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Accounting Principles | Entity & Going Concern | Concepts & Conventions| Letstute Accountancy - YouTube
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in our first session be seen the
importance of record keeping
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in accountancy
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my friend peter is now a bear a
different terminologies that I used in
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accounting
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which we have studied about in our
second session this is
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the third month the fifth business and
his grocery store business
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is now really going big so Peter
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also needs to learn accounting in more
detail to manage its business in a
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proper manner
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So in this session we're going to try to
learn
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the basic accounting concepts of
principle
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which helpus to prepare our accounts
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in a more systematic manner now
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accounting reports are kept by account
all over the word for different
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different businesses
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that on many parties that need to know
about your business
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oil company like in Bath does our credit
dead or shareholder
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individuals who want to in bed
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bank to provide loans to them government
agencies who collect taxes ejup
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this means accounting recalled of your
business
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is just not meant for you there are many
more state called us are outside parties
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who need to read and understand your
accounting recall it
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not support base for fans after then be
outside body
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and all the company's our businesses
kept records differently
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that means in different manners and
different style
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it would be very difficult for this
person
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are other bodies to understand these
accounting reports
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so it would be much more
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easier in their with certain basic
guidelines
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and rules as to how everyone should
maintain their accounting reports
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right
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now so that there is uniformity
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in maintaining the is recalling there
are 13 concept and guidelines that are
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known as
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generally acceptor did accounting
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principal or gap which is universally
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accepted now we will learn about these
basic accounting principles as we come
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across
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what is happening in my friend be dead
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business in the third month of operation
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you this month be to try to maintain his
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own dick gone but when I checked it
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I felt there was something wrong let's
look at his report
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he's recorded his friend his salaries is
electricity
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he is regarded his breath and then
maintenance bail
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and he's also recorded a washing machine
but chase
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all residents maintain N
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bill if if the boss to be confident as a
business expand
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and this washing machine is for personal
use
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but he has recorded it as his acted
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in his business accounts well these
accounting treatment are wrong
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it is not possible to find the correct
state of affairs of his business
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if he makes his personal expenses into
his business
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so all affairs personal expenses are
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acted for che's do not form part of its
business
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activity either he should have babies
expenses from it but no
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bank account or he needs to show these
payments at
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Forstner an account for it separately
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basically on personal matters of the
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own art on totally separate from his
business big the concept in accounting
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call dad the ended a concept where the
business
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its confidante a separate entity from it
owner
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ended the main had a distinct identity
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not the boys be there had two other
businesses baby does car repairs and
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X Y then bookstore he would keep
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all undoubted guard separate as well
separate books about balance will be
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death car repairs
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step in books for XY that bookstore and
separate books for his cross restore
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for the entity concept
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stayed that a business if separate
entity from its
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own at we think that the owners of
businesses or companies
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change we also see that ownership is
passed on to their children of somebody
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else but does the company
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are the business closed down no
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the businesses on companies dilute phase
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in it own plate without own distinct
identity
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in other words bet or infirmity of the
owner
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me not affect the continuation of in
business so business is independent from
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it
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or not they are to separate entities
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this was me entity concept
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wealthy what happened next beat out
Bochy is
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a grocery weighing machine for two
thousand dollars
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which is going to benefit his business
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or 10 United
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so we will treat although this 2011
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as his expense but guarantee or well
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any business needs to be treated as
continue it because usually
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every business phone companies stop
would be intention to stay in business
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for a very very long period
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unless there's a specified command you
do which it is mentioned
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that the business is going to last only
for indefinite period
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so what is important here
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is this machine will be used
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for 10 your and since we are going to a
doomed added business is going to be
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continued for a very long period we do
not have to record the
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entire amount Avonex pen in the car
interior
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the entire cost for weighing machine
needs to be split
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into ten years all the death toll house
in dollars will not be treated
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as an expense in the yard the asset
worth but chased
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only one tenth Bart that'd be X bike
cost on the comment here
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will be treated as expense that is two
hundred dollars and the remaining 1000
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800
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will be shown as an affect at this main
machine
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is an asset to the business it going to
be used for a long period
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not every yard the value of this acted
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will be reduced by 1:10 and then it will
be shown
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under expenses here we are believing
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or deal-making are we at retain that our
business is
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long-term all continues and that in the
reason
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we will provide for the remaining
expenses in future
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so this as the emotion that the business
is going to always be going on
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is known as the going concern concept
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concern here is nothing but the business
that think another example supports pdf
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spend huge amount for advertisement safe
six thousand dollars but
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it would be beneficial for his business
at least for think feared
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so only one think of the entire amount
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that is one thousand dollars will be
shown as current year's a
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Ben and the remaining five thousand
dollars will be shown
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at aphid and it will be reduced
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one fake every your now what Dave
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a business needs a long term loan when
the bank relied
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a long term loan if it has been
mentioned that
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the business will only last for
indefinite period in their regards
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what they may not provide the loan but
if a business
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is that going cunt then and has provided
for payment in future
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and have a good reputation only then
will the bank provide
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long term loan I hope you're getting me
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for the flaws the going concern concept
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you always love you that a business is
going to be
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continues our long-term so miss when the
end of
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the June month and we learned a lot of
new pain
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we came across the entity concept
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and the going concern concept we will
come back and see the operations in
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feeder
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grocery store for the month of July and
14 more accounting principles in our
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next session
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so stay tuned I hope you enjoyed this we
do.
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please share it with those who can
benefit from it comment your query is
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below
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and hit that subscribe button to get all
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