*Accountants are a cautious lot and where alternative accounting procedures or valuations are possible, the most pessimistic one is normally chosen. This is the prudence concept: that is, giving the most cautious representation of the financial position. So, if you have unsold goods at the end of your financial year, in your balance sheet, they [read more]
The Money Measurement Concept*Accounts only deal with items to which a monetary value can be attributed. For example, an asset such as a machine can be valued at its original purchase cost, its replacement cost (asset valuation and accounting can take up a whole accountant) but the flair and talent of a manager or employee has no easily [read more] |
|
Accounting Concepts*Accountancy is based on some very basic Accounting Concepts and they are the underlying logic of the profession. The Entity Concept This means regarding the business as a separate entity, distinct from its owners of managers. This concept applies whether the business is a limited company (which is then, in law, a separate entity) or a [read more] |
Why Keep Accounts?*As a business, you will obviously want to keep track of what’s coming in and out and how it is being spent. You need to pay your bills and in turn, know what money is due to you. Cashflow is also a very important consideration: Even though you may be profitable on paper, if customers [read more] |
Taking the Plunge*Well, I’m just going to take the plunge and get going with this blog, if I think too much about it, I’ll never actually do it. There’s some things that you can probably plan too much. * |
