Introduction to financial accounting ( Simple understanding of financial accounting)
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Introduction to financial accounting ( Simple understanding of financial accounting)

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Introduction to financial accounting. This presentation will help students to understand financial accounting in simple way , it covers basics of financial accounting process

Introduction to financial accounting. This presentation will help students to understand financial accounting in simple way , it covers basics of financial accounting process

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  • 1. Introduction to financial accountingBy.Dr. Sanjay P Sawant DessaiAssociate ProfessorVVMs Shree Damodar College of Commerce and Economics Margao Goasanjaydessai@gmail.com06/07/13 sanjaydessai@gmail.com 1
  • 2. What is Accounting• Accounting is ---Reporting• Reporting through ---Financial StatementsFinancial statements are• Profit and loss Account / Income statement• Balance Sheet• Cash Flow Statement06/07/13 sanjaydessai@gmail.com 2
  • 3. Financial AccountingDefinitionAmerican Institute of certified public Accountantdefines accounting as“Accounting is an art of recording, classifying andsummarizing in a significant manner and in termsof money, transaction and events which are, inpart at least, of a financial character andinterpreting the results thereof ”06/07/13 sanjaydessai@gmail.com 3
  • 4. Accounting• Art• Record• Transaction/Event• Monetary terms (money)• Financial Character• Classification• Summary &• Interpretation of results06/07/13 sanjaydessai@gmail.com 4
  • 5. Items disclosed in financialstatements• Assets• Liabilities• Incomes / Gains• Expenses / Losses• Equity (Capital)• (Personal, Real and Nominal Accounts )06/07/13 sanjaydessai@gmail.com 5
  • 6. Types of Accounts• Personal Accounts - Assets and liabilities• Real Accounts – Assets• Nominal Accounts - Incomes and expenses06/07/13 sanjaydessai@gmail.com 6
  • 7. Process of Accounting(Preparation of financial statements)1. Transaction / event2. Documentary evidence / Voucher3. Journal /Subsidiary books4. Ledger5. Balancing / Totaling6. Trial balance7. Financial statements06/07/13 sanjaydessai@gmail.com 7
  • 8. Journal /Subsidiary books- PrimaryBooks1. Purchase Book2. Sales Book3. Purchase Return4. Sales Return5. Cash book6. Bills Receivable Book7. Bills Payable Book8. Journal Proper06/07/13 sanjaydessai@gmail.com 8
  • 9. Reporting financial information onfollowing1. Sales2. Purchases3. Expenses4. Incomes5. Profits6. Losses7. Capital8. Liabilities9. Assets10. Reserves11. Loans and advances12. Investment13. Debtors14. Creditors06/07/13 sanjaydessai@gmail.com 9
  • 10. Parties interested in financial information1. Owners /Investors2. Management3. Potential investors4. Suppliers and other creditors5. Lenders (banks a6. Employees7. Government and other agencies8. Public9. Customers06/07/13 sanjaydessai@gmail.com 10