1. 1 Accounting Concepts and Convention 基本會計概念及慣例 References ： Chapter 12 (p. 235) 參考書目：第 12 章 (p. 250) 18

2. 2 AObjectivity ( 客觀性 ) and Subjectivity ( 主觀性 ) Objectivity is enhanced by using methods that are generally agreed. Generally agreed method is not used, it is regarded as subjective.

3. 3 BConcepts and Convention Concept is an idea or abstract principle which relates to a particular view of a subject. Convention refers to the ways of thinking and behaving that are believed to be normal and right by most people in a particular field

4. 4 CBasic Accounting Concepts 1.Business entity concept 2.Dual aspect concept 3.Money measurement concept 4.Historical cost concepts 5.Going concern concept 6.Concept of stable monetary measures 7.Realisation concept 8.Accrual concept 9.Matching

5. 5 1Business Entity Concept ( 企業個體概念 ) Business entity concept only concerns the transactions which affect the firm but not the owner’s personal transactions. e.g. The motor vehicle owned by the proprietor do not record in the books of the company.

6. 6 2Dual Aspect Concept ( 複式概念 ) Dual aspect concept states that there are two aspects of accounting, i.e. the assets of a business and the liabilities and / or capital of the business.

7. 7 3Money Measurement Concept 貨幣量度單位概念 Money measurement concept concerns only with transactions measurable in units of money, on which general agreement can also be obtained. e.g. quality of management, morale of the workforce

8. 8 4.Historical Cost Concept 成本概念 Historical cost concept states that assets are normally shown at their original costs of acquisition. E.g. A motor vehicles (Fixed asset) was recorded at the cost when acquired.

9. 9 5Going Concern Concept 繼續經營概念 Going concern concept states that a business is assumed to continue to operate in the foreseeable future. E.g. The assets are recorded at their original cost rather than their current market values in the book, even the business is operating at a loss for years.

10. 10 6 Concept of stable monetary measures 貨幣穩定假設 The concept of stable monetary measures assumes that the value or purchasing power of money is constant ignoring the effects of inflation or deflation. E.g. Two motor vehicles were bought in 2001 and 2008, the purchasing power were different in two years. But under the concept of stable monetary measures, the values of two motor vehicles allows to record without any adjustment.

11. 11 7Realisation concept 變現概念 Realisation concept specifies the point of time at which revenue should be recognised and recorded in the book. It usually refers to the point of time when: 1.Goods or services are passed to the customers, and 2.The customers incur liability to pay.

12. 12 8Accrual Concept 應計概念 Accrual concept states that revenues and expenses are recognised in the profit and loss account for the period in which they have been earned or incurred, not when they are received. Under this concepts, accruals and prepayments are arouse.

13. 13 9 Matching Concept Matching concept sates that revenue should be linked with its relevant expense or cost in the same period. Commission is the relevant expenses of Sales. (Commission is matched with Sales.) Depreciation of motor vehicle is matched with the time.

14. 14 DAccounting Convention Materiality / Conservatism Prudence Principle of Consistency

15. 15 1Materiality 重點鉅數 Materiality concept is used to judge what sorts of transactions or items are significant and their classification in the financial statements. e.g. A box of paperclips can be used for several years. It will not be recorded as fixed assets, because of its immaterial value.

16. 16 2Prudence / Conservatism 穩健保守 Prudence concept ensures that the net assets and profits of a business are not overstated. Thus, revenues should not be anticipated; Expenses should be anticipated.

17. 17 3Principle of Consistency 一致性 Consistency is to keep using the same accounting method on similar items, except for special cases. e.g. A company depreciates the machinery by using reducing balance method. The proprietor want to overstate the profit by changing the depreciation method. This violates the principle of consistency.