1. HIGHER ACCOUNTING Concepts and Conventions

2. Statements of Principle Relevant – to stakeholders of accounting information Reliable – complete and free from deliberate bias or error Comparable – enables users to compare results of one business with another Understandable – understood by the users of the accounting information

3. Statements of Standard Accounting Practice (SSAPs) Issued by the Accounting Standards Board These are rules developed, written and enforced by the accountancy profession To ensure consistency and comparability between business enterprises

4. Objectives of Standards To narrow the discretion in accounting practices in specific areas such as: Valuation of Depreciation Stock Valuation The aim to ensure that the accounting statements give a ‘true and fair view’ of the business enterprise

5. SSAP 2 Four basic assumptions that underlie all accounting statements: Going Concern Accruals/Matching Consistency Prudence/Conservatism

6. Going Concern It is assumed that the firm is going to continue in operation for an indefinite period of time: Assets are shown at cost less depreciation to date as they are not for resale but to be used by the business until their working life is over

7. Accruals/Matching Allowance has to be made for amounts due and amounts prepaid at the beginning and end of the financial period

8. Consistency To enable comparison over consecutive years and between firms, accounting statements must always be prepared using the same bases eg Method of depreciation Method of valuing stock

9. Prudence/Conservatism Where there is the choice between one of two figures, the one which will understate rather than overstate profit should be used. All losses should be recorded in the books, but profits should not be anticipated

10. Other Concepts and Conventions Cost Materiality Business Entity Money Measurement Realisation Dual Aspect