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Fmi

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    Fmi Fmi Presentation Transcript

    • Meaning, objective, importance and utility of book-keeping and accountancy, basic accounting terminologies Concepts, conventions and principles Dr BRR
    • Principles of double entry book keeping and classification of accounts Primary books of accounts, meaning, utility, format writing of primary books Basis of accounts: Cash & mercantile Dr BRR
    • Cash book single, double and triple column Secondary book – ledger posting of transactions in ledger. Dr BRR
    • Petty cash book- imprest system, analytical petty cash book Bank reconciliation statement. Meaning, need importance and preparation Dr BRR
    • Kinds of errors, rectification of errors, suspense account Preparation of trial balance Final accounts. Concepts, meaning and importance. Dr BRR
    • Accounts of NTC Receipt and payment account and income and expenditure account Income & Expenditure A/c, Balance Sheet Dr BRR
    • Cost accounting concept Relationship of cost accounting and financial accounting Concept of cost analysis and its classification Dr BRR
    • Material cost, material records, inventory systems. Overheads : classification Concepts of cost units and cost centres. Allocation and absorption of overheads Elements of cost sheet Dr BRR
      • Recommended Books:
      • 1. Financial Accounting-A Managerial Perspective
      • - Dr. R NarayanaSwamy, PHI Edition
      • 2. Cost Accounting-A Managerial Emphasis
      • Horngren, Datar, Foster, Pearson Education
      • Journals:
      • 1. Management Accountant [ICWAI Publication]
      • 2. Chartered Accountant [ICAI Publication]
      • 3. Accounting World [ICFAI Publication]
      Dr BRR
    • What is Accounting? Accounting defined: [AICPA] Recording and reporting of financial transactions, including the origination of the transaction, its recognition, processing, and summarization in the FINANCIAL STATEMENTS. Dr BRR
    • Regulatory Framework Co ACT, 1956: 658 sections + 14 schedules IT Act, 1961: 298 sections + 16 schedules RBI, SEBI, IRDA, TRAI, MCA or DCA, CAG Global fund raising Harmonization of financial statements at international level Ownership & management – separation International organizations-IASB, SEC What is Book Keeping? It is an art and science of recording business transactions in a set of books of account Dr BRR
    • Interested parties/Stakeholders Public Creditors/Lenders Govt Investors Customers Mgt Employees Shareholders BUSINESS FIRM Dr BRR
    • Dr. BRR Objectives
      • Provide financial performance
      • Profitability, Liquidity, Solvency
      • Bring out sources & applications of funds
      • Economic resources owned & employed
      Dr BRR
    • What is Accounting Cycle? Dr. BRR Documentation Recording Classifying Summarizing Bifurcating [income statement & B/S] Dr BRR
    • What does an accounting report contain? Dr. BRR Income statement Balance sheet Cash flow statement Notes to Accounts & Accounting policies Plus Auditor’s report, Director’s report, chairman’s statement, management discussion &analysis, Corporate Governance Report Dr BRR
    • Who are stakeholders/users? Dr. BRR Investors – present & potential-amateur , analysts Employees & trade unions Lenders-financial institutions Suppliers / creditors Consumers Government-SEBI, Tax authorities, CAG, Stock exchanges, Dept of company affairs Public-general, Environmental activists, consumer forums Management Dr BRR
    • Accounting assumptions = Concepts + Conventions Dr. BRR Accrual Concept Going Concern Concept Business Entity Concept Accounting Period [Periodicity] Concept Money Measurement Concept Cost Concept Dual Aspect Concept Consistency Disclosure Conservatism Dr BRR
    • Assets, Expenses Accounts: Debit Credit Incomes, Liabilities, Equity Accounts: Debit Credit Debit Expenses or assets Credit Incomes or Liabilities Accounting Equation EQUITY = ASSETS – LIABILITES Dr BRR
    • Personal Account Accounts of persons, firms, institutions Ram a/c, Bank a/c, O/S expenses, Prepaid a/c Real Account Accounts of assets or properties Cash a/c, Building a/c, Goodwill a/c Debit The Receiver Credit The Giver Nominal Account Accounts of Expenses, incomes, gains, losses Salary, Rent, Depreciation, Discount, Commission Dr BRR Debit What Comes In Credit What Goes Out Debit Expenses or Losses Credit Incomes or Gains
      • Accounting Standards (ASs)
      • AS 1 Disclosure of Accounting Policies
      • AS 2 Valuation of Inventories
      • AS 3 Cash Flow Statements
      • AS 4 Contingencies and Events Occuring after the B/S Date
      • AS 5 Net Profit or Loss for the period,Prior Period Items and Changes in Accounting Policies
      • AS 6 Depreciation Accounting
      • AS 7 Construction Contracts (revised 2002)
      • AS 7 Accounting for Construction contracts
      • AS 8 Accounting for Research and Development
      • AS 9 Revenue Recognition
      • AS 10 Accounting for Fixed Assets
      Dr BRR
      • AS 11 The Effects of Changes in Foreign Exchange Rates (Revised 2003),
      • AS 11 Accounting for the Effects of Changes in Foreign Exchange Rates
      • AS 12 Accounting for Government Grants
      • AS 13 Accounting for Investments
      • AS 14 Accounting for Amalgamations
      • AS 15 Accounting for Retirement Benefits in the Financial Statement of Employers
      • AS 16 Borrowing Costs
      • AS 17 Segment Reporting
      • AS 18, Related Party Disclosures
      • AS 19 Leases
      • AS 20 Earnings Per Share
      Dr BRR
      • AS 21 Consolidated Financial Statements
      • AS 22 Accounting for taxes on income.
