Accounting concepts are based on

Accounting concepts are based on certain assumptions. These assumptions are the foundation of accounting and provide a framework for the preparation and presentation of financial statements. The assumptions are:

• Economic entity assumption: The economic entity assumption states that an entity is separate from its owners and other entities. This means that the entity’s financial statements should report only the activities of the entity, and not the activities of its owners or other entities.
• Going concern assumption: The going concern assumption states that an entity will continue to operate for the foreseeable future. This assumption is important because it allows for the preparation of financial statements that are based on the assumption that the entity will continue to operate.
• Monetary unit assumption: The monetary unit assumption states that financial statements are prepared in terms of a monetary unit. This assumption is important because it allows for the comparison of financial statements over time.
• Periodicity assumption: The periodicity assumption states that an entity’s activities can be divided into time periods for the purpose of financial reporting. This assumption is important because it allows for the preparation of financial statements on a regular basis.
• Accrual basis assumption: The accrual basis assumption states that revenues and expenses are recognized when they are earned or incurred, regardless of when cash is received or paid. This assumption is important because it allows for a more accurate representation of an entity’s financial performance.
• Historical cost principle: The historical cost principle states that assets should be recorded at their historical cost, which is the amount of cash or cash equivalent paid for the asset. This principle is important because it provides a basis for comparing the financial statements of different entities.
• Full disclosure principle: The full disclosure principle states that financial statements should disclose all information that is necessary for users to make informed decisions about the entity. This principle is important because it allows users to understand the entity’s financial position, results of operations, and cash flows.

The other options are not correct because they are not assumptions that are used in accounting.