Accounting Principles

Accounting is the language of business through which economic information is communicated to all the parties concerned. In order to make this language easily understandable all over the world, it is necessary to frame or make certain uniform standards which are acceptable universally. These standards are termed as "Accounting Principles ". Accounting principles may be defined as those rules of action or conduct which are adopted by the accountants universally while recording accounting transactions. They are a body of doctrines commonly associated with the theory and procedures of accounting. They are serving as an explanation of current practices and as a guide for selection of conventions or procedures where alternatives exist. These principles can be classified into two groups. 1. Accounting concepts 2. Accounting conventions. Accounting Concepts: The term 'concepts' includes those basic assumptions or conditions on which the science of accounting is based. The following are the important accounting concepts: 1. Separate entity concept 2. Going concern concept 3. Money measurement concept 4. Cost concept 5. Dual aspect concept 6. Accounting period concept 7. Matching concept 8. Realization concept. Accounting Conventions: The term 'conventions' includes those customs or traditions which guide the accountant while communicating the accounting information. The following are the important accounting conventions; 1. Convention of conservatism 2. Convention of full disclosure 3. Convention of consistency 4. Convention of materiality.