Accounting Convention
Definition of 'Accounting Convention'Guidelines that arise from the practical application of accounting principles. An accounting convention is not a legally-binding practice; rather, it is a generally-accepted convention based on customs, and is designed to help accountants overcome practical problems that arise out of the preparation of financial statements. As customs change, so to will accounting conventions. |
|
Investopedia explains 'Accounting Convention'If an oversight organization, such as the Securities and Exchange Commission (SEC) or the Financial Accounting Standards Board (FASB) set forth a guideline that addresses the same topic as the accounting convention, the accounting convention will no longer be applicable. Basically, conventions fill in the gaps between guidelines and practical usage. |
Related Definitions
Articles Of Interest
-
The Flow Of Company Information
Learn how to gather all the pieces before you start to put together your puzzle. -
A Look At Accounting Careers
More than just crunching numbers, this career blends detective work with trouble shooting. -
Core Earnings Strip Away "Creative" Accounting
This metric is an attempt to counteract creative accounting, but it poses its own set of challenges. -
Financial Statement Manipulation An Ever-Present Problem For Investors
The SEC has taken steps to eliminate this type of corporate fraud, but it remains a real risk for investors. -
Ancient Accounting Systems
Learn how accounting evolved to keep records of increasingly complex transactions and civilizations. -
Accounting Rules Could Roil The Markets
FAS 142 is an accounting rule that changes the way companies treat goodwill. Be aware of the impact it has on reported earnings to avoid making bad investment decisions. -
Footnotes: Early Warning Signs For Investors
These documents hold very important information, but reading them takes skill. -
Pay Attention To The Proxy Statement
Don't overlook this overview of a company's well-being. -
Explaining Amortization In The Balance Sheet
Amortization is important to account for intangible assets. Read to find out more about amortization. -
Top 4 Most Competitive Financial Careers
If your goals include a big paycheck and working for a Wall Street firm, then you need to learn how to meet employers' expectations.
Free Annual Reports