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Accounting Concepts - Coggle Diagram
Accounting Concepts
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11) Dual Aspect Concept
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And this concept must be recorded by an equation, that is,'assets = liabilities + equity'.
This concept means that every transaction or event must be recorded in two different accounting accounts. And this concept is a basic concept, that is, a concept that everyone must understand.
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3) Conservatism Concept
This concept mainly refers to the fact that a company must confirm whether its liabilities and expenses can be collected as soon as possible when it cannot completely guarantee what the result is. On the contrary, income and assets only need to be confirmed when they have been confirmed.
In summary, if a company is uncertain whether a loss will occur, it must first record the loss, and if it is uncertain whether a profit will occur, it does not need to record.
5） Accruals Concept
The concept is that companies must record financial statements when the company transaction event occurs, rather than when cash is received.
To give a simple example, on December 10th, a customer bought ten dozens of red wine from a wine merchant, but the customer stated that the payment would be paid in three days, so the accountant must record the transaction on December 10th.
7) Materiality Concept
The ‘important’ mentioned in this concept refers to the indispensable financial information in financial statements. Because it can directly affect the rationality and choices of users of financial statements.
In other words, all financial information that can influence the thinking of users of financial statements should be recorded in the financial statements.
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10) Cost Concept
This concept is mainly about cost analysis. Cost analysis is usually used for the scale of the enterprise, the production price of the product, the scale of the product, and so on. And the production of these products will involve financial aspects.
However, the concept of cost has also been divided into many categories.
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4) Consistency Concept
As the name suggests, this concept means that there are many methods and principles for recording accounting information, but once a company decides which method to use, it must use the same method for all subsequent accounting periods.
6) Matching Concept
The difference between this concept and the accrual concept is that the principle of the matching concept is that the accountant can only record the transaction when the payment is received.
12) Recognition Concept
The concept is to call on all the income of each enterprise to be recorded in the accounting books during the period, instead of waiting until the payment is received.