Basic accounting concepts in the case of the Volkswagen AG

Essay by peet4University, Bachelor'sB, March 2004

download word file, 11 pages 4.8

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Table of contents

1. Introduction 3

2. About the company 3

3. The balance sheet of the company 4

4. The entity concept 5

5. The money measurement concept 5

6. The going-concern concept 6

7. The cost concept 7

8. The realization concept 8

9. The accruals concept 9

10. The matching concept 9

11. The periodicity concept 10

12. The concept of consistency 10

13. The concept of prudence 11

14. Conclusion 12

15. Bibliography 13

1. Introduction

The purpose of this essay is to show how the basic accounting principles are used in the real life. I choose a vehicle producer company, the Volkswagen AG, to discuss the basic principles through its balance sheet. In the beginning I have a few words about the company itself, just to have some clue over its operations. After that, each concept is discussed. There are ten basic concepts in accounting and I have all of them explained through an example in the case of the Volkswagen AG.

2. About the company

Volkswagen AG is a German company, which produces vehicles and, of course, spare parts for it. It has ten different type of vehicles plus commercial vehicles, because their policy is to be present in all categories. Most of the factory's cars are worldwide known. It designs cars for all purposes. It has very small cars for those, who often use it in city traffic. It has sport cars, especially for young people. The factory thinks of families too, therefore it has vans with many different sizes. It also produces trucks and 4-by-4 vehicles. In this year it introduced itself on the luxury category with a very good car named Phaeton. It was a very debated question whether the company should be present in the luxury category or...