ACCOUNTING

PRINCIPLES
•ACCOUNTING CONCEPTS
•ACCOUNTING CONVENTIONS
•SYSTEM OF BOOK-KEEPING
•SYSTEM OF ACCOUNTING
 Meaning
Accounting Principles are the rules of
action or conduct which are adopted by
the accountants universally while
recording accounting transactions.
 Accounting Concepts

It refers to the basic assumptions, rules

& principles which work as the basis
of recording of business transactions &
preparing accounts.
 Concepts
Business Entity Concept

Going Concern Concept

Money Measurement Concept

Cost Concept

Accounting Period Concept

Dual Aspect Concept

 CONTD…
Realization Concept

Accrual Concept

Matching Concept
 Accounting Conventions

It includes those customs or traditions

which guide the accountant while
preparing the accounting statements.
 Conventions

Convention of Consistency

Convention of Full Disclosure

Convention of Materiality

Convention of Conservatism
 Accounting Standards

The set of guidelines issued by the accounting body that

are followed for preparation and presentation of

financial statements.
Their main objective is to bring uniformity in
accounting practices.
They help auditors in auditing & ensures reliability.
 System of Accounting

Cash System of Accounting: accounting entries

are made only when cash is received or paid.

Accrual System of accounting: accounting

entries are made on the basis of amounts

becoming due whether received or not paid or
not.
 System of Book-keeping

Single Entry System: its an incomplete

double entry system where only essential

records are only maintained.
Double Entry System: two-fold aspect of

the transaction is recorded

 Accounting Equations
Assets = Equities
A starts business with a capital of Rs 10,000.
A purchases furniture for cash worth Rs 2,000.
A purchases goods from B Rs 5,000 on credit.
He sells for cash goods costing Rs 3,000 for Rs
4,000& Rs 1,000 for Rs 1500 on credit to P.
A withdraws cash of Rs 1,000 & goods of Rs 200
for his personal use.