Accounting provides essential financial information about a business and helps with budgeting, cash flow management, and cost cutting. It has two main branches: financial accounting for external reporting to banks and shareholders, and managerial accounting for internal decision making. Accounts can be personal or impersonal, real or nominal depending on whether they represent people, assets, expenses/incomes, or other intangible items. The three main financial statements are the balance sheet, which provides a snapshot of assets, liabilities and equity on a given date; the income statement, which measures revenue and expenses over a period of time; and the statement of cash flows.

2. ACCOUNTING?
Accounting is a language of business.
The affairs and the results of the
business are communicated to others
through accounting information, which
has to be systematically recorded and
presented

3. Help you prepare a budget and keep on
target.
Realize how much cash you have and if
there is enough to pay bills.
Uncover places where costs can be cut.
HOW ACCOUNTING
HELPS YOU?

4. TYPES OF ACCOUNTING
Financial accounting
Managerial accounting

5. Branch of accounting associated
with preparing reports for external
users
i.e. the bank, shareholders
FINANCIALACCOUNTING

6. Accounting to guide management in
making decisions about the business
i.e. break even analysis
MANAGERIAL
ACCOUNTING

7. CLASSIFICATION OF
ACCOUNTS
ACCOUNTS
PERSONAL
ACCOUNTS
IMPERSONAL
ACCOUNTS
REAL
ACCOUNTS
NOMINAL
ACCOUNTS

8. Accounts in the name of persons are known
as personal accounts.
Eg: Babu A/C,
Babu & Co. A/C,
Outstanding Salaries A/C, etc.
PERSONALACCOUNTS

9. These are accounts of assets or properties. Assets
may be tangible or intangible. Real accounts are
impersonal which are tangible or intangible in
nature.
Eg:- Cash a/c, Building a/c, etc are Real
Accounts related to things which we can
feel, see and touch.
Goodwill a/c, Patent a/c, etc Real Accounts
which are of intangible in nature.
REALACCOUNTS

10. These accounts are impersonal, but invisible and
intangible. Nominal accounts are related to those
things which we can feel, but can not see and
touch. All “expenses and losses” and all “incomes
and gains” fall in this category.
Eg:- Salaries A/C, Rent A/C, Wages A/C, Interest
Received A/C, Commission Received A/C,
Discount A/C, etc.
NOMINALACCOUNTS

11. The Balance Sheet
The Income Statement
Statement of Cash Flows
FINANCIAL
STATEMENTS

12. The balance sheet is an accountant’s
snapshot of the firm’s accounting value on a
particular date, as though the firm stood
momentary still.
The balance sheet states what the firm owns
and how it is financed.
Assets Liabilities + Stockholders’ equity
THE BALANCE SHEET

13. The income statement measures performance
over a specific period of time, say, a year.
The accounting definition of income is:
Revenue – Expenses is Income
THE INCOME
STATEMENT

14. 14
STATEMENT OF CASH
FLOWS
Sources of Funds
Assets
Liabilities and
Stockholders’ Equity
Uses of Funds
Assets
Liabilities and
Stockholders’ Equity