There are Limitations of accounting in practice and businesses must record, analyze and present accounting information in way to avoid them.
Accounting is important in business, it provides the financial information of business to aid managers to take decision and run it successfully.
In Double Entry System, debit and credit of each account properly determined by Golden Rules and Accounting Equation Method.
In Accounting, clear conception of events classification is required and and events are divided in monetary events and Non-monetary events.
Accounting Equation indicates that for every debit there must be a equal credit. assets, liabilities and owners’ equity are the three components of it.
The uses, acceptability, application, advantages and social position of Accounting have increased to the credit of the image of Accounting.
Four basic assumptions are part of GAAP, accounting principles and the double entry system. The basic assumptions are like the pillars on which the structure of accounting is based.
In accounting, events which bring changes in the financial position of a person or an organization and for which keeping of accounts is needed are recognized as financial events
Constraints of accounting are actually the limit or boundaries that are necessary for providing information with the qualitative in characteristics.
Basic principles of Accounting are essential and these are the general decision making rules which govern the development of accounting techniques.