Question

What are some of the accounting principles and concepts that influence the four financial statements all business organization create each financial period?

Answer 1

The four accounting principles are aa follows :-

1. Accountability

The information given in the books of accounts are accountable and answerable to the organisation

2. Transparency

All the transactions are the be recording without any missing of transaction and omission of transaction. All the recorded transactions are to be true and fair with transparency.

It should show the data how the organisation is performing.

3. Integrity

This leads to correctness of the transactions recorded in the organisation.

4. Consistency

All the methods and policies implemented in the organisation should be followed consistently.

Accounting concepts

Going concern

This shows information that the organisation will compulsorily operates it's bussiness activities till a foreseeable future.

Accrual

This gives information about the transaction recorded that all are not in cash basis but all are as per accrual basis it means that all incomes are to be recorded when they earned but not when they are received in same way the expenses are to be recorded when we are liable but not when actually paid.

Materiality

All the organisation has a limit of the important values and that level of importance and all the transactions satisfied that limit is termed as materiality. Example for a small company 10000 is material or important amount but to a multinational companies that 10000 is not so important and material

Substance over form

All the assets are to be recorded on the basis of substancw over form. It means in some time the asset is owned by organisation but possession is at seller so that asset to be recorded in our books and in some cases like leasing the asset owner is other but usage is at our organisation then also that asset to be recoded in our books of accounts.

These are all the information regarding the accounting principles and concepts effecting the books of accounts and financial statements.

I hope, all the above mentioned information and explanations are useful and helpful to you.

Thank you.