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Agenda 2 Introduction Book Keeping Advantages of Book keeping Accountancy, Accounting and Book keeping Branches of Accounting What more is in store
Introduction – Book Keeping 3 Book-keeping is that branch of knowledge which tells us how to keep a record of business transactions. Those transactions related to business which can be expressed in terms of money are recorded As per R.N. Carter - “Book-keeping is the science and art of correctly recording in the books of account all those business transactions that result in the transfer of money or money’s worth”. The objective of book keeping is to keep a record of all the business transactions to enable calculation of Profit & Loss and Assets and Liabilities of the business.
Advantages of Book Keeping 4 Permanent and Reliable Record keeping Arithmetical Accuracy To know the Profit or Loss of business correctly Ascertainment of Financial Position to plan for the next year as well Ascertainment of the Progress of Business To know how much he has to pay others and how much to receive. Keep a check over assets and evaluate them every year To keep control over liabilities To ensure proper records for taxation and management purposes To maintain legal records
Accounting 5 American Accounting Association defines accounting as “the process of Identifying measuring and Communicating economic information to permit informed judgments and decision by users of the information”. An accounting cycle is a complete sequence of accounting process, that begins with the recording of business transactions and ends with the preparation of final accounts Business transaction Journal Trial Balance P&L Account Balance Sheet
Accountancy, Accounting & Book Keeping 6 Accountancy- systematic knowledge of accounting. Why and how to prepare the books of accounts Accounting– actual process of preparing and presenting the accounts. BookKeeping– record keeping or maintenance of books of accounts Users of Accounting – Internal Users - owners, management, employees External Users – creditors / lenders, investors, banks and other lending institutions, present and potential investors, Government, tax authorities, regulatory agencies and analysts and public at large.
Branches of Accounting 7 Financial Accounting - recording of business transactions to know the operating result (profit or loss) of a particular period and financial position (Balance Sheet) on a particular date can be known. Cost Accounting – to know the cost of material, men etc in a certain manner Management Accounting – use of accounting information by management for planning, strategy formulation and decision making by the management.
What’s more 8 Basic Accounting Terms – Closing stock, assets, liabilities etc Basic Accounting Concepts - matching concept, revenue realization Accounting Assumptions – going concern, accounting entity Accounting Standards Double Entry system of book keeping Questions and Exercises