Accounting Principles
Accounting
In this Part, we discuss about following topics relating to Accounting
- Business Activities
- Recording of Business Transaction
- Book Keeping & Accounting
- Objectives & Branches of Accounting
- Users of Accounting Information
Business Activities
An individual, a group of individual or an institution like club, local authority body, etc carries some kind of economic (or Business) activities, which can be expressed in terms of money.
Business Activities
Rs.20, 000 Rs.25, 000 Rs. 5000
Goods Purchase => Goods Sale => Profit
(Transaction) (Transaction) (Event)
Book Keeping
Book Keeping is the process of systemically recording of Financial transactions, in terms of Money. ‘Book’ means Financial Records (Book in which Financial Records are kept). ‘Keeping’ means systematic way of keeping the Financial records.
Book Keeping
Recoding Classifying Posting
Click to read and listen more
View & Listen in Hindi
View & Listen in Hindi
Recoding Classifying Posting
Click to read and listen more
View & Listen in Hindi
Accounting Cycle
Accounting is a process comprising of Recording of transactions, Classifying, Summarizing, Analyzing, Interpreting & Communication of business activities & its results in a scientific & systematic way.
Definition of Accounting
1) According to American Institute of Certified Public Accountants, “Accounting is the Art of recording, classifying, and summarizing in a significant manner and in terms of money, transactions and events which are of financial character, and interpreting the results thereof”.
2) According to American Accounting Association “Accounting is the process of identifying, measuring and communicating economic information to permit informed judgments and decisions by users of the information”.
Click to read and listen more
View & Listen in Hindi
System of Accounting
- Cash System: Transactions are recorded as and when actual cash is received or paid.
- Hybrid System : This uses mix of Cash Basis (for Income) & Accrual Basis (for Expenses)
- Double Entry System: Both aspects (Debit and Credit) are fully and completely recorded.
- Single Entry System: Only one aspect is recorded. Missing information is built up from computation based on available information.
Objectives of Accounting
The objective of Accounting is to get the Financial State of Affairs, Operational Results, Financial Forecasting, Financial Decision making, Compliance of Taxation & Statutory Requirements etc.
- Financial Position: To reveal State of Affairs (What is owned & what is owed), like Balance Sheet
- Operational Results: To reveal Operational Results, like Profit & Loss Statement
- Budgeting : To plan activities ahead & review the actual results vis a vis the plan
- Decision Making: For Analysis and reporting of information, facilitates decision-making.
- Communicating the Results: To communicate the results to Government investors, creditors, employee etc.
- Regulation & Taxation: To comply the Statutory, legal & Tax requirements.
View & Listen in Hindi
Functions of Accounting
The principal Functions of Accounting are Measurement, Forecasting, Decision-making, Comparison & Evaluation & Control.Accounting Process
Accounting process (or Accounting Cycle) can be divided into broad tasks like Journal Entry, Ledger Posting, Trial Balance Preparation, Adjustment Journal Entries, Adjusted Trial Balance Preparation, Closing entries in Journal, Preparation of Financial Statements
Branches of Accounting
According to purpose & objective, Accounting process may be classified as Financial Accounting, Management Accounting, Cost Accounting, Social Accounting etc.
Click to read and listen more
Users of Accounting Information
The financial statements are prepared primarily to serve various stakeholders:Necessity of Accounting
Accounting records & statements are required to reveal various required information about activities & results of the organisation.
Accounting & other Disciplines
There is close relationship between some specific disciplines with accounts. That is why, professional Accountants are to study these disciplines also, for their professional work.
Videos
Click on the following link to play YouTube videos of the topics discussed in this chapter.
Accounting
Click on the following link to play YouTube videos of the topics discussed in this chapter.
Accounting
No comments:
Post a Comment