Coconote
AI notes
AI voice & video notes
Export note
Try for free
Commerce Pro Series - Day 9: Accounting Principles
Jul 22, 2024
Commerce Pro Series - Day 9: Accounting Principles
Introduction
Day 9 of Commerce Pro Series
90 days to cover full syllabus of Accounts, Business Studies, Economics
Focus on Chapter 3: Accounting Principles
Two classes to complete this chapter
Today's class: basics and principles
Next class: complete the chapter
Importance of following the playlist and keeping up with chapters
What are Accounting Principles?
Principles
: Rules or guidelines assisting in decision-making and performing tasks
Accounting Principles
: Developed over time through study, observation, and analysis
Help in formulating rules and regulations for creating accounts
Base of all accounting concepts and chapters
General Acceptance
: Globally accepted guidelines for preparing accounting statements
Developed through usage, reason, experience, statements by professionals, and government agencies
Known as Generally Accepted Accounting Principles (GAAP)
Features of Accounting Principles
Uniform Set of Rules
: Similar worldwide, applicable regardless of academic level
Man-Made
: Created through observation, practice, and experience
Flexible
: Can change with time and evolving business practices and technology
Generally Accepted
: Serve as solutions for many accounting problems globally
Purpose of Accounting Principles
Relevance
: Useful and significant to users, free from irrelevant details
Objectivity
: Free from personal bias or manipulation
Feasibility
: Easy to apply without complications
Types of Accounting Principles
Accounting Concepts (Assumptions)
: Fundamental, developed through experience and usage
Legal acceptability and widely followed
Accounting Conventions
: Based on customs and beliefs
Lesser legal acceptability, may vary among individuals
Examples: Full Disclosure vs Materiality
Basic Accounting Assumptions (Concepts)
Going Concern
Business will continue indefinitely
Important for long-term financial decisions like loans and credit
Basis for recording fixed assets and depreciation
Consistency
Use the same methods consistently across different periods
Important for accurate comparison of financial statements over years
Examples: Depreciation methods, stock valuation methods
Accrual Concept
Transactions recorded when they occur, not when cash changes hands
Provides true financial position
Applies to both revenues and expenses
Recap and Preparation for Next Class
Review features and meanings of accounting principles
Understand the basic concepts: Going Concern, Consistency, Accrual
Next class will cover additional important concepts and complete the chapter
ЁЯУД
Full transcript