Accounting Principles and Concepts – Why are they Important?

Being conceptually good enables us to use the acquired knowledge and concepts effectively. Regardless of their chosen field of endeavor, people whose concepts are clear can perform their tasks well and independently. 


Accounting system is based on some concepts and conventions. Accountants all over the world would agree on certain basic points on which accounting theory and practice is based being commonly referred to as accounting concepts and principles. 

They are considered as a broad set of conventions that are meant to provide basic frame work for financial reporting. The importance of these concepts and principles lies in the fact that they are related to the entire Financial accounting process while they affect directly the way the financial reports are prepared. 

Accountants need to apply professional judgments while preparing financial reports, these concepts and principles help them to ensure that they are not being misled and that providing a true and fair view of financial statements is being accomplished.

Following is a list of the major accounting concepts and Principles:

•   Timeliness
•   Faithful Representation
•   Reliability
•   Neutrality
•   Matching Concept
•   Prudence
•   Completeness
•   Entity Concept
•   Money Measurement Concept
•   Understandability
•   Comparability
•   Consistency
•   Materiality
•   Going Concern
•   Accruals
•   Substance Over Form
•   Duality Concept
•   Realization Concept

 Read more.......

Written by:

K. A. Fareed (Fareed Siddiqui)
Writer, Trainer, Author, Blogger, Software Developer
BBA, MBA-Finance, MPhil-Financial Management, (MSc-Software Engineering)
(PhD-Management)
MA-English, MPhil-English
Post Graduate Diploma in Computer Applications and Programming
Certificate course in English language proficiency
Level 1 – Leadership and Management ILM – UK
Pursuing CMA-USA
Individual Member of Institute of Management Consultants of India

Professional articles on business and Management 

My You tube Videos and Presentations