This document discusses accounting concepts from an Islamic perspective. It outlines conventional accounting concepts and examines their compatibility with Islamic principles. The accounting assumptions of the accounting unit, going concern, periodicity, and monetary unit concepts are found to be generally acceptable in Islam. Accrual-based revenue recognition is preferred over cash-based accounting. While historical cost is used, current market value is recommended for zakat calculation. Full disclosure of material information is required to avoid prohibited interest and ensure proper payment of zakat and social accountability. Developing Islamic accounting further requires ongoing discussion and research.
The document provides an overview of Islamic finance and banking. It defines Islamic finance as financial business that complies with Shariah (Islamic law) and avoids elements like interest, gambling, and uncertainty. It discusses the history and concepts of Islamic banking, highlighting that relationships are based on profit and loss sharing rather than debt. Common Islamic banking products and contracts are explained such as Murabahah, Mudarabah, Musharakah, Ijara, Salam and Sukuk. The global growth of the industry is summarized. In conclusion, it is stated that Islamic banking has grown significantly in the last 40 years while adhering to risk-sharing models of finance.
Trial balance and rectification of errorsItisha Sharma
Trial balance and rectification of errors, Introduction- Specimen of a Trial Balance- Errors and their rectification – Rectification of errors Rectification of errors detected after the preparation of Trial Balance but before the preparation of Final Accounts- Effect of errors on Profit – Rectification of errors appearing after the preparation of Final Accounts
The document provides information about financial statements of not-for-profit organizations. It discusses the key components of their financial statements which include a receipts and payments account, income and expenditure account, and balance sheet. It explains items that appear on each financial statement such as subscriptions, donations, depreciation, capital and revenue expenditures. It also differentiates between general funds and specific funds maintained by not-for-profit organizations.
The document discusses the accounting cycle and provides examples of classifying accounts, journalizing transactions, preparing ledger accounts, and posting journal entries to the ledger. It begins by classifying various accounts as personal, real, or nominal. Examples are then provided of journalizing transactions and posting the journal entries to update the appropriate ledger accounts. The key steps in journalizing, preparing ledger accounts, and posting entries from the journal to the ledger are outlined. Compound or combined journal entries involving multiple debits and/or credits are also introduced.
This document discusses social accounting, which is a process that communicates the social and environmental impacts of organizations' economic actions to interested groups. It provides background on the history and definition of social accounting, its purposes of accountability and management control. Key aspects covered include formal accountability, self-reporting and third party audits. The objectives and benefits of social accounting are outlined. Challenges and a three step process involving planning, accounting, and reporting/auditing are also summarized. An example of social accounting for a student housing co-operative is provided.
Control accounts the account which represents a particular sub ledger, sales ledger and purchases ledger control accounts.
At the end of an accounting period the accounts are balanced off and a trial balance prepared to check the accuracy of the book keeping entries. If a trial balance fails to balance this usually indicates that an error or errors may have been made and needs to be identified. As the business expands the accounting requirements increase which may lead to more errors occurring which are very difficult to find.
The document discusses the accounting process and provides details about accounting concepts, principles, branches, books of accounts, accounting systems and rules of debit and credit. It defines accounting and discusses the accounting equation. It explains the different types of accounts, accounting process which involves recording transactions in journal, posting to ledger, preparing trial balance and final accounts. It provides examples of journal entries and trial balance.
The document provides an overview of Islamic finance and banking. It defines Islamic finance as financial business that complies with Shariah (Islamic law) and avoids elements like interest, gambling, and uncertainty. It discusses the history and concepts of Islamic banking, highlighting that relationships are based on profit and loss sharing rather than debt. Common Islamic banking products and contracts are explained such as Murabahah, Mudarabah, Musharakah, Ijara, Salam and Sukuk. The global growth of the industry is summarized. In conclusion, it is stated that Islamic banking has grown significantly in the last 40 years while adhering to risk-sharing models of finance.
