Theory Base of Accounting

• Introduction

  • Meaning of Theory Base
  • Need for uniformity and consistency
  • Components: Accounting Concepts, Principles, Standards

• Generally Accepted Accounting Principles (GAAP)

  • Meaning and definition
  • Basic rules and guidelines
  • Acceptance by the accounting profession

• Basic Accounting Concepts (Assumptions)

  • Going Concern Concept
  • Consistency Concept
  • Accrual Concept

• Fundamental Accounting Principles

  • Business Entity Principle
  • Money Measurement Principle
  • Accounting Period Principle
  • Full Disclosure Principle
  • Materiality Principle
  • Prudence (Conservatism) Principle
  • Cost Concept (Historical Cost)
  • Matching Principle
  • Dual Aspect Principle ($Assets = Liabilities + Capital$)
  • Revenue Recognition (Realisation) Concept

• System of Accounting

  • Double Entry System
    • Two-fold aspect (Debit and Credit)
    • Scientific and complete system
  • Single Entry System (Incomplete records)

• Basis of Accounting

  • Cash Basis
    • Transactions recorded on cash receipt/payment
  • Accrual Basis
    • Revenues and expenses recorded when they occur

• Accounting Standards (AS)

  • Meaning and nature
  • Need and objectives
  • Standardized policies for financial reporting
  • Setting body in India: ICAI

• International Financial Reporting Standards (IFRS)

  • Meaning of IFRS
  • Global standards for financial reporting
  • Convergence of Indian Accounting Standards with IFRS (Ind-AS)

• Goods and Services Tax (GST)

  • Introduction to GST
  • Destination-based consumption tax
  • Replacement of indirect taxes (CGST, SGST, IGST)