The accounting concepts, year-end adjustments for accruals, prepayments, irrecoverable debts and provisions, and the role of ethics and the professional accountant.
Accounting concepts
| Concept | Meaning |
|---|---|
| Business entity | Owner and business are separate |
| Going concern | The business will continue for the foreseeable future |
| Accruals (matching) | Match income and expenses to the period they relate to |
| Prudence | Do not overstate assets/profit; recognise foreseeable losses |
| Consistency | Use the same methods each period |
| Materiality | Only items significant to decisions need separate treatment |
| Money measurement | Only what can be measured in money is recorded |
| Realisation | Revenue recognised when earned, not when cash received |
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