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Home Accounting Dictionary Letter S Substance over form Concept Definition
 
 

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Substance over form Concept Definition:

Where real substance takes precedence over legal form.

It happens that the legal form of a transaction can differ from its real substance. Where this happens, accounting should show the transaction in accordance with its real substance which is, basically, how the transaction affects the economic situation of the business. This means that accounting in this instance will not reflect the exact legal position concerning that transaction.

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