Difference Between Accounting Concept and Convention


Accounting is a business language, which is used to communicate financialinformation to the company’s stakeholders, regarding the performance, profitability and position of the enterprise and help them in rational decision making. The financial statement is based on various concepts and conventions. Accounting concepts are the fundamental accounting assumptions that act as a foundation for recording business transactions and preparation of finalaccounts.
On the other extreme, accounting conventions are the methods and procedures which have universal acceptance. These are followed by the firm while recording transactions and preparation of financial statement. Let’s take a look at the article to understand the difference between accounting concept and conventions.
Comparison Chart
Definition of Accounting Concept

Accounting Concepts can be understood as the basic accounting assumption, which acts as a foundation for the preparation of financial statement of an enterprise. Indeed, these form a basis for formulating the accounting principles, methods and procedures, to record and present the financial transactions of business.

These concepts provide an integrated structure and rational approach to the accounting process. Every financial transaction that occurs is interpreted taking into consideration the accounting concepts, which guides the accounting methods.

Business Entity Concept: The concept assumes that the business enterprise is independent of its owners.
Money Measurement Concept: As per this concept, only those transaction which can be expressed in monetary terms are recorded in the books of accounts.
Cost concept: This concept holds that all the assets of the enterprise are recorded in the accounts at their purchase price
Going Concern Concept: The concept assumes that the business will have a perpetual succession, i.e. it will continue its operations for an indefinite period.
Dual Aspect Concept: It is the primary rule of accounting, which states that every transaction effects two accounts.
Realisation Concept: As per this concept, revenue should be recorded by the firm only when it is realized.
Accrual Concept: The concept states that revenue is to be recognized when they become receivable, while expenses should be recognized when they become due for payment.
Periodicity Concept: The concept says that financial statement should be prepared for every period, i.e. at the end of the financial year.
Matching Concept: The concept holds that, the revenue for the period, should match the expenses.


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