Accounting Introduction
- 1. What is Bookkeeping & Accounting ? Bookkeeping recording the transaction of an organization Accounting analysis of the performance of an organization
- 2. What is Bookkeeping ? You have Rs10. Your mother/father/aunt gives you Rs100 because today is your birthday. You go with your friends to celebrate your birthday. You have Rs15 left after the celebration. How much money did you spend? In businesses, all of this would be recorded !
- 3. What is Bookkeeping the keeping of Accounts the keeping of accounting records Accounting records are kept in ‘ Books ’ or ‘Ledgers’ In businesses all transactions are recorded Book-keeping is simply keeping the records of business transactions
- 4. What is Bookkeeping record important, useful information. the information must be recorded accurately it is routine It is recording It is ‘ accounting for ’ business transactions Examples of transactions : sale/purchase of goods/services every sale, etc., is shown in money
- 5. What is Accounting Accounting is the of recording classing , summarizing in a significant manner and in terms of money and in terms of money ,transaction & events which are in part at least of financial character & interpreting the results there of
- 6. What is Bookkeeping and Accounting Accounting is very business-like very professional You must do/be the same Keeping accounts: keeps checks on customers and suppliers leads to preparation of overall, summary statements These Financial Statements are information to the business.
- 7. What is Bookkeeping and Accounting We cannot keep Accounting records without documents (proof of transactions) sales, purchases, banking (payment and receipts) documents these are source documents this documentary evidence : tells/shows us the actual transaction shows what has happened Accounting records : show the impact of these transactions on a business show what these transactions mean to a business
- 8. Types of accounting Financial accounting : documentation of facts, daily transactions for communicating it to external users Cost accounting : going in deepest detail of expenditure for a particular service with a view to minimize costs & reduce Wastages. Management accounting : Analysis and interpretation of financial information for management purpose
- 9. What is financial accounting ? financial Accounting may be defined as the science and art of Recording and Classifying Business Transactions, and preparing Summaries of the same for determining year end Profit or Loss and the Financial Position of the concern.
- 10. What is the Object of Financial Accounting ? The main object of Financial Accounting is to find out the Profitability and to provide information about the Financial Position of the concern
- 11. Who are the users Owners/shareholders Management Creditors Customers Bank & Financial Institutions Employees Investors
- 12. USERS Researchers Tax authorities Other Government Department General public
- 13. Functions of Financial Accounting Recording of Information Classification of Data Making Summaries Dealing with Financial Transactions Interpreting Financial Information Communicating results Making information more reliable
- 14. Accounting Objectives To keep Systematic Records To Protect Business Properties To Ascertain the operational Profit or loss To Ascertain the Financial Position of Business. To Facilitate Rational Decision Making. To prevent frauds & errors To know what business owe to others & what others owe to business.
- 15. Accounting Objectives To know sources of revenue & items of expenditure. To satisfy legal formalities. Making financial information available to other groups
- 16. Importance Provides complete and scientific record Information regarding performance and position Enable comparison Helps in complying legal formalities Evidence in legal matter Evaluation of business Help in raising loans Useful for Owners\ Management
- 17. Advantages of Accounting Recording Helpful in Tax Assessment Prevent Fraud Business Valuation Helps in Debt Collection Helps in Planning Funds Raising Becomes Easy Evidence in the Court Comparison Ascertainment of profit/Loss Ascertainment of Financial Position
- 18. Accounting principles To convey the Language of Business , certain principles are required to be followed for maintaining Business transactions . Accounting Principles are, the Rules of Action or the Methods and Procedures of Accounting commonly adopted while recording Business transactions.
- 19. Accounting Principles are Classified into two categories Accounting Concepts Accounting Conventions
- 20. Accounting Concepts ( Underlying Assumptions) Business entity concept Going concern concept The cost concept Dual aspect concept Money measurement concept Accounting period concept
- 21. Accounting Concepts Accrual concept Revenue Recognition concept Matching concept Objective Evidence concept
- 22. Accounting Conventions Accounting conventions are the traditions , usage and customs which are in used since long.
- 23. The most important conventions are; Convention of Disclosure Conventions of Consistency Convention of Conservatism Conventions of Materiality