What is the corresponding concept?

Concept of conformity concept is the practice of business accounting that corresponds to income with the costs incurred to create them. When using the concept of conformity, the company recognizes revenue and their related expenses in the same accounting period, whether they actually occur in the same period. This practice prevents societies from incorrecting their earnings or losses at a certain time.

Many companies use a quarterly accounting system in which one accounting period corresponds to one fiscal quarter. Four -quarters are a fiscal year or annual accounting period. At the end of each accounting period, the company publishes several accounting reports. These include generally a statement of changes in the financial situation, a statement of undivided earnings and a profit and loss statement. These statements help owners and investors evaluate the financial health of the company.

The concept of the corresponding is only one of several generally accepted accounting principles to ensure that these messages are as accurate as possible. Without him would pOdniky could have issued a bloated profit and loss statement, as expenses related to the release of a particular product have not yet been linked to the market. This could result in an artificial sense of the value of a company that could affect stocks and the selection of investments.

Acrual accounting is another generally accepted accounting practice that is often used to support the concept of corresponding. When using an accrual accounting, the company calculates money as soon as it is divided and as soon as it is owed. If the company knows that it will cost a certain amount, for example, to pay to its employees that money is considered to be costs as soon as the employee works, not on the second Friday of the month when paying paydays.

The acrual accounting supports the concept corresponding to the fact that it forces the company to resolve debts, even if they have not been paid. Nevertheless, it also allows money to count as an asset, even if the customer is not yettil company. It is used by most companies around the world.

The generally accepted accounting principles, such as the concept of corresponding and accrual accounting, consist of rules set by national and international organizations and less formal conventions recognized in the field of accounting. International standards are set by the International Council for Accounting Standards of the International Financial Report Foundation. Individual countries have their own advice and organizations that set standards in each country. Although some of these standards are a matter of the Convention, many of them have also been coded in the law.