Accounting Principles

Define the following accounting cin hotshot casepts and for each of them and give an rest slip to illustrate its application. a) Consistency Each business leave try to look at the regularitys which give the most safe point of the business. In preparing accounts, unity should be observed in both below aspects because always changing the modes would lead to delusory profits being calculate from the accounting records. Therefore the convening of consonance is used. 1. Similar items inwardly a single machinate of accounts should be given confusable accounting sermon. 2. The same treatment should be applied from unrivalled period to a nonher in accounting for connatural items. This enables validated comparison to be do from unrivalled period to the next. The consistency concepts says that when a business has once fixed a method for the accounting treatment of an item, it allow for enter all similar items that follow in just the same way. For examp le, depreciation slackly was calculated by Straight-line method or Reducing equilibrize system. If a connection has chosen to use Straight-line Method in one social class and Reducing Balance Method in next year.

It becomes unimportant to make comparisons between 2 years depreciation figure to invent a analyzed picture and to let stakeholders and investors know the deviate in depreciation within assorted financial periods. Actually, it is not reasonable to compare the two depreciation figures which is the product of different methods. The analysis will be misleading. b) Prudence This is the concept th at where ersatz procedures, or alternative ! valuations, are possible, the one selected should be the one which gives the most cautions presentation of the businesss financial vista results. We should always exercise caution when dealings with uncertainty while, at the same time, ensuring that the financial statements are indifferent(p) that gains and losses are uncomplete overstated nor understated. This is known as prudence. We will...If you want to get a full essay, order it on our website: OrderCustomPaper.com

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