Question

Entity Concept; ?
* Dual Aspect Concept; ?
* Accounting Period Concept; ?
* Going Concern Concept; ?
* Cost Concept; ?
* Money Measurement Concept; ?
* Matching Concept; ?
* Realization Concept; ?
* Accrual Concept; ?
* Convention of Disclosure. ?
* Convention of Conservatism. ?
* Convention of Disclosure. ?
* Convention of Conservatism.

I need to choose 2 of them and explain them and i also need to say the resources name that i have got knowledge 

minimum 500 word

Answer 1

The detailed answer for the above question is provided below:

Going Concern Concept

 

This concept is also know as the concept of continuity. This is a fundamental accounting concept. According to the going concern concept an entity is expected to continue its business for in future. This means that the company can carry on its business and meet its obligation for foreseeable future. While preparing the financial statements, an entity uses this concept to defer some expenses and losses for the future period. In the event an entity seizes to be a going concern then it is required to report certain matters in its financial statements. Whether an enterprise is a going concern or not depends upon certain factors which may include losses incurred continuously law suits, denial of credit. 

According to this concept the entity is not expected to liquidate in the near future. 

An enterprise is said to be a going concern when:-

I) the enterprise can run its operations properly. 

ii) the enterprise has the ability to meet its liability 

iii) There is demand for the product and services offered by the enterprise. 

iv) There should be no changes in law governing the enterprise. 

 

 

Concept of conservatism 

 

According to the concept of conservatism, the expenses and liabilities are recorded as soon as possible but revenue is recognised only when there is certainty to receive that amount. 

This means that the expenses or losses which are uncertain must be recognised in the books of accounts whereas, uncertain revenues must be ignored. 

This concept states that the company must prepare the financial statements conservatively, so that it reflects the true and correct picture of company's financial position.By following this concept enterprise keeps its profit low by recognising uncertain liabilities.