Trial balance and rectification of errorsItisha Sharma
Trial balance and rectification of errors, Introduction- Specimen of a Trial Balance- Errors and their rectification – Rectification of errors Rectification of errors detected after the preparation of Trial Balance but before the preparation of Final Accounts- Effect of errors on Profit – Rectification of errors appearing after the preparation of Final Accounts
The document provides information about financial statements of not-for-profit organizations. It discusses the key components of their financial statements which include a receipts and payments account, income and expenditure account, and balance sheet. It explains items that appear on each financial statement such as subscriptions, donations, depreciation, capital and revenue expenditures. It also differentiates between general funds and specific funds maintained by not-for-profit organizations.
The document discusses the accounting cycle and provides examples of classifying accounts, journalizing transactions, preparing ledger accounts, and posting journal entries to the ledger. It begins by classifying various accounts as personal, real, or nominal. Examples are then provided of journalizing transactions and posting the journal entries to update the appropriate ledger accounts. The key steps in journalizing, preparing ledger accounts, and posting entries from the journal to the ledger are outlined. Compound or combined journal entries involving multiple debits and/or credits are also introduced.
This document discusses social accounting, which is a process that communicates the social and environmental impacts of organizations' economic actions to interested groups. It provides background on the history and definition of social accounting, its purposes of accountability and management control. Key aspects covered include formal accountability, self-reporting and third party audits. The objectives and benefits of social accounting are outlined. Challenges and a three step process involving planning, accounting, and reporting/auditing are also summarized. An example of social accounting for a student housing co-operative is provided.
Control accounts the account which represents a particular sub ledger, sales ledger and purchases ledger control accounts.
At the end of an accounting period the accounts are balanced off and a trial balance prepared to check the accuracy of the book keeping entries. If a trial balance fails to balance this usually indicates that an error or errors may have been made and needs to be identified. As the business expands the accounting requirements increase which may lead to more errors occurring which are very difficult to find.
The document discusses the accounting process and provides details about accounting concepts, principles, branches, books of accounts, accounting systems and rules of debit and credit. It defines accounting and discusses the accounting equation. It explains the different types of accounts, accounting process which involves recording transactions in journal, posting to ledger, preparing trial balance and final accounts. It provides examples of journal entries and trial balance.
The document discusses accounting concepts like debits, credits, assets, liabilities, capital, and provides examples of journal entries, ledger accounts, and a trial balance. It also explains the purpose and components of key financial statements like the trading account, profit and loss account, and balance sheet.
A business usually pays other parties by cheque, with information written on both the cheque itself and a corresponding cheque counterfoil. A deposit slip is filled out when depositing money including cash, cheques, and money orders into a bank account, with the depositor keeping a duplicate and the bank keeping the original. When a customer pays a business through various methods like cash, cheque, or credit/debit card, the business can provide a receipt, cash register receipt, or credit card slip to acknowledge receiving payment.
This document discusses various types of customers and account holders that banks deal with. It describes ordinary customers as well as special customers like minors, partnership firms, joint Hindu families, joint stock companies, and more. For each type of special customer, it provides details on legal considerations for opening and operating accounts, required documents, authorized signatories, and other precautions banks must take. The document aims to outline procedures and legal compliance for properly handling different customer accounts.
This document describes different types of cash books used to record cash transactions. A cash book is a book of primary entry that records all cash receipts on the debit side and cash payments on the credit side. It serves as both a journal and ledger for the cash account. The key types discussed are simple, double-column, and triple-column cash books. A simple cash book records cash transactions in one column, while double-column and triple-column cash books record cash and additional accounts like discounts or bank in multiple columns. Petty cash books are also mentioned for recording small expenses.
An accountant plays several important roles in an organization. They record all financial transactions to maintain accurate books of accounts, which helps with planning, decision making, coordination, control, communication, and replacing memory. Properly maintained financial records are required for taxation, auditing, and presenting evidence in court. Accountants also assist with tax planning, financial services advice, and statutory and internal auditing. Overall, accountants are crucial to an organization's success by providing timely and accurate financial information needed for effective management and operations.
This document defines and explains the bank reconciliation statement. [1] It reconciles the differences between the bank balance shown in a business's cash book and the balance in their bank statement or passbook. [2] Common causes of differences include outstanding checks and deposits, as well as bank charges and interest that have been applied. [3] Preparing the reconciliation statement regularly helps ensure accurate accounting records and identifies potential errors or fraud.
