Finance and Accounting Assignment Help

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Accounting concepts:

Money measurement concept: money measurement concept holds that accounting is a measurement and communication process of the activities of the firm that are measurable in monetary term. Thus only such transactions and events can be interpreted in terms of money and recorded. Events which cannot be expressed in money terms do not find place in the books of accounts though they may be very important for business. Non-monetary events like death, dispute, sentiments, efficiency etc. are not recorded in the books, even though these may have great effect. Accounting therefore does not give a complete account of the happenings in a business or an accurate picture of the conditions of the business. Thus accounting information is perceived as essentially monetary and qualified.

Any unit of measurement over a period of time has its drawbacks.

Though a universally acceptable measure of value, it suffers from territorial limitation. It gets affected seriously by economic differences between various territories as well as political and social differences.

Cost concept: this concept is closely related to going concern concept. According to this concept an asset is ordinarily entered in the accounting records at a price paid to acquire it and this cost is the basis for all subsequent accounting for the assets. If a business buys a plot of land for $ 50,000 the asset would be recorded in the books at $ 50,000 only even if its market value happens to be $ 60,000, in case inserting year if the market value of the asset comes down to $ 40,000 it will ordinarily  continue to be shown at $ 50,000 in the books. The cost concept does not mean that the asset will always be shown at cost. It has also been stated above that cost becomes the basis for all future accounting for the asset. It means that asset is recorded at cost at the time of its purchase
but it may systematically be reduced in its value by charging depreciation.

Dual aspect concept: according to this concept every business transaction has a dual effect. Eg. A person starts a business with capital of $ 10,000. There are two aspects of this transaction. On the one hand business has asset of $ 10,000 on the other hand business has to pay the liability of $ 10,000 to the proprietor. The term assets denotes the resources owned by the business while the term equity denote the claim of various parties against the assets. Equity is of two types: Owner equity and outside equity.
Owner equity is the claim of owners against the assets of the business while outsides equity is the claim of outside parties such as creditors, debentures holders etc. since all assets of the business are claimed by someone, the total of assets will be equal to the total of liabilities.

Equities= Assets
Liabilities + Capital = Assets

In the example given above if the business purchase furniture worth $ 5000 provided by the owner the situation can be written as:
(Capital) $ 10,000 = (Cash) $ 5000 + (Furniture) $ 5000

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