In accounting, the receipts and payments of the owners of the business are not necessarily the amount of cash actually received or paid in a particular period of account. It is the receipts due and not yet received and the expenses due and not yet paid. These treats advances in the period in which they …
Here, we are meant to understand that in accounting, one is not supposed to make a provision for profit or expect such profits pending the time such profit is realized in the business. This shows that profit is to be earned only when they are realized.
Here, the transactions of a business are dual in nature. This implies that this principle is the central care of modern account which then also implies the double entry system of accounts. It states that in every debit entry, there must be a corresponding credit entry and vise versa. This shows in effect that in …
Here, in most cases, the accounting records are kept with the assumption that the business will continue its trading operations. If for instance, the business decides to go into liquidation or becomes bankrupt, then a different approach to valuation has to be needed.
Here, assets are those resources that are acquired by the business and they are normally being paid for. The amount being paid for acquiring those properties (resources) is recorded in the book of accounts. The result is that at any moment in time, the values recorded in the book of account do not necessarily reflect …
Here, accounting uses money to express certain facts about business. But information used or recorded in accounting are those ones that are limited to monetary expression. Note: To express certain basic facts about a business means that if an equipment that is worth N25,000 is in the business then the wealth can be expressed.