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BUSI4359 Business Strategy

Course Title: Business Strategy

Course ID: BUSI4359

University Name: Tarleton State University

Study Level: Undergraduate

Location: Texas

Accounting Concepts

Accounting concepts serve as the foundation for establishing a well-organized accounting system in a company. Accounting ideas are extremely important for every business since they allow them to stay in sync with other industries by employing the same accounting concept. All of this contributes to a more accurate comparison. The concepts provide BUSI4359 task answers & better perspective for management and aid in the management of the accounting system in a consistent manner. Accounting Concepts has a number of conceptual concerns that must be understood in order to have a solid foundation for understanding how the accounting system operates. The following are some basic accounting concepts:

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  1. The Accrual Concept:Revenue is recognised as soon as it is earned here. Expenses, on the other hand, are recorded when assets are used.
  2. Conservatism Concept: The conservatism notion states that revenue is only recognised when it is reasonably assured that it must be realised. Expenses are recognised sooner in this case, just when they are likely to be incurred.
  3. Concept of Consistency: When a company picks an accounting approach, it should stick with it for a long time.
  4. Economic Entity Concept: Businesses must keep their transactions separate from their owners'.
  5. Going Concern Concept: The financial statements are prepared using the going concern concept, which assumes that the business will continue to operate in the future. Revenue and expense recognition may be delayed to a later period under this assumption.
  6. The matching concept states that expenses that are related to income should be recorded in the same period as the revenue.
  7. Materiality Concept: Transactions must be documented if failing to do so could influence a reader's opinion on a company's financial statements.

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Accounting Conventions

Accounting conventions are the basic rules that firms employ to figure out how to record business transactions that aren't fully handled by accounting standards. Although these methods and principles are not legally enforceable, they are widely accepted by accounting organisations. Essentially, these are intended to ensure uniformity and assist accountants in overcoming practical issues that may emerge during the preparation of financial statements. The accountants are helped by four basic accounting conventions:

    • Conservatism: It instructs accountants to err on the side of caution when estimating assets and liabilities, implying that when two values for a transaction are available, the lower one should be preferred.

    • Consistency: Throughout the accounting cycle, a corporation must apply the same accounting standards. Once a method is chosen, it is strongly advised to remain with it in the future.

    • Full disclosure: All potentially significant and relevant information must be disclosed, regardless of whether it is harmful to the company.

    • Materiality: Like full disclosure, this convention encourages corporations to lay all of their cards on the table, which means they must fully disclose all of the company's material information.

 

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