Basics of Accounting and Accounting standards which provides loot of inputs to learn Accounting and accounting standards.

1. ACCOUNTING STANDARDSACCOUNTING STANDARDS
SAIPRASAD D.
M.Com., M.Phil., NET.,(Ph.D.)
Asst. Professor Dept. Commerce and Management
MLA-Academy of Higher Learning

2. © The McGraw-Hill Companies, Inc., 2006cGraw-Hill/Irw2in
Opportunities in AccountingOpportunities in Accounting
FinancialFinancial
•Preparation
•Analysis
•Auditing
•Regulatory
•Consulting
•Planning
•Criminal
investigation
•Preparation
•Analysis
•Auditing
•Regulatory
•Consulting
•Planning
•Criminal
investigation
ManagerialManagerial
•General accounting
•Cost accounting
•Budgeting
•Internal auditing
•Consulting
•Controller
•Treasurer
•Strategy
•General accounting
•Cost accounting
•Budgeting
•Internal auditing
•Consulting
•Controller
•Treasurer
•Strategy
TaxationTaxation
•Preparation
•Planning
•Regulatory
•Investigations
•Consulting
•Enforcement
•Legal services
•Estate planning
•Preparation
•Planning
•Regulatory
•Investigations
•Consulting
•Enforcement
•Legal services
•Estate planning
Accounting-
related
Accounting-
related
•Lenders
•Consultants
•Analysts
•Traders
•Directors
•Underwriters
•Planners
•Appraisers
•Lenders
•Consultants
•Analysts
•Traders
•Directors
•Underwriters
•Planners
•Appraisers
•Fraud investigators
•Market researchers
•Systems designers
•Merger services
•Business valuation
•Human services
•Litigation support
•Entrepreneurs
•Fraud investigators
•Market researchers
•Systems designers
•Merger services
•Business valuation
•Human services
•Litigation support
•Entrepreneurs

3. © The McGraw-Hill Companies, Inc., 2006cGraw-Hill/Irw3in
Accounting Jobs by AreaAccounting Jobs by Area
Private
accounting
60%Public
accounting
25%
Government,
not-for-profit,
& education
15%

4. BASICS OF ACCOUNTINGBASICS OF ACCOUNTING

5. BUSINESSBUSINESSBusiness includes
commerce and industry
with profit motive under law
Accounting iS A LANGUAGE of
business .
It communicates business
operations to needy people.
in form of financial statements

6. IdentifiesIdentifies
RecordsRecords
CommunicatesCommunicatesRelevantRelevant
ReliableReliable
ComparableComparable
Importance of AccountingImportance of Accounting
AccountingAccounting
is a
system that
information
that is
to help users make
better decisions.
to help users make
better decisions.

8.  Identifying
Business
Activities
 Recording
Business
Activities

Communicating
Business
Activities
Accounting ActivitiesAccounting Activities

9. Users of Accounting InformationUsers of Accounting Information
External Users
•Lenders
•Shareholders
•Governments
•Consumer Groups
•External Auditors
•Customers
Internal Users
•Managers
•Officers
•Internal
Auditors
•Sales Staff
•Budget
Officers
•Controllers

10. Users of Accounting InformationUsers of Accounting Information
External Users
Financial accounting provides
external users with financial
statements.
Internal Users
Managerial accounting provides
information needs for internal
decision makers.

11. Users of Accounting Information-ExternalUsers of Accounting Information-External
Lenders: Whether the firm (borrower) can
repay the money?
Shareholders: whether to buy, hold, or sell
stocks?
Governments: whether the firm pay all due
tax?
Customers: whether the firm can exist to
provide post-sale services?
External Auditors: whether the financial
statements are prepared according to
GAAP?
Etc.

12. Users of Accounting Information-InternalUsers of Accounting Information-Internal
Marketing managers: target customers, set
price, monitor sales.
Production managers: monitor cost and
ensure quality.
Purchasing managers: what, when and
where to purchase materials.
Human resource managers: employees’
performance and compensation.

13. CONCEPTUAL FRAMEWORK OFCONCEPTUAL FRAMEWORK OF
ACCOUNTINGACCOUNTING
Generally accepted accounting principles
set of standards and rules that are recognized as a general
guide for financial reporting.
Generally accepted
means that these principles must have substantial
authoritative support AND UNIVERSALY ACCEPTED.

