Intro
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Intro Intro Presentation Transcript

  • 1 Introduction to Accounting
  • Contents of the Lecture
    • What is Accounting?
    • Functions of Accounting
    • Branches of Accounting
    • Accounting Cycle
    • Users of Accounting Information
    • Objectives of Accounting
    • Advantages of Accounting
    • Limitations of Accounting
  • What is Accounting ?
    • Accounting may be defined as the process of recording, classifying, summarizing and interpreting the financial transactions and communicating the results thereof to the persons interested in such information.
    • Accounting as an information system is the process of identifying, measuring and communicating the economic information of an organization to its users who need the information.
  • Functions of Accounting
    • Identifying
    • Measuring
    • Recording
    • Classifying
    • Summarising
    • Analysing
    • Interpretation
    • Communication
  • ACCOUNTANCY, ACCOUNTING AND BOOK-KEEPING
    • ACCOUNTANCY: systematic knowledge of accounting. It explains ‘why to do’ and ‘how to do’ of various aspects of accounting.
    • ACCOUNTING: actual process of preparing and presenting the accounts. It is the art of putting the academic knowledge of accountancy into practice.
    • BOOK-KEEPING: recording of daily business transactions in a systematic manner.
  • BRANCHES OF ACCOUNTING
    • Financial Accounting
    • Cost Accounting
    • Management Accounting
  • ACCOUNTING CYCLE
    • Sequential steps involved in an Accounting Cycle:
    • Journalising
    • Posting
    • Balancing
    • Trial Balance
    • Income Statement
    • Position Statement
  • USERS OF ACCOUNTING INFORMATION
    • Short-term Creditors
    • Long-term Creditors
    • Present Investors
    • Potential Investors
    • Management
    • Employees
    • Tax Authorities
    • Customers
    • Government and their agencies
    • Public
  • OBJECTIVES OF ACCOUNTING
    • To maintain records of business.
    • To calculate the results of operations.
    • To ascertain the financial position.
    • To communicate the information to the users.
    • To file tax return
    • To portray the liquidity position
  • ADVANTAGES OF ACCOUNTING
    • Facilitates to replace memory
    • Facilitates to comply with legal requirements
    • Facilitates to ascertain net result of operations
    • Facilitates to ascertain financial position
    • Facilitates the users to take decisions
    • Facilitates a comparative study
  • Advantages contd……
    • Assists the management
    • Facilitates control over assets
    • Facilitates the settlement of tax liability
    • Facilitates the ascertainment of value of business
    • Facilitates raising loans
    • Acts as legal evidence
  • LIMITATIONS OF ACCOUNTING
    • Ignores the qualitative elements
    • Not free from bias
    • Estimated position and not real position
    • Ignores the price-level changes
    • Danger of window dressing
  • End of Chapter 1