0Dear Students,
Every academic subject that you study has a business language and specific jargons of expression.
The following popular terms regarding the Accounting principles used in the day to day business practices have been explained in a natural language-
1. Business Entity Principle- the business and its owner (proprietor) have separate and distinct existence. Both are different from each other. Thus, the money invested by the proprietor in the business is considered a liability by the business.
2. Money Measurement Concept - All the Business Transactions that can be measured in money's worth are only recorded in books of accounts.
3. Going Concern Principle- the business would continue for an indefinite time irrespective of the existence of the proprietor.
4. Cost Concept- An asset is recorded in the books of accounts at its historical cost; i.e. the cost paid to aquire it.
5. Dual Aspect Concept- Every Business transaction has two aspects: a debit and a credit of an equal amount.
6. Accrual Concept/Revenue Recognition Concept- This concept states that the Revenue should be considered when it is realized, irrespective of whether cash is received or not. e.g. Credit Sales
7. Matching Principle- The revenues of a particular period have to be matched with the expenses of a period while recording in books of accounts.
8. Conservatism Principle- Providing for all possible losses and not recording any anticipated profits is the best practise of this principle in accounts.
9. Full Disclosure Concept- Business organizations should disclose all the material information in the books of accounts.
10. Materiality Principle- The accountants should record all the material/relavant/ significant transactions from the business perspective of the smaller amounts.
I hope this will help you, like this post if it does.
Regards
