The document outlines a Smart Accountant class offering 200 hours of coursework, including 60 hours of theory and 140 hours of practical application, covering accounting principles such as accrual and cash basis accounting. It also details the accounting process, standards, and essential terminology, emphasizing the importance of each method in financial reporting and the reliability of financial statements. Additionally, it provides definitions of key terms related to assets, liabilities, income, and expenditures.

1. Welcome to Smart
Accountant class
200
Hrs
60
Hrs
140
Hrs
Basis of Accounting
3 Months, 200 Hours
60 Hours of Class
140 Hours of
Practicals

2. While some might connect the idiom
to the 18th century when special ice-
breaking ships were built to help
explore he polar regions, the first
recorded use actually goes back to
the 17th century (1678) when
Samuel Butler used it in his poem
Hudibras. "The Oratour - At last
broke silence, and the Ice."
Breaking the Ice
Origination

3. Accrual accounting is an accounting
method where revenue or expenses
are recorded when a transaction
occurs rather than when payment is
received or made.
The method follows the matching
principle, which says that revenues
and expenses should be recognized
in the same period.
Accrual Basis of
Accounting
Definition

4. Cash Basis of Accounting
Definition
Cash basis refers to accounting
method that recognizes revenues and
expenses at the time cash is received
or paid out. This contrasts
accrual accounting, which recognizes
income at the time the revenue is
earned and records expenses when
liabilities are incurred regardless of
when cash is received or paid.

5. Differences between Accrual
Basis of Accounting and Cash
Basis of Accounting
Differences

6. Differences
Basis Accrual Basis of Accounting Cash Basis of Accounting
Nature of
Transactions
Both cash and credit transactions
are recorded
Cash transactions are recorded
Prepaid/
Outstanding
Expenses
Accrued
Income/Income
Received in Advance
Prepaid and outstanding
expenses are accounted in the
Profit and Loss Account.
Accrued income and income
received in advance are also
accounted and shown in the
Balance Sheet.
Prepaid and outstanding
expenses are not adjusted.
Similarily, accrued income and
income received in advance are
not adjusted.
Profit or Loss
Correct profit and loss is
ascertained because it records
both cash and credit transactions.
Correct profit and loss is not
ascertained because it records
only cash transactions.
Technical
Knowledge
The Accrual Basis of Accounting
requires technical knowledge as
many adjustments like prepaid,
outstanding, capital and revenue
are required to be made.
It does not require much of
technical knowledge as is
required for Accrual Basis of
Accounting.

7. Differences
Basis Accrual Basis of Accounting Cash Basis of Accounting
Legal Position
Accrual Basis of Accounting is
recognized by the Companies Act,
2013
Cash Basis of Accounting is not
recognized by the Companies Act,
2013.
Acceptability
Accrual Basis of Accounting is more
acceptable in business as it reveals
correct income and expense besides
assets and liabilities.
Cash Basis of Accounting is not
acceptable in business as it does
not reveal the required
information.
Reliability
Accrual Basis of Accounting is more
reliable as it records both cash and
credit transactions and thus, reveals
correct profit or loss besides assets
and liabilities.
Cash Basis of Accounting is less
reliable as it records only cash
transactions and as a result does
not reveal correct profit or loss
and also assets and liabilities.
Suitability
Accrual Basis of Accounting is
suitable for businesses as it requires
information that is complex. It can
be made available by Accrual Basis
of Accounting.
Cash Basis of Accounting is
suitable for Not-for-Profit
Organizations and Professionals
such as chartered accountants,
lawyers, etc. since they require
comparatively less information.

8. Welcome to Smart
Accountant class
200
Hrs
60
Hrs
140
Hrs
Accounting Process
3 Months, 200 Hours
60 Hours of Class
140 Hours of
Practicals

9. Accounting Process
The Accounting Process is a series
of activities that begins with a
transaction and ends with the
closing of the books. Because
this process is repeated each
reporting period, it is referred to as
the Accounting Cycle.
Definition

10. Based on the attributes of accounting, the steps of
accounting process are as follows:
Steps
Financial Transactions
and Events
Recording
Journal
1. Cash Book
2. Purchases Book
3. Sales Book
4. Purchases Return Book
5. Sales Return Book
6. Bills Payable Book
7. Bills Receivable Book
8. Journal Proper
Classifying
(Posting into Ledgers)
Communicating to users
Analysis and
Interpretation
Summarising
1. Trial Balance
2. Trading and Profit and Loss Account
(Statement of Profit and Loss)
3. Balance Sheet

11. Welcome to Smart
Accountant class
200
Hrs
60
Hrs
140
Hrs
Accounting Standards
3 Months, 200 Hours
60 Hours of Class
140 Hours of
Practicals

12. What is the main objective of setting
accounting standards?
Or
What is meant by Accounting standards?
Explain one objective of Accounting
standards.
Accounting Standards
Question

13. Answer
Accounting Standards are the guidelines for the
preparation of uniform and consistent Financial
Statements. This also includes disclosures
required by the different users of accounting
information
The objective of setting Accounting Standards is
to bring uniformity in accounting practices and to
ensure transparency, consistency and
comparability.

