This document provides an overview of accounting, including its objectives, branches, users of information, and the accounting cycle. It discusses how accounting involves identifying, measuring, recording, classifying, summarizing, analyzing, and communicating financial transactions. The main branches covered are financial accounting, managerial accounting, cost accounting, tax accounting, and forensic accounting. The accounting cycle includes preparing vouchers, journal entries, ledger entries, trial balances, and financial statements. Finally, it outlines the internal and external users that rely on accounting information for decision making.

1. OBJECTIVES
BRANCHES OF
ACCOUNTING
USERS OF
ACCOUNTING
INFORMATIONS
ACCOUNTING
CYCLE
Prof. Satyanath Mohapatra

2. Accounting has been widely and rightly termed as “the Language of
Business”. The language is the means of communication.
Accounting is the identifying ,
recording of financial
transactions pertaining to a
business, and it also refers to the
process of summarizing, analyzing
and reporting these transactions
to various uders of accounting
informations

3. Accounting covers the following activities-:
1- Identifying the transactions and events
2- Measuring the identified transactions and events
3- Recoding the transactions
4- Classifying the recorded transactions
5- Summarizing the classified transactions
6- Analyzing
7- Interpreting the significance and Communicating.

4. Systematic recording of transactions: basic objective of accounting is to
systematically record the financial aspects of business transactions (i.e.
book-keeping). These recorded transactions are later on classified and
summarized logically for the preparation of financial statements and for
their analysis and interpretation.
Ascertainment of result of above recorded transactions: accountant
prepares profit and loss account to know the result of business operations
for a particular period of time. If expenses exceed revenue then it is said
that the business is running under loss. The profit and loss account helps
the management and different stakeholders in taking rational decisions. For
example, if business is not proved to be remunerative or profitable, the
cause of such a state of affairs can be investigated by the management for
taking remedial steps.
Objectives of Financial Accounting

5. Ascertainment of the financial position of business: businessman is not only
interested in knowing the result of the business in terms of profits or loss for a
particular period but is also anxious to know that what he owes (liability) to the
outsiders and what he owns (assets) on a certain date. To know this, accountant
prepares a financial position statement of assets and liabilities of the business at a
particular point of time and helps in ascertaining the financial health of the
business.
Providing information to the users for rational decision-making: accounting as a
‘language of business’ communicates the financial result of an enterprise to various
stakeholders by means of financial statements. Accounting aims to meet the
financial information needs of the decision-makers and helps them in rational
decision-making.
To know the solvency position: by preparing the balance sheet, management not
only reveals what is owned and owed by the enterprise, but also it gives the
information regarding concern’s ability to meet its liabilities in the short run
(liquidity position) and also in the long-run (solvency position) as and when they fall
due.

6. Branches of Accounting
Auditing

7. Financial Accounting
Financial accounting involves recording and
classifying business transactions, and
preparing and presenting financial
statements to be used by internal and
external users.
In the preparation of financial statements,
strict compliance with generally accepted
accounting principles or GAAP is observed.
Financial accounting is primarily concerned in
processing historical data.

8. Managerial Accounting
Managerial or management accounting
focuses on providing information for use by
internal users, the management. This branch
deals with the needs of the management
rather than strict compliance with generally
accepted accounting principles.
Managerial accounting involves financial
analysis, budgeting and forecasting, cost
analysis, evaluation of business decisions,
and similar areas.

9. Cost Accounting
Sometimes considered as a subset of management
accounting, cost accounting refers to the
recording, presentation, and analysis of
manufacturing costs. Cost accounting is very useful
in manufacturing businesses since they have the
most complicated costing process.
Cost accountants also analyze actual and standard
costs to help managers determine future courses
of action regarding the company's operations.

10. Tax Accounting
Tax accounting helps clients follow rules set
by tax authorities. It includes tax planning
and preparation of tax returns. It also
involves determination of income tax and
other taxes, tax advisory services such as
ways to minimize taxes legally, evaluation
of the consequences of tax decisions, and
other tax-related matters.

11. Forensic Accounting
Forensic accounting involves court and litigation cases,
fraud investigation, claims and dispute resolution, and
other areas that involve legal matters. This is one of the
popular trends in accounting today.
Auditing
External auditing refers to the examination of financial
statements by an independent party with the purpose of
expressing an opinion as to fairness of presentation and
compliance with GAAP. Internal auditing focuses on
evaluating the adequacy of a company's internal control
structure by testing segregation of duties, policies and
procedures, degrees of authorization, and other controls
implemented by management.

12. 1- The Events that involves the transfer of value between two
entities are called a transaction.
2- Preparing the receipt or payment vouchers.
3- The first entry made to the primary books regarding the
transaction. Generally known as the journal entry.
4- Re-recording of the transaction takes place to visualize it in
a clear and systematic manner. It helps to classify the
transactions as per nature. Generally known as the ledger
entry.
5- Trial balance statements prepared to test the accuracy of
the ledger balance.
6- The Financial statements like balance sheet, Profit/loss
account statements prepared to present and forecast the
financial positions.
The Accounting Cycle.

13. Users of Accounting Information
External users of accounting information
Internal users of accounting information
Investors
Creditors
Customers
Suppliers
Employees
Government organizations
Management
Managers of operations

14. The American institute of certified and public
accountants committee on terminology
defined accounting as:
“Accounting is 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 a financial
character and interpreting the results there of
”. Of all definitions available, this is the most
acceptable one because it encompasses all the
functions which the modern accounting
system performs.

15. Thank you