Definitions Accounting is 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 a financial character, and interpreting the results thereof Book keeping is the science and art of correctly recording in the books of account, all those business transactions that results in the transfer of money or money’s worth
Users of Financial information Managers Owners Investors Government and regulatory authority Banks and Financial institutions Suppliers Employees Researchers The public
Objectives of Accounting To keep systematic record To ascertain the result of operations To ascertain financial position of the business To protect business property To facilitate rational decision making
Role and activities of anAccountant He is a one who Is engage in accounts keeping He is functionary who aids control He is fiscal adviser He verifies, authenticates, and certifies the accounts of an entity He produce an income statement and balance sheet for an accounting period He is a professional whose primary duties are concerned with information management for internal and external use
Accounting ConceptsThese are the basic assumptions upon which the science ofaccounting is based Business entity concept Money measurement concept Going concern concept Cost concept Accrual concept Concept of conservatism Materiality concept Consistency concept Periodicity concept
Changing nature of generallyaccepted accounting principles(GAAP)
Accounting cycle Identification of transactions Business documents Recording transactions Posting Trial balance Adjustment entries Closing entries Final accounts Reverse entries
Personal AccountDEBIT=the receiverCREDIT= the giver
Real Account DEBIT= what comes in CREDIT- what goes out
Nominal Account DEBIT= expanses and losses CREDIT= incomes and gains
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