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Business relies on accounting language. Accounting utilizes several concepts, which rule the language. What follows are a few of the more significant ones:
First, Going Concern Concept. In this field, it is presumed that an enterprise will exist for a long time. Consequently, transactions are recorded from this perspective. Because of this, there must be differentiation between expenditure that will cause benefit over a long period, and those with benefits that will be quickly exhausted. Necessarily, if it is obvious that the concerned venture will exist only for a limited time, the accounting record will state the same.
Second, Dual-Aspect Concepts. Each transaction has two facets. If an enterprise has bought, or somehow procured an asset, it must have resulted in any of these: some other asset has bee sacrificed; or the obligation to pay arises; or there is gain, or profit, which is actually the amount that the business owes to the owner or the proprietor has given money for the acquisition of the asset thus mentioned.
Second, Dual-Aspect Concepts. Each transaction has two aspects. If a business has acquired an asset, it must have resulted in one of the following: some other asset has been given up; or the obligation to pay for it has arisen; or there has been a profit, leading to an the amount that the business owes to the proprietor; or the proprietor has contributed money for the acquisition of the asset. In accounting the two effects of an entry will be recorded.
Third is the Realization Concept. Accounting is a time-oriented record of transaction; it encodes what has already transpired and does not predict events. However, the anticipated adverse effect of events that have already happened are usually recorded.
No profit or income could likewise be considered as realized.
First, Going Concern Concept. In this field, it is presumed that an enterprise will exist for a long time. Consequently, transactions are recorded from this perspective. Because of this, there must be differentiation between expenditure that will cause benefit over a long period, and those with benefits that will be quickly exhausted. Necessarily, if it is obvious that the concerned venture will exist only for a limited time, the accounting record will state the same.
Second, Dual-Aspect Concepts. Each transaction has two facets. If an enterprise has bought, or somehow procured an asset, it must have resulted in any of these: some other asset has bee sacrificed; or the obligation to pay arises; or there is gain, or profit, which is actually the amount that the business owes to the owner or the proprietor has given money for the acquisition of the asset thus mentioned.
Second, Dual-Aspect Concepts. Each transaction has two aspects. If a business has acquired an asset, it must have resulted in one of the following: some other asset has been given up; or the obligation to pay for it has arisen; or there has been a profit, leading to an the amount that the business owes to the proprietor; or the proprietor has contributed money for the acquisition of the asset. In accounting the two effects of an entry will be recorded.
Third is the Realization Concept. Accounting is a time-oriented record of transaction; it encodes what has already transpired and does not predict events. However, the anticipated adverse effect of events that have already happened are usually recorded.
No profit or income could likewise be considered as realized.
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