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financial management and analysis MODULE TITLE: - Financial Management PROGRAMME: BA SEMESTER: Semester Four A
Finance & Accounting
Pages 6 (1506 words)
Accounting Concepts Introduction Accounting concepts and conventions together form a unique structure to the way various accounting practices must be performed. The term ‘concept’ represents accounting postulates, which are the basic assumptions on the edifice of which the accounting framework is based.
Business entity concept Business unit or business entity is an organisation established by an individual or group of individuals so as to accomplish a set of economic goals. Under this concept, business unit is to be treated separately from the businessman. The business entity concept can be illustrated as an accounting equation; Assets = Liabilities+Capital. This equation clearly indicates that the business unit itself owns assets and in turn owes same level of liabilities too. Since this concept separates business from businessman, it is easy for accountants to distinguish personal assets and liabilities of the businessman from those of the business. This concept restricts the amount of economic data in an accounting system to data directly linked to the business activities (Warren et al 2008, p.8). In a global context, this concept helps to evaluate and compare business data, particularly the economic data related directly to sole proprietorship and partnership ventures. Money measurement concept According to the money measurement concept, all types of business transactions are recorded in terms of money in accounting (Pendlebury & Groves 2004, p. 12). ...
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