Accounting Concepts and Characteristics of Financial Reports

Accounting for business

Table of Contents
Introduction......................................................................................................................................1
Accounting concepts....................................................................................................................1
Characteristics of financial reports..............................................................................................3
Conclusion.......................................................................................................................................4
References........................................................................................................................................4
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Introduction
Accounting for business represents systematically recording analysing and interpreting and the
presentation of financial information of the company (Hsieh and et.al 2018). Business accounting
also collects differential information which is based on the activities of the business. This report
provides accounting concept which is used for the preparation of financial statements. Along
with the characteristics of financial reports is being mentioned in this report.
Accounting concepts
Accounting concepts refers to set of general rules and guidelines when they need to deal any
accounting situation (Zeff and et.al 2020). In other words accounting concepts are rules
guidelines assumptions and parameters which used for accounting operations. They are popularly
known as Accounting Principles which represents fundamental of preparing financial statements.
Financial statements
Financial statements provide formal records of all the financial activities of the business.
Financial statements used to convey the overall financial position and health of the organisation.
In short financial statements are referred as an written records for the business activities. The
major reason behind preparing financial statement is that is used to provide all the information
about income and expenditure of the company.
There are major five accounting concepts which used for the preparation of financial statements.
Money Measurement Concept
Organisation can only do accounting for those items which can be expressed in the terms of
money. Money has one of the biggest advantages that it is beneficial and it can be used as a
common denominator which represent all the resources of the company in the terms of money.
But all the resources are not capable of measured in the terms of money so they will not include
in the balance sheet (Christ and et.al 2018). Money Measurement Concept work on this
parameter and therefore there are some limits of this concept to prepare accounting reports
because it measured only those items which can be expressed in monetary terms.
Going concern concept
This concept also works on assumption that the business will never stop their operations and will
continue for long duration. In other words it can be stated that business does not have any
intention to sell off assets (Russell and et.al 2020). When business need to sell their assets then it
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