Accounting Principles, Concepts and Conventions Explained: The Ultimate Beginner's Guide for Commerce Students
July 9, 2025, 3:33 p.m.
Make Sense of Accounting from Day One
If you're starting your journey in commerce, it's essential to understand the basics of accounting principles, accounting concepts, and accounting conventions. These are the rules and ideas that help everyone in business speak the same financial language.
In this guide, we'll explain everything in easy terms, with examples and tables – so students and parents can learn together.
What Are Accounting Principles?
Accounting principles are basic rules that guide how financial transactions are recorded and reported. They ensure that accounting is done honestly, clearly, and consistently.
Why They Matter:
Make financial reports trustworthy
Help compare results between companies
Form the foundation for learning more advanced topics
Core Accounting Principles (with Examples)
Principle
What It Means
Simple Example
Going Concern
Business will continue to operate in the future
A store buys assets assuming it won’t shut down soon
Consistency
Use the same method every year
Using same depreciation method over years
Accrual
Record income/expenses when they happen
Record rent when due, not when paid
Matching
Match expenses with related income
Salary for staff is matched with sales they helped make
Prudence (Conservatism)
Record possible losses, not future gains
If stock loses value, record the lower value
Materiality
Ignore small things that don’t affect decisions
Not recording a broken pen in financial records
Full Disclosure
Share all important information in reports
Mentioning pending legal case in the notes
What Are Accounting Concepts?
Accounting concepts are ideas or assumptions that support the principles. They help accountants follow a consistent process when recording data.
Key Accounting Concepts:
Business Entity Concept – Treat the business and owner as separate
Money Measurement Concept – Record only what can be measured in money
Dual Aspect Concept – Every transaction has two sides (debit and credit)
Cost Concept – Record assets at their original cost, not current value
Revenue Recognition Concept – Record revenue when earned, not when received
Example:
If the business buys a computer for Rs. 50,000, it records the original cost (not the market value), based on the cost concept.
What Are Accounting Conventions?
Accounting conventions are general practices developed over time that most companies follow. They support principles and make accounting practical.
Common Conventions:
Conservatism – Be cautious, report possible losses
Consistency – Stick to the same method unless change is needed
Disclosure – Reveal all important details in reports
Comparability – Make it easy to compare one period/company to another
Example:
If two companies use the same method for inventory valuation, their reports can be compared more easily.
If you want to know more about the two types of accounting methods, checkout the blog given below,
Build a strong foundation in Class 11 and 12 Commerce
Help in understanding topics like journal entries, ledgers, and trial balance
Essential for future careers like CA, accountant, or financial analyst
Start Learning Accounting the Easy Way – Enroll in Account Eazy Today!
Understanding accounting principles, accounting concepts, and accounting conventions is the first step to learning accounting confidently. These basics make accounting logical, reliable, and universal.
At Interval Learning, our Account Eazy course makes topics like accounting concepts and conventions simple to learn with:
Whether you're just starting or helping your child in commerce, Interval Learning’s Account Eazy course is a perfect way to master these concepts the easy way.
Frequently Asked Questions
Principles are the rules to follow; concepts are the ideas behind those rules.
No, but they are widely accepted and useful for consistency.
They are the foundation for everything in accountancy and commerce.
Yes, through beginner courses like Account Eazy, anyone can learn these basics.
Yes! Interval's Account Eazy course explains all concepts and conventions in a simple, interactive way for students and parents.
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