(a) What is Accounting concept? (b) Explain the following accounting concepts: (i) Business Entity Concept (ii) Accrual Concept (iii) Going Concern Concept (iv) Consistency Concept(v) Periodicity Concept (vi) Historical Cost Concept
Take Free Practice Test On 2026 JAMB UTME, Post UTME, WAEC SSCE, GCE, NECO SSCE
Correct Answer: Option
Explanation:
(a) Accounting Concepts: Accounting concepts are the assumptions/principles/practices/rules/guidelines; that form the basis for the preparation and disclosure of items in the financial statements.
(b)(i) Business Entity Concept: This concept means that the affairs of a business are to be treated as being separate from the personal affairs of its owner. (ii) Accrual Concept: This concept means that revenues and expenses are recognized and included in the financial statement as they occur and not as they are paid or received (iii) Going Concern Concept: This concept means that the business will continue to operate for the foreseeable future unless there is evidence to the contrary. (iv) Consistency Concept: This concept means that once an accounting method or procedure has been chosen, it should not be changed unless it is deemed necessary. (v) Periodicity Concept: This concept means that financial statements should be prepared at regular intervals (usually one year) to measure the entity's performance. (vi) Historical Cost Concept: This means that the value of assets of a business should be shown at the cost of acquisition and not at the values which are expected to be earned or the current market value.
(a) Accounting Concepts: Accounting concepts are the assumptions/principles/practices/rules/guidelines; that form the basis for the preparation and disclosure of items in the financial statements.
(b)(i) Business Entity Concept: This concept means that the affairs of a business are to be treated as being separate from the personal affairs of its owner. (ii) Accrual Concept: This concept means that revenues and expenses are recognized and included in the financial statement as they occur and not as they are paid or received (iii) Going Concern Concept: This concept means that the business will continue to operate for the foreseeable future unless there is evidence to the contrary. (iv) Consistency Concept: This concept means that once an accounting method or procedure has been chosen, it should not be changed unless it is deemed necessary. (v) Periodicity Concept: This concept means that financial statements should be prepared at regular intervals (usually one year) to measure the entity's performance. (vi) Historical Cost Concept: This means that the value of assets of a business should be shown at the cost of acquisition and not at the values which are expected to be earned or the current market value.