Introduction to financial accounts

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Introduction to financial accounts

  1. 1. INTRODUCTION TOFINANCIAL ACCOUNTS
  2. 2. 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
  3. 3. Users of Financial information Managers Owners Investors Government and regulatory authority Banks and Financial institutions Suppliers Employees Researchers The public
  4. 4. 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
  5. 5. 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
  6. 6. Accounting personnel Internal auditor Controller Treasurer Finance officer
  7. 7. 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
  8. 8. Changing nature of generallyaccepted accounting principles(GAAP)
  9. 9. Accounting cycle Identification of transactions Business documents Recording transactions Posting Trial balance Adjustment entries Closing entries Final accounts Reverse entries
  10. 10. Personal AccountDEBIT=the receiverCREDIT= the giver
  11. 11. Real Account DEBIT= what comes in CREDIT- what goes out
  12. 12. Nominal Account DEBIT= expanses and losses CREDIT= incomes and gains
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