
Cost Concept
Relevant to business operation and decisions can be grouped on the basis of their nature and propose
Recognition Concept
Revenue Recognition = Revenue earned + Revenue realized