ACCOUNTING PRINCIPLES
In dealing with the framework of accounting theory, we are confronted
with a serious problem arising from differences in terminology. A number
of words and terms have been used by different authors to express and
explain the same idea or notion. The various terms used for describing the
basic ideas are: concepts, postulates, propositions, assumptions, underly ing principles, fundamentals, conventions, doctrines, rules, axioms, etc. Each
of these terms is capable of precise definition. But, the accounting profession
has served to give them lose and overlapping meanings. One author
may describe the same idea or notion as a concept and another as a convention
and still another as postulate. For example, the separate business entity
idea has been described by one author as a concept and by another as
conventions. It is better for us not to waste our time to discuss the precise
meaning of generic terms as the wide diversity in these terms can only serve
to confuse the learner. We do feel, however, that some of these terms/ideas
have a better claim to be called ‘concepts ‘ while the rest should be called
‘conventions’. The term ‘Concept’ is used to connote the accounting postulates,
i.e., necessary assumptions and ideas which are fundamental to accounting
practice. In other words, fundamental accounting concepts are
broad general assumptions which underline the periodic financial statements
of business enterprises. The reason why some of the these terms should be
called concepts is that they are basic assumptions and have a direct bearing
on the quality of financial accounting information. The term ‘convention’
is used to signify customs or tradition as a guide to the preparation of accounting.
In dealing with the framework of accounting theory, we are confronted
with a serious problem arising from differences in terminology. A number
of words and terms have been used by different authors to express and
explain the same idea or notion. The various terms used for describing the
basic ideas are: concepts, postulates, propositions, assumptions, underly ing principles, fundamentals, conventions, doctrines, rules, axioms, etc. Each
of these terms is capable of precise definition. But, the accounting profession
has served to give them lose and overlapping meanings. One author
may describe the same idea or notion as a concept and another as a convention
and still another as postulate. For example, the separate business entity
idea has been described by one author as a concept and by another as
conventions. It is better for us not to waste our time to discuss the precise
meaning of generic terms as the wide diversity in these terms can only serve
to confuse the learner. We do feel, however, that some of these terms/ideas
have a better claim to be called ‘concepts ‘ while the rest should be called
‘conventions’. The term ‘Concept’ is used to connote the accounting postulates,
i.e., necessary assumptions and ideas which are fundamental to accounting
practice. In other words, fundamental accounting concepts are
broad general assumptions which underline the periodic financial statements
of business enterprises. The reason why some of the these terms should be
called concepts is that they are basic assumptions and have a direct bearing
on the quality of financial accounting information. The term ‘convention’
is used to signify customs or tradition as a guide to the preparation of accounting.
No comments:
Post a Comment