Principles already Covered: • Business Entity • Duality • Money Measurement • Realisation • Consistency • Matching • Prudence
Sunday, February 24, 2013
abdullahakram591@live.com
Slide No: 1
Accounting Rules
More accounting principles:
• Going Concern (Will continue to operate for an indefinite period of time, no intention to close down or reduce the size of the business).
• Materiality (Value of an item to the business or to the decision of stakeholders). • Historical Cost (Recording items based on actual costs). • Accounting Period (Performance measurement, Reporting & Feedback etc.).
Sunday, February 24, 2013
abdullahakram591@live.com
Slide No: 2
Quality of Information
Objectives in selecting accounting policies:
• Relevance: relevant to the (intended) users of the financial statements/reports. • Timely: Should be in time.
• Reliability: True and fair representation, free from bias & significant errors.
• Comparability: Same policies, or information on effect and implication of changes of policies or the effects and implications of different policies. • Understandability: Clarity of information, consider the ability of the users to understand in choosing terms etc.
Sunday, February 24, 2013
abdullahakram591@live.com
Slide No: 3
Capital and Revenue (Short term/Long Term) Expenditure & Receipt • Capital Expenditure: Money spent on purchasing, improving or extending fixed assets. T. Cost = Purchase Cost + (Legal + Carriage + Installation)Costs. • Revenue Expenditure: Money spent on running the business on day-to-day basis. Includes admin’n expenses, financial expenses, selling & distribution expenses, discounts given or cost of maintaining the fixed assets etc.
• Capital Receipt: On the disposal of a fixed asset. • Revenue Receipt: Sales, other income ( Rent received, commission received, discount received etc.)
Sunday, February 24, 2013
abdullahakram591@live.com
Slide No: 4