06-16-2009, 02:49 PM
<blockquote id="quote"><font size="1" face="Verdana, Arial, Helvetica, san" id="quote">quote<hr height="1" noshade id="quote"><i>Originally posted by irfan kazim</i>
<br />What are the meaning of these terms in simple words and with simple examples.
Materiality, consideration, going concerned,
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">
<b>Materialily</b>
Materiality refers to the significance or importance of an event,transaction and amount and their influence on the overall financial position of company.
Materiality concept is very important for tracing an asset. For instance if a small machinery is purchased for Rs.5000/- by a small company shall be treated as asset but if the same machinery is purchased by a large organization then it shall be treated as expense.
Materiality means the significant or degree of influence of a transaction on the financial position of a company.
<b>Consideration</b>
Consideration is an incentive that a receipient of goods or services give to person from whom he receives this goods or services. A consideration may be in cash or in kind or in shape of services.
<b>Example</b>
you purchase a house for Rs.200,000/- the amount 200,000/- that you will pay shall be treated as consideration. If you give the land in return of house then it will be alos consideration. If you provide employment services to the seller for one year for the value of house it will also be consideration.
<b>Going Concern</b>
It is the basic principle of accounting . Going concern is defined in the framework of IAS.
Going concern means that a business neither have intenssion nor need to wind up in foreseeable future.
you have seen that asset are shown in balance sheet at book value rather than at value at which they can be sold. It is because of the fact that a business has not intenssion to wind up.
Regrds,
Awais Aftab
<br />What are the meaning of these terms in simple words and with simple examples.
Materiality, consideration, going concerned,
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">
<b>Materialily</b>
Materiality refers to the significance or importance of an event,transaction and amount and their influence on the overall financial position of company.
Materiality concept is very important for tracing an asset. For instance if a small machinery is purchased for Rs.5000/- by a small company shall be treated as asset but if the same machinery is purchased by a large organization then it shall be treated as expense.
Materiality means the significant or degree of influence of a transaction on the financial position of a company.
<b>Consideration</b>
Consideration is an incentive that a receipient of goods or services give to person from whom he receives this goods or services. A consideration may be in cash or in kind or in shape of services.
<b>Example</b>
you purchase a house for Rs.200,000/- the amount 200,000/- that you will pay shall be treated as consideration. If you give the land in return of house then it will be alos consideration. If you provide employment services to the seller for one year for the value of house it will also be consideration.
<b>Going Concern</b>
It is the basic principle of accounting . Going concern is defined in the framework of IAS.
Going concern means that a business neither have intenssion nor need to wind up in foreseeable future.
you have seen that asset are shown in balance sheet at book value rather than at value at which they can be sold. It is because of the fact that a business has not intenssion to wind up.
Regrds,
Awais Aftab