14. ‘Accounting Standards have been evolved to
improve the reliability and credibility of
Financial Statements. Accounting Standards
provide the solution in case of conflicts
among various groups.’ In the light of this
statement, enumerate the objectives of
Accounting Standards.
Question

15. Answer
The objectives of Accounting Standards are:
i. Minimise the diverse accounting policies and
practices with the aim to eliminate them to
the extent possible.
ii.Promote better understanding of financial
statements.
iii.Understand significant Accounting policies
adopted and applied.
iv.Facilitating meaningful comparison of
financial statements of two or more entities.
v.Enhancing reliability of financial statements.

16. Welcome to Smart
Accountant class
200
Hrs
60
Hrs
140
Hrs
Basic Accounting
Terms
3 Months, 200 Hours
60 Hours of Class
140 Hours of
Practicals

17. What is meant by Cash Transaction?
Cash transaction is a financial
transaction or event that is settled
immediately in cash.
Basic Accounting Terms
Answer
Question
Answer
Question
What is meant by Credit Transaction?
Credit transaction is a financial
transaction or event that is not settled
immediately, i.e., is agreed to be settled
later.

18. Briefly explain Expenditure.
Expenditure is the amount spent or
liability incurred for acquiring assets,
goods or services.
Answer
Question
Answer
Question
What are Assets?
Asset is a property (land, machine,
goods, premises etc.) or legal rights
(patents, copyrights etc.) owned by an
individual or business which can be
measured in money terms.

19. What are Fixed Assets?
Fixed Assets are the assets which are
acquired not with a purpose to resell
but with a purpose to increase the
earning capacity of the business.
Answer
Question
Answer
Question
What is meant by Tangible Assets?
Tangible Assets are the assets which
have physical existence, i.e., they can be
seen and touched such as Land,
Building, Plant and Machinery and
Computers.

20. Briefly explain Intangible Assets.
Intangible Assets are the assets which
do not have a physical existence, i.e.,
they cannot be seen or touched such as
Computer Software and Goodwill.
Answer
Question
Answer
Question
Briefly explain the term ‘Goods’.
Goods are the physical items of trade.

21. Define the term ‘Purchase’.
The term Purchase is used for
purchase of goods for resale or for
producing the finished products which
are also to be sold. The term ‘purchase’
includes both cash and credit
purchases of goods. Goods purchased
for cash are termed as Cash Purchases
and goods purchased on credit are
termed as Credit Purchases.
Answer
Question

22. Question
Answer
What are the main classes of
Liabilities?
Non-current Liabilities and Current
Liabilities
Question
Answer
Give any two examples of Current
Assets.
Stock-in-Trade (Inventories) and Cash in
Hand

23. Question
Answer
Name three Current Liabilities.
Creditors, Bills Payable and Outstanding
Expenses.
Question
Answer
Name two Long-term Liabilities.
Long-tem Loans and Debentures.

24. Question
Answer
Explain Capital briefly.
Capital is the amount invested by the
proprietor or the partner in the business.
Question
Answer
Who is a Debtor?
Debtor is a person to who owes amount
to the business on account of credit
sales of goods and/or services in the
normal course of business.

25. Question
Answer
Who is a Creditor?
Creditor is the person to whom an
amount is owed on account of credit
purchases of goods and/or services in
the normal course of business.
Question
Answer
What is an Income?
Income is profit earned during the
accounting period, i.e., revenue minus
expenses.

26. Question
Answer
What is meant by Revenue from
Operations?
Revenue from Operations means
revenue earned by the enterprise from
its Operating Activities such as Net Sales
(Sales-Sales Return), services rendered,
sale of scrap etc.
Question
Answer
Define Voucher.
Voucher is an evidence of a business
transaction.

27. Question
Answer
Define Drawings with example.
Drawings is the amount of money or
value of goods which the proprietor or
partner withdraws for personal use. For
example, withdrawal of cash by the
proprietor for personal use.
Question
Answer
Define Merchandise.
Merchandise means goods for resale.

28. Question
Answer
A firm earns a revenue of 21,000 and
the expenses to earn this revenue are
15,000. Calculate its income.
Income = Revenue - Expense
= 21,000 - 15,000 = 6,000
Question
Answer
A firm has received a large order to
supply goods. Will it be recorded in
the books of account of the firm? Give
reason.
No, it will not be recorded in the books of
account because it is not a transaction.

29. Thank You