Sunday, July 23, 2017

What are the Underlying Assumptions of Accounting?



Answer:
1.     Separate Entity Assumption: Business is an entity that is separate and distinct from its owners, so that the finances of the firm are not mixed with the finances of the owners.
2.   Going concern Assumption: The business is going  to be operated for foreseeable future
3.   Monetary unit Assumption: The transaction must be reported in the form of monetary  unit i.e., Taka, US Dollar etc
4.  Periodicity Assumption: Information should be prepared and reported periodically (quarterly, Half-yearly, annually).

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