Accounting Conventions - a)Convention of Conservation b)Convention of Materiality c) Convention of Consistency

Explain a)Convention of Conservation b)Convention of Materiality c) Convention of Consistency

a)Convention of Conservation

This accounting convention is generally expressed as to “anticipate all the future losses and expenses, without considering the future incomes and profits unless they are actually realized.” This concept emphasizes that profits should never be overstated or anticipated. This convention generally applies to the valuation of current assets as they are valued at cost or market price whichever is lower.

b)Convention of Materiality

This accounting convention proposed that while accounting only those transactions will be considered which have material impact on financial status of the organization and other transactions which have insignificant effect will be ignored.. It gives relative importance to an item or event.

c) Convention of Consistency

This accounting convention proposes that the same accounting principles, procedures and policies should be used consistently on a period to period basis for preparing financial statements to facilitate comparison of financial statements on period to period basis. If any changes are made in the accounting procedures or policies, then it should be disclosed explicitly while preparing the financial statements.
What are the various systems of Accounting? Explain them.
There are two systems of Accounting: 1) Cash System of Accounting 2) Mercantile or Accrual System of Accounting
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Errors in accounting are placed in the following main groups:…
What are the types of errors which have an effect on Trial Balance?
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Discussion Board
1. Wrong Transfer Of Figure 2. Poor Addition On Both Debit And Credit Of The Trial Balance 3. Failure To Post The Ledger Balance Correctly
Akintayo Onaopemipo Waheed 10-3-2016