Accounting for Business: Concepts and Characteristics of Financial Reports

ACCOUNTING FOR
BUSINESS

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Accounting concept used while preparing financial statements.................................................3
Various characteristics of financial reports and how they are assistive to users of financial
statements....................................................................................................................................4
CONCLUSION................................................................................................................................5
REFERENCES................................................................................................................................6

INTRODUCTION
The business accounting it being defined as the recording, analysing and interpreting all
the financial statements in order to analyse profitability of business. For the business to be
successful it is essential that accounting of company is managed in proper manner so that
profitability can be assessed. The current study will evaluate the different accounting concepts
which are assistive at time of preparing the financial statements. In the end the report will
evaluate the characteristics of financial reports which assist users in evaluating and using the
correct information.
MAIN BODY
Accounting concept used while preparing financial statements
Accounting concepts are defined as some set of general convention which can be used as
the guidelines for dealing with the different accounting situation and prepare the financial
statements. The major reason for using the different accounting concept is that it provides for
guidance to the finance manager to prepare the statements on basis of these concepts. The
different accounting system useful while preparing the financial statements are as follows-
Money measurement concept- it is a concept which states that only the transaction
which can be recorded within the monetary terms can only be recorded within the books of
accounts. This is particularly because of the reason that the accounting is being undertaken in
order to evaluate the profitability of the company. hence, because of this only the monetary
transactions are being recorded within the books of accounts. For instance, a business is able to
confirm a deal with help of capability of the employees. But as these skills cannot be expressed
in the monetary terms and because of this it will not be recorded within the books of accounts.
Dual aspect concept- this is a concept which states that every business transaction has
dual impact over the financial statements. The major reason behind this fact is that the making of
financial statements is based on the accounting equation. This accounting equation states that
assets of company are always equal to the total of liabilities and shareholder’s equity (Brown and
et.al., 2019).
Assets = Liabilities + Shareholder’s equity

Accounting for Business

Table of Contents
Introduction......................................................................................................................................2
Accounting concepts....................................................................................................................2
Characteristics of financial reports..............................................................................................3
Conclusion.......................................................................................................................................4
Reference.........................................................................................................................................5
1

Introduction
Accounting for business is an ongoing procedure of identifying recording and analysing of
financial transactions so that they can be pertain the situation of our business (Saputra, and et.al
2021). Accounting place a critical role in running the entire Enterprises and business because it
helps the management to track down all the incomes and expenditures of the company for a
specified time duration. This report provides detailed information about the accounting concept
which has been used for financial statements. Along with this characteristics of financial report
have been mentioned in this report.
Accounting concepts
Accounting concept states about rules regulations and assumptions which each and every
company has to follow and it is the responsibility of the accountant they must follow the
accounting concepts so that they can easily record analyse summarise the financial transactions
of the company (Gonçalves, 2021). For instance there are many countries who have different
rules and regulations so the people were living in such countries they have to strictly follow all
the rules and regulations prepared by their government similarly accounts also have various
accounting concepts which each and every Accountant of the company has to make sure while
preparing financial statements. Is the main objective of accounting concept is to maintain
uniformity and consistency and recording the transactions. These Concepts are important
constituent because it provides basic details of accounting. These entire concepts have been
adopted by getting approved after many years and therefore they are universally accepted. The
following accounting concepts are used for the preparation of financial statements.
Business entity concept
This concept is one of the important Concept for the accounting purpose it assumes that the
entire business Or Enterprises I totally different from there honours. Is concept states that
business has its different transactions and owner has its personal transactions so nobody can
assume that the personal transactions of honour will be set off against the profit of the business.
For instance whenever any honour invest money in the business it is always recorded on the
liability side and shows under the capital because it is a liability of the business to return that
money to their owner.
Money Measurement Concept
2