This document provides an overview of financial statement analysis and ratio analysis. It defines key financial statements like the income statement, balance sheet, and statement of cash flows. It also explains the purpose of ratio analysis is to evaluate a firm's performance, liquidity, profitability, and financial stability by calculating and comparing various financial ratios over time and against industry benchmarks. Common ratios covered include liquidity, leverage, activity, and profitability ratios. Ratio analysis is a useful tool but requires comparing ratios to standards and accounting for company and industry differences.
IAS 10 prescribes the accounting treatment and disclosures required for events that occur after the balance sheet date but before financial statements are authorized for issue. It distinguishes between adjusting events that provide evidence of conditions that existed at the balance sheet date and non-adjusting events that are indicative of conditions that arose after that date. Financial statements must be adjusted for subsequent adjusting events, but not for non-adjusting events, although the latter may need to be disclosed. The standard also addresses the assessment of going concern and specifies certain additional disclosures required regarding the authorization date of the financial statements and material post-balance sheet date events or conditions.
The document discusses foreign currency translation and accounting for currency exchange rate differences. It defines foreign currency translation as the process of converting a foreign subsidiary's financial statements to the parent company's presentation currency. The key aspects covered include determining the functional and reporting currencies, translating financial statements at historical or current exchange rates, and recognizing resulting gains and losses. Rules for converting trial balances from foreign to reporting currencies using historical or average rates are also outlined.
The document discusses various types of depository institutions like commercial banks and credit unions. It mentions the Federal Deposit Insurance Corporation (FDIC) and National Credit Union Administration (NCUA) as regulators of these institutions. It also lists several common services provided by depository institutions, including checking and savings accounts, online and mobile banking, debit cards, ATMs, and payment instruments. The summary briefly outlines the key topics covered in the original long-form document.
This document discusses common size analysis, which allows companies to be compared across time and against competitors by expressing financial statement items as percentages of a base figure. There are three types of common size analysis: vertical common size income statements, horizontal common size income statements, and common size balance sheets. An example is provided where net income figures for two companies of different sizes are expressed as a percentage of sales revenue for better comparison. The document outlines some limitations of common size analysis and provides an example analysis of common size income statements and balance sheets.
The document provides an introduction to accounting, including definitions, key concepts, and terminology. It discusses the three main branches of accounting: financial accounting, cost accounting, and management accounting. Financial accounting is designed to provide information to external users to help with decision making. Cost accounting helps management control costs, while management accounting provides information to help management make decisions and control activities. The document also outlines accounting concepts like the business entity concept, money measurement concept, and matching concept. It defines key terms like assets, liabilities, revenues, and expenses.
1. The document discusses accounting for partnerships, including the basics of partnerships, partnership agreements, contents of partnership deeds, profit and loss appropriation accounts, valuation of goodwill, admission and retirement of partners.
2. Key aspects include meaning of partnerships, partnership agreements, profit and loss sharing, treatment of interest on capital and drawings, revaluation accounts used during admission and retirement, and calculations related to goodwill.
3. Examples and problems are provided to illustrate accounting entries for partnerships including admission of new partners, retirement of existing partners, treatment of revaluation of assets and liabilities, and allocation of goodwill.
Power Point Presentation on Accounting Concepts and Principlesjinulazer
The document discusses accounting concepts and principles, including the basic assumptions that the accounting system is based on the separate existence of business and proprietor, that the business will last for a long time, and that transactions involving money or money's worth will be recorded in account books. It also mentions that the accounting period is the interval for which accounts are prepared, expenses and revenues should match the same accounting period, and that every business transaction has a dual effect of debit and credit.
Completing a task requires invaluable contributions from many individuals. The author expresses gratitude to their guide for guidance and encouragement. Thanks are also given to parents for their support. Tally is a powerful accounting software that can handle all types of financial transactions efficiently and accurately through its various features like voucher entries, books of accounts reports, bank reconciliation statements and shortcut keys.
clubs & societies : final accounts of non - profit organisationsSanjaya Jayasundara
- The document provides information about accounting for clubs and societies, including preparing receipts and payments accounts, income statements for trading activities, subscriptions accounts, income and expenditure accounts, and statements of financial position.
