Intro.to Accounting - Final

8/3/2019 Intro.to Accounting - Final

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Introduction to

ACCOUNTING

ANDBOOK - KEEPING

Mandeep. D

Manas. K

Nisha. N

Deepak. G


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What is ACCOUNTING ? ?

Accounting is the art of

Recording

Classifying Summarizing

In significantmannerandinterms ofmoney.

Itis known as an artof RECORD KEEPING.


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Accounting, as a basic and the keyframework that any business is built upon.

Financial position of business can be known

by accounting.

Accounting as the base for any business.

Accounting is essentially a measure of

how well are we doing..?? Accounting when properly maintained, avoidsFRAUD.

Significance to Accounting


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Financial accounting

Managerial accounting

Cost accounting

Social accounting

HumanResource accounting

Sub-fields of Accounting


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Personal accounts

Naturalpersonsaccount

Artificial personsaccount

Representativepersonal account

Real accounts

Tangible

Intangible

Nominal

Accounts

Types of Accounting


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PersonalAccount

RealAccount

NominalAccount

DebittheReceiver

Creditthe Giver

Debitwhatcomes in

Creditwhatgoes out

Debit all theexpenses

Credit all the Incomes

Golden Rules of Accounting


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Accountingprinciples aretherules ofactionor

conduct adopted bythe accountants

universallywhilerecording accounting

transactions

They arethenorms orrules which are

followedintreating various items ofassets,

liabilities,expenses,incomes,etc.

What is Principles of Accounting??


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Accountingis the languageofthe business.

Financial statements communicates financial

informationto stakeholders fordecisionmaking.

So,financial statements prepared bydifferent

organisations should bepreparedonuniform basis .

Tohaveconsistencyovera period inmakingfinancial

statements.

Ifevery accountant starts followinghis ownnorms

andnotions foraccountingofdifferentitems then

therewill be anutterconfusion.

Need of having Accounting Principles .


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To avoidconfusion andto achieveuniformity, accounting

process is appliedwithintheconceptual frameworkof

GenerallyAcceptedAccounting Principles(GAAPs).

GAAPs is usedtodesciberules developedforthepreparationofthefinancial statements and arecalled

concepts ,conventions ,postulates,principles etc.

Accountingprinciples are basicnorms and assumptions on

whichthewhole accounting systemhas been

developed andestablished

GAAPs


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Entity Concept

MoneyMeasurement Concept

Periodicity Concept

Accrual Concept Matching Concept

Going Concern Concept

Cost Concept

Realisation Concept

Dual Aspect Concept

Consistency

Materiality

Concepts/Principles


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Systematicrecordingoftransaction.

Ascertainmentofprofitorloss

Ascertainmentofthefinancial positionofthebusiness.

Providinginformationtotheusers forrational

decisionmaking.

Purpose of Accounting


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Advantages of accounting

Financial information aboutthe business.

Assistancetomanagement.

Facilitates comparative study.

Facilitates settlementoftax liabilities.

Facilitates loans.

Facilitates saleofbusiness.

Advantages of Accounting


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Accounting is not fully exact.

Accounting does not indicate the reliable

value. Accounting ignores the qualitative

elements.

Accounting ignores the effect of price levelchanges.

Accounting may lead to window dressing.

Limitations of Accounting


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Bookkeepingis therecordingoffinancial

transactions. Transactions include sales,

purchases,income, andpayments by an

individual ororganisation.

What is Book-keeping


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A transactionis eitherrecordedindebitorincreditcolumnofthe same accountSingle Entry

Twoentries ofeachtransaction

arecarriedto ledger,oneindebitcolumn andotherundercreditheading.

Double Entry

Types of Book-keeping


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CompleteRecordingofTransactions

Ascertainmentof financial effectonthe

business

Purpose of Book-keeping


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Book-keeping Accounting

(1) Recording of transactions (1)Summarizing of the recordedtransactions

(2) Base of accounting (2) Language of the business

(3)Financial statement is not a part ofthis process

(3)Financial statements are prepared.

(4) Managerial decisions cannot betaken

(4) Management takes decisions on thebasis of these records

(5) No sub-field (5) It has several sub-fields.

(6)Financial position of the businesscannot be ascertained through book-keeping

(6)Financial position of the business isascertained on the basis of theaccounting reports

Documents

Intro.to Accounting - Final