Going concern concept gives the fundamental assumption that the business entity will continue fairly for a long time.

Accounting principles are accepted based on the past experiences.

Under the conservatism principle, if there is uncertainty about incurring a loss, you should tend toward recording the loss. Conversely, if there is uncertainty about recording a gain, you should not record the gain.

When an entity practice the substance over form, it means that the financial statements reflect the financial reality of the entity (Substance) rather than the legal form of the transactions and events (forms), which underlie them.

According to this concept, business and businessman are two separate entities. Hence, the capital as well as drawings by the businessman should be properly recorded in the books of accounts. Matching concept states that the revenues of a particular period should be matched to the expenses incurred in that period in order to find out true profits. Accrual concept is concerned with recording cash as well as non-cash expenses and revenues in the books of accounting in order to find out true profits. Going concern concept states that business is assumed to exist for a long period of time.

According to conservatism, the business should not anticipate any profit but provide for all possible losses. Thus, stocks should be valued as stated above. Consistency concept advocates for following the accounting policies consistently. Realisation concept advocates for recording the change in value of asset only when it is realised. Cost concept states that the asset should be recorded in the books at cost price minus depreciation if any.

Accounting is concerned with recording transactions of only the financial nature. According to entity concept, business and businessman are two separate entities. Hence, the capital as well as drawings by the businessman should be properly recorded in the books of accounts.          Matching concept states that the revenues of a particular period should be matched to the expenses incurred in that period in order to find out true profits. Accrual concept is concerned with recording cash as well as non- cash expenses and revenues in the books of accounting in order to find out true profits.

According to this concept, the business can ignore the disclosure of insignificant items to ease the work of accounting such as payment for postage stamps worth Rs. 20 may be considered as utilised and there is no need to record any stamps which are not utilised yet from this transaction. Realisation concept advocates for recording the change in the value of an asset only when it is realised. Cost concept states that the assets should be recorded in the books at cost price minus depreciation if any. According to conservatism, the business should not anticipate any profit but provide for all possible losses.

“Assets should be valued at the price paid to acquire them” is based on cost concept. Assets are entered in the books of account at the price paid to acquire them and this cost rather than market value is the basis for subsequent accounting for the asset. The real worth of an asset changes with the passage of time but the assets are shown in books of account at cost and not at what they are worth.