Different Accounting conversations

-

     


        In Accounting conversation means a custom or tradition , used as a guide for the preparation of Accounting Statement. The following are the conversations:




 1) conversation of full Disclosure

2) Conversation of consistency

3) Convention of materiality

1) convention of full Disclosure:- Accounting to this conversation, Accounts should be prepared honestly and they should disclose all materials and significant information. Every company shall keep proper books 📚 of Accounts auditor record expenses, incomes, profits, losses, assets, and liabilities. The essential items to be disclosed in the profit and loss Account are given. There is legal from the balance sheet.


2) Convention of consistency:- In every business, the management draws important conclusion from the financial statements, regarding working of the concern, for this purpose in preparing the financial accounts.

        The same principle and practices should be followed from year to year.


3) Conversation of conservation:- This is very important in preparing final accounts, This term suggests caution. In ascertaining net profit, all final likely losses should be provided for. All prospective profits should be ignored. All outstanding expenses should be taken into account. Adequate reserves or provisions should be provided for. This means that there should be no window dressing and secret reserves.


4) Convention of materiality:- This is also called the Convention of reasonble degree of accuracy. According to this, the information given in the accounts should be reasonable accurate. All the entries should be exact. Fraction of a rupee is avoided.


Comments

Post a Comment

Popular posts from this blog

Preference Shares

-
Image
  Preference Shares:-   Preference Shares are those which carry preference over other classes of shares in the payment of dividend and repayment of capital at the time of winding up. Types of preference Shares:-   Preference Shares can be broadly divided into. 1) Redeemable preference Shares. 2)irredeemable preference Shares 3) Cumulative preference Shares 4) Non - Cumulative preference Shares 5) Convertible preference Shares 6) Non - Convertible preference Shares 7) participating preference Shares. 8) Non - participating preference Shares   Redeemable preference Shares:-   These are the shares, the capital of which is refundable after a stipulated period. Irredeemablepreference Shares:- These are the shares, capital of which is not refunded during the life time of the company. Cumulative preference Shares:- These are the shares on which a fixed rat of dividend is paid out of the current or future profits. If in any year, the company doesn't pay the dividend wil...
Read more

Accounting information

-
  Persons interested in Accounting Disclosures:-    Accounting is of primary importance to the proprietors and the managers. However, others person's such as creditors, prospective investors, employees, etc. are also interested in the Accounting information. 1) Proprietors:- A business is done with the objective of making profit. It's profitability and financial soundness are, therefore, matters of prime importance to the proprietors who have invested their money 💰 in the business. 2) Managers:- In a sole proprietary business, usually the proprietor is the manager. In case of a partnership business either some or all the partners participate in the management of the business. They therefore, act both as managers as well as owners. In case of joint stock companies, the relationship between ownership and management becomes all the more remote . In most cases the shareholders act merely as rentiers of capital and the management of the company passes in to the hands of profe...
Read more

Write a bout journal

-
Image
  Journal:-         Journal means a day book 📚 or daily record. It is the book where in all the transactions are first recorded in chronological order. It is a book of prime, original or first entry, as all business transactions are first recorded in the journal. Form journal the posting are made in the ledger. journal is only subsidiary book 📚 i.e., a book 📚 which is sub-ordinate to the ledger. Which is the principal Book 📚 of accounts? The journal analyses the various transactions into their debits and credits so that they could be easily posted to the ledger accounts. In order words journal is helpful in the preparation of Accounts in the ledger. The process of recording transactions in journal is termed as 'journalizing'.        The journal is rule of as follows:-                         Journal            Column (1) : Date     ...
Read more