3.5 Accounting concepts used in the preparation of accounting records


Additional information

General accounting concepts.

Concepts are:

  • money measurement
  • duality
  • cost
  • going concern
  • accruals
  • consistency
  • prudence
  • materiality
  • realisation
  • business entity.

The use of accounting concepts in a variety of situations.

Situations are:

  • preparation of financial statements
  • asset valuation
  • depreciation of non-current assets
  • inventories (using cost or net realisable value as the basis for valuation).
  • recording the purchase of non-current assets
  • recording transactions in ledger accounts
  • goods sold on a sale or return basis.