Topics: Generally Accepted Accounting Principles, Balance sheet, Accounts receivable Pages: 3 (672 words) Published: September 3, 2013
Substance over form is an accounting concept where the entity is accounting for items according to their substance and economic reality and not merely their legal form. It is one of the key determinants of reliable information. For most transactions there will be no difference and in some cases however, the two diverge and the choice of how to present the transactions can give very different results. This differences occurs when an asset or liability is not recognized in the account even though benefits or obligations may result from the transaction or oppositely. ( SEPARATE DETERMINATION

Separate determination concept holds that each component of any category of assets or liabilities should be valued separately when arriving at a total to be shown in the accounts for that category. For example, the value of each stock item should be calculated individually and these values should then be totalled to give the stock figure which will appear in the accounts. DIFFERENCE BETWEEN BAD DEBTS AND PROVISION FOR BAD DEBTS

The provision of bad debts might refer to the balance sheet account also known as the Allowance for Bad debts. It is used along with the account (Account Receivable) in order to report the net realizable value of the accounts receivable while Bad Debts refers to accounts receivable that will not be collected. They can also refer to notes receivable that will not be collected. DIFFERENCE BETWEEN DISCOUNT RECEIVED AND DISCOUNT ALLOWED

Discount received are given by the suppliers of a company to induce the company to settle in a time specified by the supplier. It is treated as a credit to the profit and loss account hence increasing the net profit of the business while Discount Allowed are given to the customers of a company so as to induce them who are owing money to settle in a time specified by the company. It is treated as an expense on the profit and loss Account.

Continue Reading

Please join StudyMode to read the full document

You May Also Find These Documents Helpful

  • Accounting Essay
  • Essay on Introduction to Accounting for Entrepreneurs
  • Final Exam Accounting 1 Review Essay
  • Effectiveness of Double Entry Accounting System Essay
  • Basic Accounting Essay
  • Accounting Project Essay
  • Essay on Basic Elements of Accounting
  • Effects of Technology on the Accounting Profession Essay

Become a StudyMode Member

Sign Up - It's Free