Unit 1-accounting introduction-ppt
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The document outlines the historical evolution and principles of accounting, beginning with references to ancient accounting practices noted in Kautilya's 'Artha Shastra.' It emphasizes the role of accounting as a systematic process for recording and interpreting financial information, which aids decision-making and legal compliance. Additionally, the text differentiates between financial accounting, cost accounting, and management accounting, highlighting their functions in supporting business operations and management strategies.
Unit 1-accounting introduction-ppt
- 1. Dr. THULASI KRISHNA. K Dept. of Management Sciences, MITS, Madanapalle, A.P.
- 2. In India, the system of Accounting was practiced 23 centuries ago as it is clear from the book named “Artha sasthra” written by Koutilya, Chandra Gupta’s minister. Kautilya’s Arthshastra covers accounting principles and standards, role and responsibilities of accountants and auditors, the methodology of accounting, auditing and fraud risk management, and the role of ethics in managing financial activities.
- 3. The modern system of accounting based on the principles of double entry system owes its origin to ‘Fra Luca Pacioli’ (Father of Accounting) who first published the principles of double entry system in 1494 at Venice in Italy.
- 4. Accounting is a discipline which records, classifies, summarises and interprets financial information about the activities of a concern so that intelligent decisions can be made about the concern. The art of recording, classifying, and summarizing in a significant manner and in terms of money, transactions and events which are, in part at least, of financial character, and interpreting the results thereof. ……. American Institute of Certified Public Accountants
- 5. Accounting is a process; It is an art; It is a means and not an end; It deals with financial information and transactions; and It is an information system
- 6. To keep a systematic record of business transactions; To ascertain the results of the operation; To determine the financial position of the business; To portray the liquidity position; To protect business properties; To facilitate rational decision – making; and To satisfy the requirements of law:
- 7. It keeps a systematic permanent written record of business transactions of the organization. It maintains a record of assets and liabilities. It provides information for meeting various legal requirements such as I.T returns, Sales tax returns, etc. It communicates the results of the business to the various categories of persons such as owners, creditors, Govt., etc. It protects the property of the business. It helps in managerial decision making. It helps in optimum utilisation of resources.
- 8. • Owners • Management Internal Users • Employees • Investors • Creditors • Customers • Government • Researchers External Users
- 9. Maintaining systematic records Meeting legal requirements Protecting and safeguarding business assets Facilitates rational decision-making Communicating and reporting Comparison of results Decision making
- 10. • Deals with the preparation of financial statements to provide information to the interested parties. Financial Accounting • Provides the detailed cost information that management needs to control current operations and plan for the future Cost Accounting • Deals with the presentation of accounting information is such a way as to assist management in the creation of policy and the day-to-day operation of an undertaking Management Accounting