Accounting Concepts and Conventions
Now, this is a blog that includes a bit of Accounting. Let us start with Accounting Concepts and Conventions.
The concepts of accounting are developed by the International Accounting Standards Committee (IASC) which is in charge of releasing International Accounting Standards (IAS). The IASC decides the preferred accounting practices worldwide acceptance. There are overall 41 IAS. Now, International Financial Reporting Standards (IFRS) and Sarbanes Oxley (SOX) Act gain more importance which came up from US GAAP and UK GAAP.
Before comparing Accounting Concepts and Conventions, let us know the comparison between Finance and Accounts as many people think Finance and Accounts are one and the same but it is not true and so below are the differences -
Let us now move ahead with the comparison between Accounting Concepts and Conventions.
- Accounting Concepts - The Accounting Concepts or Principles evolved out of practice and procedures followed by different countries and later on established by the International Statutory Accounting Bodies (ISAB) like the Institute of Chartered Accountants of India (ICAI), Institute of Chartered Accountants of England & Wales (ICAEW)...etc. to become an Accounting principle statutorily need to be followed while preparing the Financial Statements. In nutshell, this has evolved out of the standard practice followed by several countries while preparing the Trading Account, Profit/Loss Account, and Balance Sheet.
- Accounting Conventions - The Accounting Conventions or Practices are basically assumptions and expected to be followed while preparing the Financial Statements.
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