When you are studying accounting, you will learn about several aspects of it. You need to understand a get a grip on that so that you can write an effective and flawless accounting dissertation. Accounting concepts are the backbone of the accounting principle. There is a set of basic rules, laws, regulations, and assumptions that you must keep in mind before you enter a transaction in accounts books. There are many types of dissertation topics such as economics, math, English and accountancy and finance etc. You will be surprised that even experienced accountants keep the entire accounts rule in mind when preparing an accounts book.
Here are all you need to know about 7 of the accounting concepts.
1. Entity concept
The first concept you must know about is the entity concept. It explains how business is different from you. It explains that a business and a business owner both are different entities. The statute identifies the entity as an artificial person. The entity needs to compose its own set of financial statements and record its business transactions as required. If you have trouble understanding the concept or need help, you can search for dissertation methodology help and ace your papers.
2. Money Measurement Concept
The money measurement concept explains that only the transactions recorded and measured in monetary terms are considered. In other words, the money measurement concept recognises only those financial transactions recorded in books of accounts.
3. Periodicity Concept
The periodicity concept explains that the entity or the business must carry out the accounting for a specific period – generally, the financial year. The time for drawing financial statements can change from monthly to quarterly to annually. It helps to recognise any changes happening over different periods.
4. Accrual Concept
Accrual Accounting states that the transaction is recorded on a mercantile basis. In simple words, transactions that are to be recorded as and when they take place, not as and when the money is received or paid, and for the period to which the transaction pertains.
5. Cost Concept
The cost concept explains that any asset that the entity records shall be recorded at historical cost value, i.e., the acquisition cost of the asset.
6. Business Entity concept
It is the most basic of the accounting concept. When you study this concept, you will understand it assumes that business owners are completely separate entities from the business. So it means that the business is a standalone entity. Another thing you must know is that the accounting books are kept separated from the books of the business owners.
Moreover, the owners are called creditors to the business. So, the owner of a business invest money into the business; it is seen as the owner extending a line of credit to the business.
7. Dual Aspect Concept
The 7th concept is the dual aspect concept that means the double-entry bookkeeping method. It shows the owners must notice each transaction and note them twice – once on the debit side and secondly on the credit side. The dual aspect concept is very important because it helps balance the accounting books.
Final Note
A student who wants to become a good accountant must have a complete grasp of all the important accounting concepts. If the base is not good, then the bookkeeping would also be not good. Moreover, you cannot make a good dissertation conclusion if you do not know the details.
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