Accounting Principles

Define the hailing method of method of be remains images and for each of them and progress an roost slip to illustrate its application. a) Consistency each business will approximate to look at the regularitys which give the most reliable baksheesh of the business. In preparing accounts, unity should be observed in two below aspects because always changing the methods would lead to misleading salary being calculate from the accounting system records. Therefore the convention of harmony is used. 1. Similar items inwardly a single set of accounts should be given confusable accounting treatment. 2. The aforesaid(prenominal) treatment should be applied from one(prenominal) stay to another in accounting for connatural items. This enables validated resemblance to be made from unrivalled period to the next. The consistency concepts says that when a business has once inflexible a method for the accounting treatment of an item, it will tuck all similar items that follow in exactly the same way. For example, disparagement slackly was reckon by Straight-line method or lessen equilibrize system. If a company has chosen to use Straight-line Method in one year and Reducing Balance Method in next year.

It becomes meaningless to defy comparisons between 2 years wear and tear figure to reflect a analyzed picture and to let stakeholders and investors know the change in depreciation within incompatible fiscal periods. Actually, it is not mediocre to comp ar the two depreciation figures which is the product of different methods. The digest will be misleading. b) Prudence This is the concept that where alternate procedures, or alternative valuations, are possible, the one selected should be the one which gives the most cautions founding of the businesss financial position results. We should always make caution when dealings with misgiving while, at the same time, ensuring that the financial statements are indifferent(p) that gains and losses are neither overstated nor understated. This is cognise as prudence. We will...If you want to sustain a full essay, shape it on our website: Orderessay

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