Sie sind auf Seite 1von 5

CONCEPTS CONVENTIONS & PRINCIPLES ACCOUNTING PRINCIPLES :PRINCIPLES ACCOUNTING CONCEPTS :CONCEPTS : PRACTICES.

ACCOUNTING CONVENTIONS :CONVENTIONS ESTABLISHED USAGES/PRACTICES. THUS THEY ARE CUSTOMS AND TRADITIONS FOLLOWED BY ACCOUNTANT AS GUIDELINES WHILE PREPARING ACCOUNTING STATEMENT THEY ARE FOLLOWED TO MAKE ACCOUNTING INFORMATION MORE MEANINGFUL & CLEAR. ACCOUNTING PRINCIPLES ACCOUNTING CONCEPTS (1) (2) (3) (4) (5) (6) (7) (8) (9) BUSINESS ENTITY CONCEPT GOING CONCERN CONCEPT ACCOUNTING PERIOD CONCEPT MONEY MEASUREMENT CONCEPT COST CONCEPT COST ATTACH CONCEPT DUAL ASPECT CONCEPT ACCRUAL CONCEPT PERIODIC MATCHING OF COST & REVENUE CONCEPT (10) REALISATION CONCEPT (11) VERIFIABLE OBJECTIVE EVIDENCE CONCEPT ACCOUNTING CONVENTIONS (1) (2) (3) (4) DISCLOSURE MATERIALITY CONSISTENCY CONSERVATISM General Law or Rule adopted as A Guide to Action FUNDAMENTAL TRUTHS TO ACCOUNTING

CAPITAL V/S. REVENUE EXPENDITURE :Incurring a Liability or Payment of cash or transfer of property for the the purpose of obtaining goods or services or Asset. BASICALLY EXPENDITURE DECISION :- CAPITAL OR REVENUE FACTORS CONSIDERED FOR EXPENDITURE DECISION (1) RECURRINGNESS OF AN EXPENDITURE Recurring Expenditure - which occurs frequently ex. Salary p.m. Rent p.m. Telephone charges p.m. Recurring - Revenue Non - Recurring Non-Recurring Exception :non recurring expd. treated as revenue expd. If it represents cost, which has been last due to normal or Abnormal factor. ex. Loss by fire/theft/Accident . ex. Sale of Goods Not frequent Purchase of Machinery or Any Asset CAPITAL

(2)

Effect on Revenue Earning Capacity If increases revenue or not It yes - Capital Expd. If no. ie. maintenance only - Revenue expd.

(3)

Benefit of an Expenditure Benefit expires in 1 year - Revenue expd. Benefit for more than 1 year - capital expd.

CAPITAL EXPENDITURE

REVENUE EXPENDITURE (1) SIZE OF AN AMOUNT

Normally larger Amt.

Smaller Amt. Compared to capital expenditure

(2) Impact on the Capacity Improves the earning Capacity, effeciency & imperove economy ex. changing from Petrol to CNG Maintains the Asset in working conditions.

(3) Period of Benefit Benefit is for a Long run period i.e. beyond 1 year Benefit is exhausted in a shorter period i.e. up to 1 year. (4) Recurrance It is non - Recurring in nature It is Recurring in nature (5) Presentation Amount is shown in the Balance Sheet Amount is shown in Profit & Loss Account.

Deferred Revenue Expenditure Certain expenditure basically Revenue but the benefit from such expenditure arrises for more than 1 year. ex. (1) (2) (3) Heavy Advertising Expenditure for launching a product. Expenditure for issue or raising loan or capital Heavy expenditure on unsuccessful activities ex. expense on a project report which was not taken up, expenditure on borewell which did not yield any water. ICAI :Expense - benefit not extend beyond that period Expenditure - benefit extend beyond that period

CAPITAL RECEIPTS (3) Reocurrance NON - RECURRING ex. Capital brought in by proprietor or Sharehlders

REVENUE RECEIPTS

RECURRING Represent Income such as sale of goods or interest on Bank deposit (2) Presentation in FINAL A/cs

Recorded as LIABILITIES in the Balance sheet ex. Loans received deposit received

Recorded as Income in P/L. A/c.

(3) REPAYMENT They are liabilities and to be repaid Revenue receipts and not to be repaid (4) GAIN / NOT They are not gains Concern They are Gain to the to the Concern or result in profit / Gain to the Concern

Das könnte Ihnen auch gefallen