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1.38 Theoretical Framework Principles and Practices of Accounting Paper 1

ƒ Dual Aspect Accounting

ƒ Materiality Concept

ƒ Fundamental Accounting Assumptions

ƒ Qualitative Characteristics of Financial Statements

ƒ CapEx vs Revenue Exp.
ƒ Provisions

ƒ Contingent Liability

ƒ Change in Accounting Policy
ƒ Benefits of As

ƒ Valuation Principle

ƒ Significance of Issue of Ind As

SUMMARY

; “Accounting is the art of recording, classifying and summarizing in a significant man-
ner and in terms of money, transactions and events which are, interpreting the result
thereof.”

; The objectives of accounting can be memorized by the word “FIRST” signifying —

F – Financial Position

I – Information to Users

R – Results

S – Solvency Position

T – Recording of Transaction

; The functions of accounting are (i) Measurement, (ii) Forecasting, (iii) Decision-
making, (iv) Comparison and Evaluation, (v) Control and (vi) Government Regulation and
Taxation.

; Objectives of Book-keeping can be remembered by the letters “CA”.

C – Complete recording of transaction in a systematic and logical manner.

A – Ascertain financial effect on the business.

; The various users of accounting information:

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