Framework of Accounting

Accounting is based on the following concepts:

Entity Concept
Money measurement Concept
Going concern Concept
Cost Concept
Conservatism Concept
Dual Aspect Concept
Accounting Period concept
Accrual Concept
Realisation concept
Matching concept
Materiality Concept

Entity Concept

For purposes of Accounting the business firm is regarded as a separate entity.Accounts are maintained for this entity as distinct from the persons who are connected with it.

Money Measurement Concept

Accounting is concerned with only those facts which are expressible in monetary terms.

Going Concern concept

Accounting is normally based on the premise that the business entity will remain a going concern for an indefinitely long period and not concern which is likely to be wound up in near future.

Cost Concept

Assets acquired by a business are generally recorded at their cost.

Conservatism Concept

Anticipate no profit but provide for all possible losses.

Dual Aspect Concept

Assets = Equities. Each event has two aspects.

An increase in owners equity resulting from a business operation is called a revenue. While a decrease in Equity from business operations is called a expense. When revenues exceed expenses the difference is called income,when expenses exceed the revenues the difference is called a loss.

Accounting Period Concept

The accounting period used for external reporting is usually one year. It is referred to as the financial

year.

Accrual Concept

Income is measured by changes in the owners equity arising from the operations of business.

Realisation Concept

Revenue is deemed to be earned only when it is realised.

Matching Concept

Once revenues for an accounting period are recognised expenses incurred in generating these revenues are matched against them.

Materiality Concept

Since maintaining the accounts involves time and expenses the Accountant is only concerned with events which are material.

Comments

RISK in Investments

Investment decisions are a trade off between Risk and Return. Risk refers to the possibility that the actual outcome of an investment will differ from its expected outcome. Most investors are concerned about the actual outcome being less than the expected outcome. The wider the range of possible outcomes,the greater the risk. SOURCES OF RISK The three major sources of risk are: Business Risk Interest Rate Risk Market Risk Business Risk As a holder of corporate securities (equity shares and debentures) you are exposed to risk of poor business performance. This may be caused by a variety of factors like heightened competition, emergence of new technologies, development of substitute products , shifts in consumer preferences, inadequate supply of essential inputs,changes in governmental policies and so on. The principal reason might be inept and incompetent management. Interest Rate Risk The changes in interest rate have a bearing on the welfare of investors. As th

A note on Motivation

Motivation Theories Motivation- those factors that cause ,channel, and sustain people’s behavior. Motivation is not always easy to discern. Most successful managers ,however, have learned by experience that people are generally very responsive to praise and encouragement-expressed not only in words but also in actions and need to feel successful in their work to give their best effort to the organization. Different View points on Motivation The Traditional Model The traditional model of motivation is associated with Fredrick Taylor and scientific management which held that an important aspect of the manager’s job was to make sure that workers perform repetitive tasks in the most efficient way. The Human Relations Model In the human relations model, workers were expected to accept management’s authority because supervisors treated them with consideration and were attentive to their needs. The intent of managers ,however remained the same- to have the workers accept

Certified Bitcoin Professional Exam

Studying for the CBP exam is easy. The 33 topics are covered extensively online making it easy to learn the knowledge required for certification. A CBP Study Guide is available to assist your review. The Common Body of Knowledge for the Certified Bitcoin Professional certification is defined as follows: History of Money and Ledger-based Economics Centralized Ledgers Functions of Currency Distributed Consensus History of Bitcoin Price Derivation Basic Cryptography Terms and Definitions Hash Functions Symmetric and Asymmetric Encryption Digital Signatures Bitcoin Basics Bitcoin Community Bitcoin Addresses and Keys Bitcoin Transactions Bitcoin Blockchain Ledger bitcoin the Unit Bitcoin the Network BIPs Buying and Selling bitcoin Blockchain Explorers UTXOs Mining Purpose and Function Algorithm Mining Pools Mining Hardware Security and Centralization Wallets, Clients and Key Management Wallet Types Bitcoin Clients Deterministic Wallets (AKA B

On Management

Search This Blog