Revenue recognition principle

Revenue recognition principle are inflows of assets resulting from providing a product or service to a customer. The revenue recognition principle is also called the realization¬† principle. Recognition of revenue is the act of recording revenue in the accounting records and reporting it in the income statement. Revenue is generally …

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Accounting period assumption

Accounting period assumption

Accounting period assumption measure activities for a specified interval of time, called the accounting period. The time periods vary entity to entity and in accordance to the need of the management. it may be monthly, quarterly, biannually or annually. But one year is the usual accounting period for the purpose …

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Recognition and measurement concepts

Recognition and measurement concepts

Recognition and measurement concepts is the Third level of the frame work consists of concepts that implement the basic objectives of level one. These concepts explain which, when, and how financial elements and event should be recognized, measured, measured and reported by the accounting system. This level can be broadly …

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Element of financial statements

Element of financial statements

Element of financial statements: Financial accounting generates different types of statements/reports and communicates them to external users so that they can assess the overall performance of the business in financial terms. These reports are overall performance of the business in financial terms. these reports are commonly known as financial statements …

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Qualitative characteristics of accounting information

Qualitative characteristics of accounting information

The FASB identifies the qualitative characteristics of accounting information that provides better (more useful) information for better decision-making by the users. These characteristics are shown below in a diagram: Fig: characteristics of accounting information Lets now discuss the elaborately with examples: Decision makers and their characteristics: there is a divergent …

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Development of conceptual framework

Development of conceptual framework

Development of conceptual framework are several organizations and individuals who have tried their best to develop a sound conceptual framework for a long period of time. But among them, Accounting principles Board (APB) and Financial Accounting Standards Board (FASB) merit attention. APB: APB issued, “Basic concepts and Accounting principles Underlying …

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Definition and need of conceptual framework

Conceptual Framework

Definition and need of conceptual framework consists of two terms: Conceptual & framework. conceptual means “idea or plan”. On the other hand. “framework” means essential supporting structure or basic structure. For accounting information stands for the plan or ideas of basic structure of generating and presenting accounting information to a …

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Understanding of accounting

Understanding of accounting

Business people should have understanding of accountancy. For doing so, they are required to develop clear concepts as to four building blocks of accounting:   Double entry system Accountancy equation Accountancy principles (Generally accepted accountancy principles) International accountancy standards We discuss the first two building blocks in the third chapter, …

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Misconception about accounting

about accounting

Misconception about accounting as an integral part of business is of great significance in out day to day life. In these days of super highway information age, accounting should merit attention from out society as because accounting is an information science which has been vested the responsibility to communicate relevant …

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Accounting ethics

Accounting Ethics stands for “A set moral principles”. Ethical problems are frequently happening in the accounting and business world. Ethics is considered a a fundamental business concept. Accountants face ethical dilemmas such as:   Will my decision after my performance? Will my colleagues be unhappy with me? Will my boss …

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