- It includes examples of preparing these accounts for a fictional sports club called the SSS Sports Club, which has members' subscriptions as its main source of income and also runs a shop selling sportswear.
- Key terms discussed include accumulated fund, which is equivalent to capital for non-profit organizations, and how profits/losses from trading activities are treated differently than in a normal business.
This PPT contains all the topics related to Financial Accounting.
This PPT is related to MBA course subject code KMBN103
Subject Name Financial Accounting and Analysis
AAOIFI's CIPA Course Material - Prepared & Presented by Yasir WaseemYasir Waseem
Please find attached AAOIFI's (Accounting and Auditing Organization for Islamic Financial Institutions ) CIPA Course Material.
It would be much helpful for those who are planning to attempt CIPA as the accounting standards have been described in understandable form. Double entries have been used to the understand nature of the transactions and how they should be reported on Financial Statements of IFI. Best of Luck.
The document discusses accounting concepts like debits, credits, assets, liabilities, capital, and provides examples of journal entries, ledger accounts, and a trial balance. It also explains the purpose and components of key financial statements like the trading account, profit and loss account, and balance sheet.
A business usually pays other parties by cheque, with information written on both the cheque itself and a corresponding cheque counterfoil. A deposit slip is filled out when depositing money including cash, cheques, and money orders into a bank account, with the depositor keeping a duplicate and the bank keeping the original. When a customer pays a business through various methods like cash, cheque, or credit/debit card, the business can provide a receipt, cash register receipt, or credit card slip to acknowledge receiving payment.
This document discusses various types of customers and account holders that banks deal with. It describes ordinary customers as well as special customers like minors, partnership firms, joint Hindu families, joint stock companies, and more. For each type of special customer, it provides details on legal considerations for opening and operating accounts, required documents, authorized signatories, and other precautions banks must take. The document aims to outline procedures and legal compliance for properly handling different customer accounts.
This document describes different types of cash books used to record cash transactions. A cash book is a book of primary entry that records all cash receipts on the debit side and cash payments on the credit side. It serves as both a journal and ledger for the cash account. The key types discussed are simple, double-column, and triple-column cash books. A simple cash book records cash transactions in one column, while double-column and triple-column cash books record cash and additional accounts like discounts or bank in multiple columns. Petty cash books are also mentioned for recording small expenses.
An accountant plays several important roles in an organization. They record all financial transactions to maintain accurate books of accounts, which helps with planning, decision making, coordination, control, communication, and replacing memory. Properly maintained financial records are required for taxation, auditing, and presenting evidence in court. Accountants also assist with tax planning, financial services advice, and statutory and internal auditing. Overall, accountants are crucial to an organization's success by providing timely and accurate financial information needed for effective management and operations.
This document defines and explains the bank reconciliation statement. [1] It reconciles the differences between the bank balance shown in a business's cash book and the balance in their bank statement or passbook. [2] Common causes of differences include outstanding checks and deposits, as well as bank charges and interest that have been applied. [3] Preparing the reconciliation statement regularly helps ensure accurate accounting records and identifies potential errors or fraud.
This document provides an overview of financial statement analysis and ratio analysis. It defines key financial statements like the income statement, balance sheet, and statement of cash flows. It also explains the purpose of ratio analysis is to evaluate a firm's performance, liquidity, profitability, and financial stability by calculating and comparing various financial ratios over time and against industry benchmarks. Common ratios covered include liquidity, leverage, activity, and profitability ratios. Ratio analysis is a useful tool but requires comparing ratios to standards and accounting for company and industry differences.
IAS 10 prescribes the accounting treatment and disclosures required for events that occur after the balance sheet date but before financial statements are authorized for issue. It distinguishes between adjusting events that provide evidence of conditions that existed at the balance sheet date and non-adjusting events that are indicative of conditions that arose after that date. Financial statements must be adjusted for subsequent adjusting events, but not for non-adjusting events, although the latter may need to be disclosed. The standard also addresses the assessment of going concern and specifies certain additional disclosures required regarding the authorization date of the financial statements and material post-balance sheet date events or conditions.
