12-22-2005, 10:45 PM
<blockquote id="quote"><font size="1" face="Verdana, Tahoma, Arial" id="quote">quote<hr height="1" noshade id="quote"><i>Originally posted by Khalid_Dawar</i>
<br />Salam to all brothers.....
Can some one tell me about the following terminalogies
1. Prudence concept
2. Historical Cost
KHALID
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">
1.
<b>Prudence </b>
Otherwise known as conservatism. It is this concept more than any other that has given rise to the idea that accountants are pessimistic boring people!! Basically the concept says that whenever there are alternative procedures or values, the accountant will choose the one that results in a lower profit, a lower asset value and a higher liability value. The concept is summarised by the well known phrase 'anticipate no profit and provide for all possible losses'. Thus, undue optimism can never be part of the make up of an accountant! The danger is that if an optimistic view of profits is given then dividends may be paid out of profits that have not been earned.
2.
Sam Quoted <b>REALISATION</b>
The realisation concept helps the accountant to determine the point at that he feels that a transaction is certain enough for the profit to be made on it to be calculated and taken to the profit and loss account. Realisation occurs when a sale is made to a customer. The basic rule is that revenue is created at the moment a sale is made, and not when the account is later settled by cheque or by cash. Thus, profit can be taken to the profit and loss account on sales made, even though the money has not been collected. The sale is deemed to be made when the goods are delivered, and thus profit cannot be taken to the profit and loss account on orders received and not yet filled. An exception to this rule would be a long term contract that involve payments on account before completion of the work.
__________________
<blockquote id="quote"><font size="1" face="Verdana, Tahoma, Arial" id="quote">quote<hr height="1" noshade id="quote"><b>The Only True Wisdom Is In Knowing You Know Nothing </b> <hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">
<br />Salam to all brothers.....
Can some one tell me about the following terminalogies
1. Prudence concept
2. Historical Cost
KHALID
<hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">
1.
<b>Prudence </b>
Otherwise known as conservatism. It is this concept more than any other that has given rise to the idea that accountants are pessimistic boring people!! Basically the concept says that whenever there are alternative procedures or values, the accountant will choose the one that results in a lower profit, a lower asset value and a higher liability value. The concept is summarised by the well known phrase 'anticipate no profit and provide for all possible losses'. Thus, undue optimism can never be part of the make up of an accountant! The danger is that if an optimistic view of profits is given then dividends may be paid out of profits that have not been earned.
2.
Sam Quoted <b>REALISATION</b>
The realisation concept helps the accountant to determine the point at that he feels that a transaction is certain enough for the profit to be made on it to be calculated and taken to the profit and loss account. Realisation occurs when a sale is made to a customer. The basic rule is that revenue is created at the moment a sale is made, and not when the account is later settled by cheque or by cash. Thus, profit can be taken to the profit and loss account on sales made, even though the money has not been collected. The sale is deemed to be made when the goods are delivered, and thus profit cannot be taken to the profit and loss account on orders received and not yet filled. An exception to this rule would be a long term contract that involve payments on account before completion of the work.
__________________
<blockquote id="quote"><font size="1" face="Verdana, Tahoma, Arial" id="quote">quote<hr height="1" noshade id="quote"><b>The Only True Wisdom Is In Knowing You Know Nothing </b> <hr height="1" noshade id="quote"></font id="quote"></blockquote id="quote">
