Conceptual and Regulatory Framework of Accounting

Discuss the inventionual and regulatory framework of Accounting

The concepts of report ar the assumptions that guide the accounting process. These concepts argon reinforced through the accounting standards that exist internation completelyy. That accountants need to observe the following basic principles;

passing Concern concept
Accounting assumes that an entity volition continue to operate indefinitely. That a business will continue to operate for the foreseeable future. This concept implies that financial statements do non represent a unions worth if its assets were to be liquidated, but rather that the assets will be used in future operations.  This concept too allows businesses to spread (amortize) the cost of an asset over its expected utile life. 
Consistency concept
Once an entity decides on one regularity of inform, that is, method of accounting for inventory, it must use that same method for all subsequent events.  This ensures that differences in financial position between reporting periods are a result of changed in the operations and not to changes in the way items are accounted for. The method chosen should refund the most reliable picture of the business. However, a business sack up change its method of reporting but they must be careful and put a lot of things in attachment first.




Conservatism or prudence concept
This requires understating rather than overstating tax (income) and outlay amounts that have a degree of uncertainty.  The rule is to recognize revenue when it is reasonably certain and recognize expenses as soon as they are reasonably possible.  The reasons for accounting in this manner are so that financial statements do not overstate the telephoners financial position.  Accounting chooses to err on the attitude of caution and protect investors from inflated or overly affirmative results. 
Realization concept
Revenues are recognized when they are earned or realized. Realization is assumed to occur when the seller receives cash or a claim to cash...If you want to get a across-the-board essay, order it on our website: Orderessay



If you want to get a full essay, wisit our page: write my essay .