Accounting Concepts and Qualitative Characteristics of Financial Reports

ACCOUNTING FOR
BUSINESS

Table of Contents
INTRODUCTION...........................................................................................................................3
TASK-A...........................................................................................................................................3
Accounting concepts....................................................................................................................3
TASK-B...........................................................................................................................................4
Qualitative characteristics of financial report..............................................................................4
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................1

INTRODUCTION
Accounting concepts including consistency, accrual, conservatism and various other are the
major aspect which every company consider while making and preparing their financial reports.
These concepts are the base on which financial report made. This essay will throw a light on
accounting concepts along with the features of financial reports.
TASK-A
Accounting concepts
These are the conventions and the assumptions or guidelines that are used and being
considered by companies while preparing their financial statements or accounts. These are the
base on which financial statements are being made.
Consistency:
As per this accounting concept there must be consistency with respect to accounting
methods. This means that the accounting method once adopted will remain same with the
concerne4d company (Chen and Gong, 2019). For example, if a company is using straight line
method or written down method with respect to depreciation then it must need to continue with
the same.
Conservatism:
Under this concept revenue and expenses would be treated differently. This means that
the revenue must be recognised only when there would be reasonable certainty for example
receiving of purchase order or the signed invoice. However, expenses must be recognised as
soon as they occur which also means that there would be certain chances of its occurrence
(Solichah and Fachrurrozie, 2019). This means that as per this concept there must be an early
recognition of expenses in comparison of income. This means that the company must depict the
overestimation of expenses with regard to income.
Business entity:
As per this concept the business must be treated as differently with the owner. This means
that the transaction of the owner must be different from the business. For example the personal
transaction of owner must not be debited and meet from the business credit card. This concept
will lead to have better maintenance of the books of accounts. Through this concept the