ACCOUNTING CONCEPTS Definition

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ACCOUNTING CONCEPTS are the assumptions underlying the preparation of financial statements, i.e., the basic assumptions of going concern, accruals, consistency and prudence.

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GOING CONCERN PRINCIPLE assumes that the accounting entity will maintain proper accounting records from the date of its establishment to the date of its liquidation.

ORDER OF MAGNITUDE is a number assigned to the ratio of two quantities; two quantities are of the same order of magnitude if one is less than 10 times as large as the other; the number of magnitudes that the quantities differ is specified to within a power of 10.

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