The document discusses foreign currency translation and accounting for currency exchange rate differences. It defines foreign currency translation as the process of converting a foreign subsidiary's financial statements to the parent company's presentation currency. The key aspects covered include determining the functional and reporting currencies, translating financial statements at historical or current exchange rates, and recognizing resulting gains and losses. Rules for converting trial balances from foreign to reporting currencies using historical or average rates are also outlined.
The document discusses various types of depository institutions like commercial banks and credit unions. It mentions the Federal Deposit Insurance Corporation (FDIC) and National Credit Union Administration (NCUA) as regulators of these institutions. It also lists several common services provided by depository institutions, including checking and savings accounts, online and mobile banking, debit cards, ATMs, and payment instruments. The summary briefly outlines the key topics covered in the original long-form document.
This document discusses common size analysis, which allows companies to be compared across time and against competitors by expressing financial statement items as percentages of a base figure. There are three types of common size analysis: vertical common size income statements, horizontal common size income statements, and common size balance sheets. An example is provided where net income figures for two companies of different sizes are expressed as a percentage of sales revenue for better comparison. The document outlines some limitations of common size analysis and provides an example analysis of common size income statements and balance sheets.
The document provides an introduction to accounting, including definitions, key concepts, and terminology. It discusses the three main branches of accounting: financial accounting, cost accounting, and management accounting. Financial accounting is designed to provide information to external users to help with decision making. Cost accounting helps management control costs, while management accounting provides information to help management make decisions and control activities. The document also outlines accounting concepts like the business entity concept, money measurement concept, and matching concept. It defines key terms like assets, liabilities, revenues, and expenses.
1. The document discusses accounting for partnerships, including the basics of partnerships, partnership agreements, contents of partnership deeds, profit and loss appropriation accounts, valuation of goodwill, admission and retirement of partners.
2. Key aspects include meaning of partnerships, partnership agreements, profit and loss sharing, treatment of interest on capital and drawings, revaluation accounts used during admission and retirement, and calculations related to goodwill.
3. Examples and problems are provided to illustrate accounting entries for partnerships including admission of new partners, retirement of existing partners, treatment of revaluation of assets and liabilities, and allocation of goodwill.
Power Point Presentation on Accounting Concepts and Principlesjinulazer
The document discusses accounting concepts and principles, including the basic assumptions that the accounting system is based on the separate existence of business and proprietor, that the business will last for a long time, and that transactions involving money or money's worth will be recorded in account books. It also mentions that the accounting period is the interval for which accounts are prepared, expenses and revenues should match the same accounting period, and that every business transaction has a dual effect of debit and credit.
Completing a task requires invaluable contributions from many individuals. The author expresses gratitude to their guide for guidance and encouragement. Thanks are also given to parents for their support. Tally is a powerful accounting software that can handle all types of financial transactions efficiently and accurately through its various features like voucher entries, books of accounts reports, bank reconciliation statements and shortcut keys.
clubs & societies : final accounts of non - profit organisationsSanjaya Jayasundara
- The document provides information about accounting for clubs and societies, including preparing receipts and payments accounts, income statements for trading activities, subscriptions accounts, income and expenditure accounts, and statements of financial position.
- It includes examples of preparing these accounts for a fictional sports club called the SSS Sports Club, which has members' subscriptions as its main source of income and also runs a shop selling sportswear.
- Key terms discussed include accumulated fund, which is equivalent to capital for non-profit organizations, and how profits/losses from trading activities are treated differently than in a normal business.
This PPT contains all the topics related to Financial Accounting.
This PPT is related to MBA course subject code KMBN103
Subject Name Financial Accounting and Analysis
AAOIFI's CIPA Course Material - Prepared & Presented by Yasir WaseemYasir Waseem
Please find attached AAOIFI's (Accounting and Auditing Organization for Islamic Financial Institutions ) CIPA Course Material.
It would be much helpful for those who are planning to attempt CIPA as the accounting standards have been described in understandable form. Double entries have been used to the understand nature of the transactions and how they should be reported on Financial Statements of IFI. Best of Luck.
The document provides an overview of auditing concepts including the scope and objectives of an audit, financial statement assertions, audit evidence, materiality, audit risk, audit opinions, and standards. It discusses key concepts such as the purpose of an audit being to obtain reasonable assurance about whether financial statements are free of material misstatement, and defines the different types of audit opinions that may be issued. The document also outlines the general principles of an audit, including complying with ethical standards and audit standards, and maintaining an attitude of professional skepticism.
