Accounting Concepts and Conventions
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Lesson overview
The rules every set of accounts must follow.
Go to lesson quiz →Exam guidance · WAEC WASSCE Paper 1 + Paper 2 Lens
Pacing
Objective speed on Paper 1 + structured step-by-step method marks on Paper 2 Theory/Practical.
How WAEC marks this
Examiners award method marks (M1) for stating the formula/definition and accuracy marks (A1) ONLY when SI units are written.
Watch out for
Writing bare numbers without working or omitting SI units loses up to 50% of Paper 2 marks even when the final value is right.
Lesson content
Overview — Accounting Concepts and Conventions
The rules every set of accounts must follow. This lesson is at the beginner level — by the end, you'll be able to recognise this question type, apply a reliable method, and avoid the traps that cost marks.
Key Concept
Accounting concepts are the basic rules underlying how accounts are prepared. Key ones: GOING CONCERN (assume the business will continue operating), ACCRUAL/MATCHING (record income/expenses when earned/incurred, not when cash changes hands), CONSISTENCY (use the same methods period to period), PRUDENCE (don't overstate profits or assets), and BUSINESS ENTITY (the business is treated separately from its owner).
Why It's Tested This Way
WAEC/JAMB test these concepts by describing a scenario and asking WHICH concept is being applied or violated — examiners want you to correctly name the specific concept, not just recognise that 'good accounting practice' is involved.
Method
To identify which concept applies, match the scenario's KEY FEATURE to a concept: recording an expense in the period it was incurred (even if unpaid) is accrual/matching; using the same depreciation method every year is consistency; not recording a profit until it's certain is prudence.
Worked Example
Worked example: A business records electricity used in December as a December expense, even though the bill is paid in January — this applies the ACCRUAL (matching) concept, recording the expense in the period it was actually incurred.
Second Worked Example
Second worked example: An owner withdrawing cash from the business for personal use records it as 'drawings' rather than a business expense, reflecting the BUSINESS ENTITY concept — the business's finances are kept separate from the owner's personal finances.
Common Traps
Common trap: confusing the ACCRUAL concept (recording transactions when they occur, not when cash moves) with simply 'being accurate' — accrual specifically concerns the TIMING of when income/expenses are recorded.
Lesson Summary
Remember: (1) identify what is being asked, (2) apply the WAEC strategy, (3) check against the traps. Complete the 10-question quiz below to unlock the next lesson — you need at least 60% to pass.
Mastery Check · Lesson Quiz · pass 60%
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