Conservation Concept:
This concept is usually expressed as – “Anticipate all the future losses and expenses, however do not anticipate the future incomes and profits.” This principle is applicable to current assets generally and hence the current assets are valued at cost or market price whichever is lower. The valuation of non-current assets is made at cost (as per the cost concept.)
Accounting Period Concept:
According to this concept, even though a business is likely to be a going concern over a longer period of time, in order to facilitate the preparation of financial statements periodically, the future time is divided into shorter segment, each one of them being in the form of Accounting period. Income is computed according to this accounting period (by preparing profitability statement) and financial position is assessed at the end of such accounting period (by preparing balance sheet). It may be noted that the length of accounting period may depend upon various factors like characteristics of the business, tax consideration, statutory requirements and so on.
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