Presentation ACCOUNTS FUNDAMENTALS.pptx FOR STUDENTS AND LECTERURS

ABOUT ACCOUNTS SUBJECT

1. OBJECTIVE OF ACCOUNTING OR NEED FOR ACCOUNTING: Systematic recordings of transaction Ascertainment of results of above recorded transaction Ascertainment of the financial position of the business providing information to the users for rational decision making To know the financial position of the business To know the solvency position of the business

2. FUNCTIONS OF ACCOUNTING Measurement Forecasting Decision making Comparison and evaluation Control Government regulation and taxation

3. Users of accounting information:

4. Accounting principles Accounting concepts: 1.Business entity concepts 2.Money measurement concepts 3accounting period concepts 4.Going concerns concepts 5.Dual aspect concepts 6.Matching concepts 7.Realisation concepts or accrual concepts 8.Cost concepts Accounting conventions: 1.Convention of consistency 2.Convention of disclosure 3.Convenction of conservation 4.Convention of materiality

5. Basis of Accounting The following are the two basis accounting to record the transaction: Cash basis Mercantile basis or Accrual basis Cash basis of accounting: cash basis of accounting is a method of recording the transactions by which revenues,cost,assets and liabilities are reflected in the accounts for the period in which actual cash receipts and actual cash payments are made. Mercantile basis or accrual basis: in this method of recording the transactions by which revenue, cash, assets and liabilities are reflected in the accounts for the period in which they accrue irrespective of actual receipts or payments of cash.

6. BRANCHES OF ACCOUNTING OR CLASSIFICATION OF ACCOUNTING Accounting can be classified on the basis of its uses as: Financial Accounting Cost Accounting Management A ccounting

7. Using debit and credit Account (a/c): Account is a basic unit of accounting where transaction are classified. Transactions are entered into various accounts in the ledger. However, in each account transactions of similar nature are recorded. Examples : plant and machinery a/c , purchase a/c, sales a/c and salaries a/c etc... Cash account Debit side (left) Credit side (right)

8. 1.PERSONAL ACCOUNTS: Natural person’s account like Ganesh a/c, ram a/c Artificial person’s a/c like abc co.ltd a/c, canara ban a/c, IIBS a/c..... Representative of personal accounts like salary o/s account, prepaid rent a/c...... 2.REAL ACCOUNTS: Real accounts are those accounts which are purely related properties, things, possessions or any kind of assets accounts Like buildings a/c , machinery a/c , cash a/c etc....... 3.NOMINAL ACCOUNTS: Nominal accounts are those accounts which are purely related to the expenses and the incomes of the business. Ex: Salary a/c, Rent a/c, Interest received a/c , Commission a/c etc....... I.CLASSIFICATION OF ACCOUNTS UNDER ENGLISH SYSTEM UNDER TRADITIONAL APPROACH:

9. GOLDEN RULES OF DEBIT AND CREDIT(Traditional Approach) 1.Personal account: Debit the Receiver Credit the Giver 2 . Real account: Debit what Comes in And Credit what Goes out 3. Nominal account: Debit all Expenses and Losses And Credit all Incomes and Gains

10. GOLDEN RULES OF DEBIT AND CREDIT(MODERN Approach) Assets Accounts : Increase- Debit Decrease – Credit Expense Accounts : Increase- Debit Decrease – Credit Liability Accounts : Increase- Credit Decrease – Debit Capital Accounts : Increase- Credit Decrease – Debit Income Accounts : Increase- Credit Decrease – Debit

11. ACCOUNTING CYCLE Accounting cycle refers to complete sequence of accounting procedure which is frequently repeated in same direction during accounting period. The sequence is R ecording of transaction in journal or subsidiary books. Posting them to various ledger accounts. Preparation of trial balance from ledger accounts. Preparation of final accounts.

12. ACCOUNTING STANDARDS INTRODUCTION: In order to provide transparency, consistency, comparability, adequacy and reliability of statements , it is essential to standardize the accounting principles and policies. Accounting standards provide a framework and standard accounting policies so that the financial statements of different enterprises become comparable . Meaning of accounting standards: Accounting standards are written policy documents issued by expert accounting body or by government or other regulatory body covering the aspects of recognition, treatment, measurement, presentation and disclosure of accounting transaction and events in the financial statements.