Group Report on Financial Accounting – I Accounting system of an OrganizationGROUP MEMBERSSweta SinghChhitiz ShresthaNisha NeupaneSamadhi Tamrakar
The Objective• To understand the basic accounting system of an organization• Accounting system varies from company to company• Accounting system we learn in theories also varies in practice• Help understand the process of accounting of an organization
The Purpose• Describe the accounting methodology• Compare the theoretical and practical aspect of accounting• Helps in getting complete information about – why is accounting done? – How is accounting done? – When is accounting done? – Etc.• Accounting information of Krishna Pauroti Pvt. Ltd
Introduction to Accounting• 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 financial character, and interpreting the results thereof. - American Institute of Certified Professional Accountants (AICPA)• More than 700 year old practice• Called "the language of business“• Vital part of day to day financial transaction.
Introduction to Accounting• Functions of Accounting – To keep complete and systematic record – To ascertain the net profit and loss – To ascertain the financial position – To obtain accounting information
Introduction of Krishna Pauroti Pvt. Ltd• Established by Krishna Bahadur Rajkarnikar in 1947• Ghana Shyam Rajkarnikar, Krishnas son, now runs the show• Krishna Pauroti is located at Kamalpokhari chowk• The factory is also situated in the same place.• It is recognized as one of the finest bakeries in Nepal.
Types of Accounts• Different from regular forms of accounting• Consists of 3 types of accounts I. Daybook II. Ledger III. Book of purchase
Daybook• Account where transactions occurring on the daily basis are recorded• The purchases and sales that take place daily is recorded• Purchases like flour, ghee, butter, milk, cream etc, required for bakeries are recorded,• Daily sales in the shop is also jotted down in this book.• Very essential as it records each and every transaction happening in the company.
Ledger• Ledger is another important account in this company.• After collecting the daily transactions, they are separated into various small accounts• Used to get the accurate total of various types of transaction.• Small accounts such as salaries, debt, bills paid etc, are separated and recorded.
Books of purchase• This account holds only those transactions which are made by cash• All the purchases and sales made by cash are recorded in this account.• Transactions made in credit and by cheque are recorded in a separate account.
Other forms of accounts• Besides, they also have a stock account• Record total product produced and total raw materials used• At the end of the year estimation of total purchases and sales is made• Eventually the company’s profit or loss is determined
Use of these Accounts• To record various transactions of the company in any form.• Help the accountants to determine the financial position of the company• Profit or loss of the company during a year• To suggest the manager for various financial strategies. – which product needs more marketing, – which product needs more sales, – Etc.
Use of these Accounts• Helps managers to estimate the salaries and wages of many workers working in the company• Helps in the planning process• These accounts help to omit errors such as double posting, omission of certain transactions, etc.• Help the managers to keep accurate transactions between various dealers and suppliers
Conclusion• Krishna Pauroti Pvt. Ltd, holds no such formal, structured accounting system.• The accounting process is rough and is used internally• Yet, the account maintained is sufficient to determine all the outputs the company requires.