Generally Accepted Accounting Principles (GAAP) are the standards and procedures companies use to compile their financial statements. GAAP include authoritative standards set by policy boards as well as commonly accepted practices. Companies must follow GAAP when reporting financial data to provide consistency for investors. Major components of GAAP include basic principles like the entity principle and matching principle, assumptions like going concern and stable dollar, and standards like objectivity, consistency, and conservatism.
This document discusses accounting concepts, principles, and conventions. It begins by outlining the learning outcomes of understanding basic accounting concepts, principles, and conventions. It then provides an overview of key topics like the entity concept, money measurement concept, periodicity concept, and others. The document emphasizes that concepts, principles, and conventions provide uniformity and structure for accounting. It stresses that financial statements should be prepared consistently according to generally accepted accounting principles.
The document provides an overview of the basis of Islamic accounting theory. It discusses accounting and its environment, objectives of accounting, and the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI). Some key differences between conventional and Islamic accounting are highlighted, such as Islamic accounting being based on ethical Sharia law versus commercial law, and its focus on full disclosure and public accountability rather than limited disclosure and personal accountability. The objectives of Islamic accounting are to identify both socio-economic and religious events/transactions and ensure transactions are fair and just according to Sharia principles.
The document summarizes the IASB's Conceptual Framework for Financial Reporting from 2011. It outlines that the framework sets the concepts that underlie financial statement preparation and presentation. It discusses the objective of financial reporting being to provide useful information to investors and creditors. It also describes the qualitative characteristics of useful financial information, such as relevance and faithful representation. Finally, it defines the elements that make up financial statements, such as assets, liabilities, income and expenses.
The document discusses the results of a study on the effects of exercise on memory and thinking abilities in older adults. The study found that regular exercise can help reduce the decline in thinking abilities that often occurs with age. Older adults who exercised regularly performed better on memory and thinking tests compared to those who did not exercise regularly. Regular exercise may help the brain work better and may reduce the risk of developing Alzheimer's disease or other dementias.
ANSWER Accounting concepts and conventions In dr.pdfinfo382133
ANSWER Accounting concepts and conventions In drawing up accounting
statements, whether they are external \"financial accounts\" or internally-focused \"management
accounts\", a clear objective has to be that the accounts fairly reflect the true \"substance\" of the
business and the results of its operation. The theory of accounting has, therefore, developed the
concept of a \"true and fair view\". The true and fair view is applied in ensuring and assessing
whether accounts do indeed portray accurately the business\' activities. To support the
application of the \"true and fair view\", accounting has adopted certain concepts and
conventions which help to ensure that accounting information is presented accurately and
consistently. Accounting Conventions The most commonly encountered convention is the
\"historical cost convention\". This requires transactions to be recorded at the price ruling at the
time, and for assets to be valued at their original cost. Under the \"historical cost convention\",
therefore, no account is taken of changing prices in the economy. The other conventions you
will encounter in a set of accounts can be summarised as follows: Monetary measurement
Accountants do not account for items unless they can be quantified in monetary terms. Items that
are not accounted for (unless someone is prepared to pay something for them) include things like
workforce skill, morale, market leadership, brand recognition, quality of management etc.
Separate Entity This convention seeks to ensure that private transactions and matters relating to
the owners of a business are segregated from transactions that relate to the business. Realisation
With this convention, accounts recognise transactions (and any profits arising from them) at the
point of sale or transfer of legal ownership - rather than just when cash actually changes hands.
For example, a company that makes a sale to a customer can recognise that sale when the
transaction is legal - at the point of contract. The actual payment due from the customer may not
arise until several weeks (or months) later - if the customer has been granted some credit terms.
Materiality An important convention. As we can see from the application of accounting
standards and accounting policies, the preparation of accounts involves a high degree of
judgement. Where decisions are required about the appropriateness of a particular accounting
judgement, the \"materiality\" convention suggests that this should only be an issue if the
judgement is \"significant\" or \"material\" to a user of the accounts. The concept of
\"materiality\" is an important issue for auditors of financial accounts. Accounting Concepts
Four important accounting concepts underpin the preparation of any set of accounts: Going
Concern Accountants assume, unless there is evidence to the contrary, that a company is not
going broke. This has important implications for the valuation of assets and liabilities.
