Describing Six Accounting Concepts for Efficient Business Operations

Accounting concepts

TABLE OF CONTENTS
.........................................................................................................................................................1
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Describing six accounting concepts............................................................................................3
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................6

INTRODUCTION
Accounting concepts helps any business in guiding the organization in most efficient
manner. Furthermore, various accounting concepts such as the going concern, money
measurement concepts, dual aspect concepts etc. will also be discussed in detail under this report
so that business will be able to present the true financial statements in the future.
MAIN BODY
Describing six accounting concepts
Accounting concepts are the ones that are set of general conventions that are used by
business managers in form of general guidelines when dealing with various types of accounting
situations. Some accounting concepts are been described in detail as follows:
Going concern: According to this concept all the business transactions of the company at
any particular point of time are recorded on basis of assumption of its prolonged running of the
operations without any kind of reason for discontinue of operations. This means that each and
every company that is working for achieving any kind of particular motive in the business is
expected to follow this principle for valuing it various assets (Hilorme and et.al., 2019).
Although this principle does not work for certain companies in those cases where company
includes long term assets in quarterly reports and is currently facing any kind of lawsuit in the
present time. For instance: If any company in UK closes one of its segment of the product line
than it does not mean that going concern is not followed rather it will be applicable to whole
organization.
Business entity concept: Under this concept every business entity is considered as
separate legal entity than its proprietor. Also, it states that all the affairs of the company are
related with nay activity would not be mixed up with the owner of the firm. Furthermore, all the
business transactions will be recorded in the business books in proper format and would be
shown separately under the heading of capital account. Also, this concept applies to all types of
firms such as partnership, sole trader or any company. For example : if any kind of household
expense are done by the owner than it would be treated in the name of drawings and not the
business expense (Sauerbronn and et.al., 2021). Moreover, through following such type of
concept the financial integrity is maintained and the true financial position of the company is
displayed in the end of the financial position.