9 accounting concepts that a business owner should know

Business owners or entrepreneurs need to equip themselves with accounting skills and a good start would be learning accounting concepts and principles. Here is a list of accounting concepts that you may find useful.

• Matching concept- this is a concept in accounting that requires all revenue and expenses be used to show the position of the business in terms of profitability.
•  Business entity concept- this concept of accounting refers to the owner and the business as separate entities.
•  Accrual accounting concept- This concept requires that business transaction be recorded in the books when they happen and transferred when finalized from debit to credit or vice versa. For example when a business receives its electricity bill it records it as an expense immediately notwithstanding its unpaid status because the service has already been used.
•  Money measurement accounting concept- this concept requires that records of accounting should be calculated in money figures. Any engagement that has monetary value should be recorded.
• Realization accounting concept- Financials should be done in money obtained not money being expected.
•  Going concern concept- This accounting concept requires that businesses are able to continue their operations presently and in future.
• Dual aspect concept- This accounting concept requires that all business transactions be reflected in both sides of the books of accounts (the credit and debit side). Assets=liabilities plus capital.
• Accounting period concept- Accounting reports are to be done in frequent and regular intervals to determine the business’s financial position.
• Accounting cost concept- the accounting cost concept guides a business towards understanding the value of its assets and record the appreciation or depreciation.

This is a simplified version of the list of accountingconcepts and will go a long way to give you an idea of what these concepts entail.