Accounting framework includes generally accepted accounting principles (GAAP) or the basis of which accounting data is processed, analysed and reported.
Accounting theory is a set of inter-related principles and propositions which provide a general frame work for accounting practice and deal with new developments in the area.
Consistency concept envisages that accounting information should be prepared on a consistent basis form period of period, and within periods there should be consistent treatment of similar items.
Conservatism concept forbids the inclusion of unrealised gains but advocates provi-sion for possible losses.
Entity concept separates the business from owner(s), from the standpoint of accounting.
Going concern concept refers to the expectation that the organisation will have indefinite life. This assumption has an important bearing on how the assets are to be valued.
Materiality concept admonishes that events of relatively small importance need not be given a detailed or theoretically correct treatment. They may be ignored for separate recording.
Money measurement concept ignores intangibles like employee loyalty and customer satisfaction as they cannot be expressed in money terms. It also assumes records on the basis of a stable monetary unit.
Objectivity principle requires that only the information based on definite and verifi-able facts be recorded.
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