write:Over years many of these concepts are being challenged as outlived. Yet no major deviations have been made as yet. Path breaking ideas have emerged and the accounting standards o

however
the terms-principles
concepts and conventions are used interchangeably.Professional Accounting Bodies have published statements of these concepts. Over years
many of these concepts are being challenged as outlived. Yet
no major deviations have been made as yet. Path breaking ideas have emerged and the accounting standards of modern days do require companies to record and report transactions which may not be necessarily based on concepts that are in vogue for long. It is essential to study accounting from the basic levels and understand these concepts in entirety.A. BASIC ASSUMPTIONS (a) Business Entity Concept This concept explains that the business is distinct from the proprietor. Thus
the transactions of business only are to be recorded in the books of business. (b) Going Concern Concept This concept assumes that the business has a perpetual succession or continued existence. (c) Money Measurement Concept According to this concept only those transactions which are expressed in money terms are to be recorded in accounting books. (d) The Accounting Period Concept Businesses are living
continuous organisms. The splitting of the continuous stream of business events into time periods is thus somewhat arbitrary. There is no significant change just because one accounting period ends and a new one begins. This results into the most difficult problem of accounting of how to measure the net income for an accounting period. One has to be careful in recognizing revenue and expenses for a particular accounting period. Subsequent section on accounting procedures will explain how one goes about it in practice. (e) The Accrual Concept The accrual concept is based on recognition of both cash and credit transactions. In case of a cash transaction
owner’s equity is instantly affected as cash either is received or paid. In a credit transaction
however
a mere obligation towards or by the business is created. When credit transactions exist (which is generally the case)
revenues are not the same as cash receipts and expenses are not same as cash paid during the period. Today’s accounting systems based on accrual concept are called as Accrual system or mercantile system of accounting.