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unit-12-basic-concepts-relating-to-final-accounts

Unit-12 Basic Concepts Relating to Final Accounts

In this unit you will learn about the basic accounting concepts or principles which guide the preparation of final accounts.

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What is the accounting implication of Going Concern Concept?


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Learning Pundits Content Team

Written on Jun 25, 2019 5:07:40 PM

Certain expenses like rent, repairs, etc., give benefits for a short period, say less than one year. But the benefit of some other expenditure like purchase of a building, machinery, etc., is spread over a longer period. The expenditure whose benefit is limited to one accounting year is fully charged to the Profit and Loss Account of the year.

But the cost of the items whose benefit is available for a number of accounting years, their cost must be spread over a number of years. Hence only a portion of such expenditure is charged to the Profit and Loss Account every year. The balance is shown in the Balance Sheet as an asset.