What is an Accounting Convention?
Accounting convention is the transaction recording process that is practiced over a long time. Accounting convention is not recorded rules like accounting standards, these conventions are used to fill the gaps in the standards. The use of accounting conventions is becoming narrower while rules and standards are increasing.
There are four types of accounting conventions that are widely used in businesses: conservatism, consistency, full disclosure, and materiality.
Where Accounting Conventions Can be Applied?
Accounting conventions can be used in valuing the inventories, adjusting the line items while there is an inflection, and also estimating an account.
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