What is the Accruals (Matching) concept? - This principle states that income and expenses must be recorded in the period to which they relate, regardless of when cash is received or paid., Define the Business Entity concept. - This concept states that the business is treated as a separate entity from its owner(s) for accounting purposes., What is the purpose of the Consistency concept? - This concept ensures that accounting methods and practices are applied consistently from one period to the next, What does the Going Concern concept assume? - This concept assumes that a business will continue to operate for the foreseeable future and will not liquidate or significantly reduce its operations., Explain the Materiality concept. - This concept states that only information significant enough to influence decisions should be included in financial statements.ountants to exercise caution and avoid overstating income or assets and understating expenses or liabilities., What is the Prudence concept? - This concept requires accountants to exercise caution and avoid overstating income or assets and understating expenses or liabilities., What does the Realisation concept mean? - This concept states that income is recognised when it is earned, not when cash is received, and expenses are recognised when incurred., Why is the Business Entity concept important? - This principle ensures that the financial transactions of the business are recorded separately from those of its owner(s), providing clarity and accuracy., How does the Accruals concept differ from cash accounting? - Accruals accounting recognises income and expenses when they occur, while cash accounting records them only when cash is exchanged., What happens if the Going Concern assumption is not valid? - If a business is not a going concern, its assets may need to be valued at liquidation value rather than at cost or market value.,

Accounting Concepts

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