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    BPLM Group Assignment

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    George Mhina
    Accounting identifies, measures, and communicates economic information to allow informed judgments and decisions. It has objectives like determining a business's worth and cash levels. There are principles like going concern (assuming continued existence), materiality (recording significant items), and business entity (separate from owners). Other principles are historical cost (recording at purchase price), cost-benefit (only record if benefit exceeds cost), accrual (recognize income/expenses when earned/incurred), realization (only recognize revenue with cash or assets), consistency (use same methods over time), and revenue recognition (record when earned, not received). Conservatism and objectivity principles aim to prevent bias.

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    BPLM Group Assignment

    Uploaded by

    George Mhina
    34 views3 pages
    Accounting identifies, measures, and communicates economic information to allow informed judgments and decisions. It has objectives like determining a business's worth and cash levels. There are principles like going concern (assuming continued existence), materiality (recording significant items), and business entity (separate from owners). Other principles are historical cost (recording at purchase price), cost-benefit (only record if benefit exceeds cost), accrual (recognize income/expenses when earned/incurred), realization (only recognize revenue with cash or assets), consistency (use same methods over time), and revenue recognition (record when earned, not received). Conservatism and objectivity principles aim to prevent bias.

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    BPLM GROUP ASSIGNMENT

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    Accounting identifies, measures, and communicates economic information to allow informed judgments and decisions. It has objectives like determining a business's worth and cash levels. There are principles like going concern (assuming continued existence), materiality (recording significant items), and business entity (separate from owners). Other principles are historical cost (recording at purchase price), cost-benefit (only record if benefit exceeds cost), accrual (recognize income/expenses when earned/incurred), realization (only recognize revenue with cash or assets), consistency (use same methods over time), and revenue recognition (record when earned, not received). Conservatism and objectivity principles aim to prevent bias.

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    © All Rights Reserved
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    34 views3 pages

    BPLM Group Assignment

    Uploaded by

    George Mhina
    Accounting identifies, measures, and communicates economic information to allow informed judgments and decisions. It has objectives like determining a business's worth and cash levels. There are principles like going concern (assuming continued existence), materiality (recording significant items), and business entity (separate from owners). Other principles are historical cost (recording at purchase price), cost-benefit (only record if benefit exceeds cost), accrual (recognize income/expenses when earned/incurred), realization (only recognize revenue with cash or assets), consistency (use same methods over time), and revenue recognition (record when earned, not received). Conservatism and objectivity principles aim to prevent bias.

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    Accounting is process of identifying measuring and communicating economic information to

    permit informed judgement and decission by users of the information.For instance ,the user of
    accounting are managers,tax inspector,the bank. And it has several objectives such as what
    their business is worth,how much cash they have in any accounting transaction .According to
    Wood ,(2002). There are several principle of accounting are to be followed are explained below.
    Acording to

    a. Going concern

    States that companies need to be treated as if they are going to continue to exist .This means
    that we must assume the company is not going to be dissolved or declare of bankrupt unless we
    have evidence to the contrary.Thus we should assume that there will be another accounting
    period in the future.

    b. Materiality concept

    Anything that would change financial statement users mind or decision about the company
    should be recorded in the financial statement. If a busness event occurred that is not significant
    that an investors or creditor would not care about it, the event neead not be recorded.

    c. Business entity concept

    Is the idea that the business and the owner of the businness are separete entities and should be
    accounted for separately this concept also applies to different busness. Each business should
    account for its own transaction separately.

    d. Historical cost concept

    Requires companies to record the purchase of goods, servise or capital assets at the price they
    paid for them. Assets are then remaining on the balance sheet at their historical without being
    adjusted for fluctuation in markert value.

    e. Cost benefit principales

    Limits the required amount of research and time to record or report financial information if the
    cost outweighs the benefit. Thus if recording an immaterial event word cost the company a
    material amount of money, it shiould be forgone.

    f. Accrual concept

    This when both income and expenditure should be recognised and accounted for as they are
    earned and incurred.
    g. Realization concept

    Enterprises should not recognise revenue unless they are realized either in form of cash or any
    other assets .

    h. The dual concept

    This concept provide double entry systeam that assets equals to capital plus
    liability(ASSETS=CAPITAL+LIABILITY). This means about bringing about the accounting equation.

    i. Consisteancy principle

    The consistency principle states that once you decide on an accounting method or principle to
    use on your business, you nead to stick it and follow this method through your accounting
    period .All accounting principles and assumptions should be applied consistently from period to
    the next.This ensure that financial statement are comparable between period through out the
    company history.

    j. Revenue recognition principle

    Companies should record their revenue when it is recognised, or in the same time period of
    when it was accrued (Rather than when it was received).Requires companies to record revenue
    when it is earned instead of when it is collected.This accrual basis of accounting gives a nmore
    accurete picture of financial event during the period.

    k. conservatism principle

    accountants should always error on the conservative side possible in any situation.this prevent
    accountant from over estimating future revanues and underestimated future expenses that
    could mislead finincial statement users.According to Tuovila,(2021)

    l. objective principle

    financial statement,accounts records,and financial information as a whole should be


    independent and free from bias.the financial statement are meant to convey the financial
    positision of the company and not to persuade end users to take certain actions. According to
    Tuovila,(2021)

    REFERENCE
    Glantion M.W.E.(2005):Basic Financial Accounting,3rd ed .Pitman Publishing,London.5,

    Wood,F.(2002);Business Accounting;9th ed.,vol.2,Pitman,Publishing,London.5.

    Tuovila,A.,2021.corporate financial&Accounting>financial statements.Available


    at :https://www.Investopedia.com/terms/a/a/accounting-principle.

    Kilagane Y.S.M,;(2006),Financial Accounting for Professional Students; volume one.

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