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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 significance of an Accounting Period?

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Learning Pundits Content Team

Written on Jun 25, 2019 5:07:19 PM

You know the going concern concept assumes that the business will continue for a long period, almost indefinitely. But the businessmen cannot postpone the preparation of financial statements indefinitely. Therefore, he prepares them periodically. This will also enable other interested parties such as owners, investors, creditors, tax-authorities to make periodic assessment of its performance.

So, the life of the business enterprise is divided into what are called 'accounting periods'. The profit or loss and the financial position at the end, of each such accounting period is regularly assessed. Conventionally, duration of the accounting period is twelve months. It is called an 'accounting year'.