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which Double Entry System of Book-Keeping is based. According to this principle, every debit has
a corresponding credit.

Accounting Period Concept

According to this concept the long life of business is divided into justifiable accounting periods so
as to help businessman to know the results of his investment during each such period. This period
is known as accounting period and the length of this period depends on the nature of business.
Accounting period may be either a calendar year (From January 1 to December 31) or the fiscal
year of the Govt. (April 1 to March 31)

Going Concern Concept

This concept assumes that every business has a long and indefinite life. Since financial statements
are prepared on the basis of this concept, all fixed assets are shown in the books at their cost
ignoring their market value.

Cost Concept

According to this concept all fixed assets are recorded in the books at cost i.e. the price paid to

acquire them. Any subsequent increase or decrease in their value will not be shown in the records
except the depreciation of these assets. In subsequent years, therefore fixed assets are shown at
cost less depreciation provided on them up to date. Continuous charging of depreciation on the
asset will ultimately eliminate the asset from the books.

Money Measurement Concept

According to this concept only those transactions are recorded in the books of accounts which can
be expressed in monetary terms. The non-financial or non-monetary transactions do not find any
place in the accounting records. Money is the common denominator to denote the value of the
various assets of diverse nature to give a meaningful total of these assets.

Matching Concept

This concept states that it is necessary to charge all the expenses incurred to earn revenue during
the accounting period against that revenue in order to ascertain the net income or trading results
of the business. The matching concept which is so closely related to accrual concept and
accounting period concept helps a businessman in realizing his objective i.e. in ascertaining the
trading results or profit or loss from the business. For ascertaining the net income.