      • AS 23 Accounting for Investments in Associates in Consolidated Financial Statements
      • AS 24 Discontinuing Operations
      • AS 25 Interim Financial Reporting
      • AS 26 Intangible Assets
      • AS 27 Financial Reporting of Interests in Joint Ventures
      • AS 28 Impairment of Assets
      • AS 29 Provisions,Contingent Liabilities and Contingent Assets
      Dr BRR
    • REVENUE RECEIPTS = INCOME REVENUE EXPENSES = EXPENSES P & L ACCOUNT [INCOME STATEMENT] BALANCE SHEET CAPITAL RECEIPTS = LIABILITES CAPITAL EXPENDITURES = ASSETS INCOME > EXPENSES -> NET PROFIT INCOME < EXPENSES -> NET LOSS Dr BRR
      • ACCOUNTING CYCLE
      BUSINESS TRANSACTIONS JOURNAL / SUBSIDIARY BOOKS LEDGER TRIAL BALANCE + EVENTS P & L ACCOUNT + BALANCE SHEET + CASH FLOW Dr BRR
    • EXERCISE 1 Classify the following in to (a) Assets, Liabilities, expenses, equity, income (b) Real, Nominal & Personal Accounts Salary, interest received, rent, building, brand, patents, client’s account [Dr.], suppliers account, goodwill, furniture, share capital, retained profits, reserves, term loan from ICICI, out standing salary, prepaid insurance, accrued interest on investment, debenture, discount, land, cash, stock, debtors, creditors, bills payable, bills receivable Dr BRR
    • Journal Book Date Particulars L.F. Debit Credit Dr BRR Rs. Rs.
      • EXERCISE 2
      • Prepare Journal book:
      • Started business with Rs. 90,000 capital
      • Opened bank account Rs. 20,000
      • Purchases Rs. 7,000 [by cash 2,000 & by cheque rest]
      • Purchases Rs. 16,000
      • Sales Rs. 33,000, of which Rs. 3,000 was cash sales
      • Received cheque from debtors Rs. 17,000
      • Salary, rent & lighting paid Rs. 2,000, 4,000 & 1,000
      • Cash paid in to bank account Rs. 10,000
      • Bank interest credited to bank account Rs. 1,000
      Dr BRR
      • EXERCISE 3
      • Prepare Journal book [Accounting year FY 08]
      • Started business with Rs. 90,000 cash, Rs. 10,000 furniture, bank Rs. 23,000
      • Drawn from bank for personal use Rs. 2,000
      • Purchases Rs. 17,000 [by cash 2,000]
      • Purchases Rs. 18,000 from Mr. Anand on account
      • Sales Rs. 53,000, of which Rs. 3,000 was cash sales
      • Received cheque from debtors Rs. 19,000
      • Salary paid: Rs. 2,000 but actual salary bill: Rs2,500
      • Rent paid Rs. 5,000
      • Insurance on stock paid by cheque for the next one year:
      • Rs. 10,000 on 1.7.2007
      • Paid Anand 17,800 in full settlement of his account.
      Dr BRR
    • Ledger Book Date Particulars Cr. Rs. Rs. Date Particulars JF JF Dr. Dr BRR
      • EXERCISE 4
      • Prepare Ledger for the Exercise 2
      Dr BRR
    • Subsidiary Books Purchases book Purchases Returns book [Return O/W book] Sales book Sales Returns book [Return I/W book] book Cash book B/R book B/P book Journal Proper 14/11/2005 Exam Q No. 3 Dr BRR
    • Cash Book Types: 1. Simple Cash Book 2. Three column cash book 3. Petty cash book Simple Cash Book [Cash column only] Date Rs. Receipts Number Receipts Date Payments Voucher Number Rs. Dr. Cr. L.F. L.F. Dr BRR
    • Three column Cash Book Date Receipts Number Receipts Date Payments Voucher Number Dr. Cr. Cash Bank Cash Bank Discount Discount L.F. L.F. Dr BRR
    • Petty Cash Book Date Rs. Payments Voucher Number Rs. Total Receipts Rs. [in Rs.] Analysis of Payments Printing Wages Adv Cartage Sundries Postage L.F. Ledger Accounts Dr BRR
    • BANK RECONCILIATION STATEMENT Particulars Rs. Bank Balance as per Cash Book ADD: Cheque issued but not presented Cheque issued presented & dishonoured Income credited by banker ECS Credits Under or Over casting of cash book on Debit or Credit side respectively LESS: Cheque deposited but not credited Bank charges ECS Debits Cheque received & entered in CB but not deposited yet Cheque deposited but dishonoured Bank Balance as per Bank Pass book Dr BRR
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