Accounting Concepts - What are the accounting concepts used by accountants

 The term given to the main accounting rules or conventions that should be applied when preparing financial statements and accounts. Accounting concepts are universally applied by accountants in the preparation of the statutory accounts.

Though all of the rules can be applied and accounts professionals will consider all of the principles when considering the accuracy of the accounts before them, some rules may seem to conflict with each other. For example if a company has a turnover of £100million and the accounts do not record a provision for a bad debt of £100, using the prudency concept, the accounts should record the bad debt provision.

However an accountant will apply the materiality concept in this instance. The fact that the organisation has not recorded a provision for a bad debt in its accounts of such a small amount is basically neither here or there. In this instance the accountant or auditor will record the fact that the provision has not been made. But it will not influence his statement as to whether or not the financial statements provide a true and fair view.