Financial Accounting

1. BASIC CONCEPTS
OF FINANCIAL
ACCOUNTING
NAVEEN SHARMA
MBA(Mkt.)HSB
96608-39808

2. Financial accounting means gathers
and summarizes financial data to
prepare financial reports such as
Balance sheet and income statement
for the organisation’s management,
investors, suppliers and other
stakeholders.

3. Cycle Of Financial Accounting
The six – step of financial accounting
1. Analyzing and categorizing documents.
2. Putting the information into journals.
3. Posting that information into ledgers.
(Note: These first three steps are continous. )
4. Preparing a trial balance.
5. Preparing an income statement and balance sheet.
6. Analyze the financial statements and determine financial
health of company.

4. Journalize
transactions
in the
journal.
Post entries to
the accounts in
the ledger.
Prepare
unadjusted trial
balance.
Prepare an
income statement
& Balance - sheet
Analyze
Business
Transactions.
Determine
financial
health of
company
Accounting Cycle

5. JOURNAL Page 1
Date Particular Lf Debit Credit
Performa of Journal

6. Performa of Ledgers
Date Item Post. Ref. * Debit Date Item
Posting
Reference Credit
Account No:Account
Left-hand or Right-hand or
Debit Side Credit Side
Account Name Account No:
Two-Column Account
T-Account form that depicts the two-column account:

7. Performa of Trial Balance

8. Performa of Trading and P&L A/c

9. Performa of Balance - Sheet

10. Importance Of Financial Accounting
 It can provide information.
 It uses double – entry method.
 It provides a clear and methodological
approach into the activities of the business.
 It is easier for small business to compare
with others because its rules are common
everywhere.
 It helps to take better decision making.

11. Scope Of Financial Accounting
 To help managers evaluate the financial
condition.
 The operating performance of the firm so
they may make better decisions.
 To report financial information to people
outside the firm such as owners, suppliers,
and the government.
 Accounting is the measurement and report
of financial information to various user
regarding the economic activities of the firm.

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