Explain each of the following accounting concepts: (i) consistency concept; (2 marks)November 2022 (ii) materiality concept; (2 marks)November 2022 (iii) | accrual concept; (2 marks)November 2022 (iv) going-concern concept. (2 marks)November 2022

(i) Consistency concept: The consistency concept states that an organization should use the same accounting methods and principles from one period to another. This allows for comparable financial statements to be produced over time, making it easier to analyze the financial performance of the organization.

(ii) Materiality concept: The materiality concept states that only financial information that is significant enough to influence the decisions of users of the financial statements should be included in those statements. Materiality is determined by considering both quantitative and qualitative factors, such as the size of the organization and the nature of its operations.

(iii) Accrual concept: The accrual concept states that revenue should be recognized when earned, regardless of when payment is received, and expenses should be recognized when incurred, regardless of when payment is made. This ensures that the financial statements reflect the economic performance of the organization during a specific period, rather than just its cash flows.

(iv) Going-concern concept: The going-concern concept assumes that an organization will continue to operate for the foreseeable future and that it has the resources to do so. This allows for the use of the accrual basis of accounting, as it assumes that the organization will have the ability to pay its liabilities and generate future revenues. The going concern concept helps an accountant to prepare the financial statement on accrual basis instead of cash basis.