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Accounting Concepts

Concept Rule Example
Objectivity ­ factual information is preferred Wherever possible, accounting information should George owes a van that cost £8000, a number of
because it is likely to be beyond dispute. be facts rather than someone's opinion. years ago and can sell it for £23000 but wants…

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Accounting Concepts

Accruals ­ expenses and revenues are matched Profits should be calculated for a period of time, Wages ­ 48000
for a time period when calculating a profit. ensuring that revenue for that period is matched Rents ­ 5500
with the expenses incurred in earning revenue. Rates ­ 1800…

Page 3

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Accounting Concepts

into thinking that the business is doing better than it
really is.
Materiality ­ if the amount involved is relatively The materiality concept concerns the treatment of A business purchases a ruler. The ruler costs 45p.
insignificant, then the usual accounting treatment the certain items when preparing final…


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