FINANCE

PRINCIPLES OF ACCOUNTING

HISTORY OF ACCOUNT

POINTS

Believed to begun at about 4,000 years BC in the kingdom of Babylon,summaria and Assyria.

Double entry by Italian monk-rev luca paciolo came with the first published  work on double entry.

The book ‘summa de arithmetica  Geometric  Proportion et proportionalita.

Italian method.

The major objective of accounting was to provide information for the owner.

1605 , a dutchaman , simeon steven , projects the preparation of profit and loss account at yearly .

ACCOUNTION  CONCEPTS AND PRINCIPLES

  • 1.DOUBLE ENTRY or DUALITY-  ANY DEBIT ENTRY HAS A CORRESPONDING CREDIT ENTRY
  • 2.PRUDENCE- THIS REQUIRES  LIABILITIES AND EXPENSES TO BE RECOGNISED AS SOON AS THEY OCCUR, BUT REVENUES ONLY WHEN THEY ARE REALISED.
  • 3.BUSINESS ENTITY: BUSINESS SEPARATE FROM THE OWNER
  • 4.SUBSTANCE  OVERFORM: ACCOUNTING PRINCIPLES  PREVAIL  OVER LEGAL FORM  IN THE PRESENTATION OF FINANCIAL STATEMENT
  • 5.GOING CONCERN: BUSINESS IS EXPECTED TO CONTINUE IN THE NEAREST FUTURE
  • 6.COST CONCEPT-COST IS HISTORICAL COSTs. COST IS BASED ON  MONETARY VALU OR ACTUAL COST OF TRANSACTION.
  • 7.MATERIALITY- ANY  SUBSTANTIAL  AMOUNT MUST  REFLECT IN THE ACcOUNTS

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