What is Accounting Concepts?
Accounting concepts are the basic rules, assumptions, and conditions that define the parameters and constraints within which the accounting operates. In other words, accounting concepts are the generally accepted accounting principles, which form the fundamental basis of preparation of universal form of financial statements consistently.
Objectives of Accounting Concepts
- The main objective is to achieve uniformity and consistency in the preparation and maintenance of financial statements.
- It acts as the underlying principle, which assists accountants in the preparation and maintenance of the business records.
- It aims to achieve a common understanding of rules or assumptions to be followed by all types of entities, thereby facilitating comprehensive and comparable financial information.