14. ACCOUNTING PRINCIPLESACCOUNTING PRINCIPLES

15. CLASSIFICATION OF GENERALLYCLASSIFICATION OF GENERALLY
ACCEPTED ACCOUNTING PRINCIPLESACCEPTED ACCOUNTING PRINCIPLES::
A) Accounting concepts
B) accounting conventions

16. CONVENTIONSCONVENTIONS

17. QUALITATIVE CHARACTERISTICS OFQUALITATIVE CHARACTERISTICS OF
ACCOUNTING INFORMATIONACCOUNTING INFORMATION
1 Relevance
2 Reliability
3 Comparability
4 Consistency

20. I order to ensure the transparency,
consistency, comparability , and adequacy
and reliability of financial reporting, it is
essential to standardized accounting
policies and principles.
Accounting standards provide frame work
and Standard accounting policies so that
financial statements different enterprises
become comparable

21. Accounting standardsAccounting standards
According to ICAI (Institute of Chartered
Accountants of India), accounting
standards “written documents, policies,
procedures issued by expert accounting
body or government or other regulatory
body covering the aspects of recognition,
measurement, treatment, presentation and
disclosure of accounting transactions in the
financial statement”.

22. OBJECTIVES OF ACCOUNTING STANDARDS:OBJECTIVES OF ACCOUNTING STANDARDS:
Standardize the diverse accounting policies.
To eliminate to the extent possible the non
comparability of financial statements.
It adds the reliability to the financial statements.
It increases the arithmetic accuracy of financial
statements.
Accounting standards helps to understand
accounting treatment in financial statement.

23. ADVANTAGES OF ACCOUNTING STANDARDS:ADVANTAGES OF ACCOUNTING STANDARDS:
Accounting standards reduces or eliminates
confusing variation in the accounting
treatments used to prepare the financial
statements.
Accounting standards may call for
disclosure beyond that required by law.
It facilitates comparison of financial
statements of different companies.

24. Accounting standards setting processAccounting standards setting process
Accounting Standards Board shall determine
the need and priority in regard to the selection
thereof.
Formation of study groups by ASB.
ASB will also hold a dialogue with the
representatives of the Government, Public
Sector Undertakings and Industry for
ascertaining their views.
Based on the work of Study Groups and the
dialogue with the organizations referred to
above, an exposure draft of the proposed
standards will be prepared.

25. The draft of the proposed standard will
include the following basic points:
Concepts and fundamental accounting
principles relating to the standard.
Definitions of the terms used in the
standard.
The manner in which the accounting
principles have been applied.
The presentation and disclosure
requirements.
Class of enterprises to which the standards
will apply.

26. Date from which the standard will be
effective.
Finalization of proposed standards by ASB
and submitted to the Council of the
Institute.
Modification or issue of accounting
standards is the authority of the Council.

27. ACCOUNTING STANDARDS
BOARD
ACCOUNTING STANDARDS
BOARD
The Institute of Chartered Accountants of India (ICAI),
recognizing the need to harmonize the diverse
accounting policies and practices in use in India,
constituted the Accounting Standards Board (ASB) on
21st April, 1977.

28. The composition of the ASBThe composition of the ASB
Apart from the elected members of the Council of the
ICAI nominated on the ASB, the following are
represented on the ASB:
 Nominee of the Central Government representing the
Department of Company Affairs on the Council of the ICAI.
 Nominee of the Central Government representing the Auditor
General of India on the Council of the ICAI.
 Nominee of the Central Government representing the Central
Board of Direct Taxes on the Council of the ICAI.
Representative of the Institute of Cost and Works Accountants of
India.

29.  Representative of the I C S of India.
 Representatives of Industry Associations
 Representative of Reserve Bank of India.
 Representative of SEBI
 Representative of Controller General of Accounts.
 Representative of Central Board of Excise and
Customs.
 Representatives of Academic Institutions (1 from
Universities and 1 from I IM)
Representative of Financial Institutions
Eminent professionals co-opted by the ICAI.
Representative(s) of any other body, as considered
appropriate by the ICAI

30. The OBJECTIVES of the ASBThe OBJECTIVES of the ASB
To suggest areas in which Accounting Standards
need to be developed.
To formulate Accounting Standards with a view to in
evolving and establishing A S in India.
Formulating the Accounting Standard and to adapt
the same.
To review, at regular intervals, the assisting the
Council of the ICAI accounting Standards from the
point of view of acceptance or changed conditions,
and, if necessary, revise the same.
To provide, from time to time, interpretations and
guidance on A S
To carry out such other functions relating to A S

31. ACCOUNTING STANDARD
SETTING
ACCOUNTING STANDARD
SETTING
It is a process of selecting the appropriate accounting
standard.
Identification and assessment of theory
Cost benefit analysis
 Choice between alternative method

32. DIFFICULTIES ACCOUNTING STANDARD SETTINGDIFFICULTIES ACCOUNTING STANDARD SETTING
1. Difficulties in definition.
2. Political bargaining in setting.
3. Conflict of accounting theory.
4. Pluralism.
5. Social, economic and legal
difficulties.