Some Basic Concepts of Accounting: A Critical Appraisal

Abstract

Financial statements of Enterprises are usually depended upon by a wide variety of users in making economic decisions about an enterprise. In order to ensure that these Statements are useful to the common needs of users, the accountancy profession has developed a framework of ideas generally accepted as the foundation on which accounting rests. Taking into consideration the fact that many of these ideas (often variously referred to as concepts, conventions, postulates etc) conflict with each other, one wonders whether accounting concepts or conventions lead to users getting what they need from a set of financial statements. This paper offers a critical appraisal of various accounting concepts and concluded that accounting concepts or conventions are likely to be of relatively different importance to different users of financial statements.