accounting conventions

1.	accounting conventions
Answer» There are four main conventions in practice in accounting: conservatism; consistency; full disclosure; and materiality. Conservatismis the convention by which, when two values of a transaction are available, the lower-value transaction is recorded. By this convention, profit should never be overestimated, and there should always be a provision for losses. Consistencyprescribes the use of the same accounting principles from one period of an accounting cycle to the next, so that the same standards are applied to calculate profit and loss. Materialitymeans that all material facts should be recorded in accounting. Accountants should record important data and leave out insignificant information. Full disclosureentails the revelation of all information, both favourable and detrimental to a business enterprise, and which are of material value to creditors and debtors tqqqqqq☺️

Answer»

There are four main conventions in practice in accounting: conservatism; consistency; full disclosure; and materiality.

Conservatismis the convention by which, when two values of a transaction are available, the lower-value transaction is recorded. By this convention, profit should never be overestimated, and there should always be a provision for losses.

Consistencyprescribes the use of the same accounting principles from one period of an accounting cycle to the next, so that the same standards are applied to calculate profit and loss.

Materialitymeans that all material facts should be recorded in accounting. Accountants should record important data and leave out insignificant information.

Full disclosureentails the revelation of all information, both favourable and detrimental to a business enterprise, and which are of material value to creditors and debtors

tqqqqqq☺️

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