Consistency Transactions and val.
Accounting concepts and principles provide a framework for financial reporting and ensure users are not misled. Some key concepts are:
- Going concern assumes the business will continue operating indefinitely.
- Entity treats the business and its owners separately.
- Duality means every transaction has two aspects recorded.
- Realization recognizes revenue when goods/services are delivered.
- Matching recognizes revenue and expenses in the periods to which they relate.
Accounting concepts andprinciples all important
In financial accounting
Cost accounting
Management accounting
GAAR principles are differernt
Application in economics and accounts corporete accounting
This document discusses key accounting principles and concepts. It defines accounting principles as broad guidelines for current and improved accounting practices that are not laws but have evolved over time. The document outlines 8 main accounting principles: [1] cost principle, [2] dual-aspect principle, [3] accrual principle, [4] conservatism principle, [5] matching principle, [6] consistency principle, [7] materiality principle, and [8] full-disclosure principle. It also discusses generally accepted accounting principles (GAAP) and factors considered when selecting accounting principles like accurate presentation, conservatism, profit maximization, and income smoothing.
This document discusses key accounting principles and concepts. It defines generally accepted accounting principles (GAAP) as principles that have substantial authoritative support and general acceptability. It classifies accounting principles into concepts and conventions. Some key concepts discussed include going concern, consistency, and accrual assumptions as well as the accounting entity, money measurement, matching, and revenue recognition principles. The document also explains conventions like materiality, conservatism, and the dual aspect principle.
This document provides an overview of accounting concepts and principles. It defines accounting as the process of recording, classifying, and summarizing financial transactions and interpreting the results. It describes the evolution of accounting from ancient times to the development of the double-entry system. The key accounting concepts discussed include the accounting cycle, branches of accounting, users of accounting information, and accounting concepts and conventions such as the business entity, cost, and matching concepts. It also summarizes the classification of accounts, golden rules of double-entry accounting, and the objectives of accounting.
Accounting serves as a language of business by communicating results of business operations to stakeholders like owners, creditors, investors, and the government. It records, classifies, and summarizes financial transactions and events in a meaningful manner using money values. Accounting provides quantitative financial information to allow informed decisions by users. It is defined as an information system that measures and reports on the resources controlled by a business and the financing of its operations.
1. Accounting involves recording, classifying, and summarizing financial transactions and events to provide information to decision makers.
2. Bookkeeping is the process of recording business transactions, while accounting builds on this by interpreting the information, compiling reports, and analyzing the financial position and performance of a business.
3. Financial accounting provides information to external users like investors and regulators, while management accounting informs internal decision making. Both require adherence to generally accepted accounting principles (GAAP) for consistency and accuracy.
The preparation of financial statements is an important aspect of an organization’s financial management, recording and reporting on financial transactions and activities.
Financial Statement Preparation in New York provides a detailed picture of a company’s financial performance, position, and cash flow to support decision making and financial analysis.
The preparation of relevant financial statements requires a thorough understanding of accounting principles, rules and regulations, as well as attention to detail and accuracy in the recording and reporting of financial statements.
Steps in financial statement preparation.
Accounting involves systematically recording all financial transactions of a business entity. The key objectives of accounting are to maintain records of transactions, ascertain profits and losses, determine the financial position of the entity, provide information to users of financial statements, and assist management. Financial statements like the income statement and balance sheet are prepared using accounting principles such as separate entity, money measurement, and accrual basis. Qualitative characteristics of accounting information include reliability, relevance, understandability, and comparability.
Similar to Ch# 1 part 2 concept of Islamic Accounting Theory.pptx (20)
The document discusses key aspects of the economic environment that influence business performance. It covers economic resources like land, labor, capital and entrepreneurship that are inputs for production. It also describes different economic systems such as capitalist, socialist, and mixed economies. Additionally, it discusses economic conditions in countries based on factors like per capita income. Economic output and business cycles, inflation, unemployment, and important economic policies that impact businesses are also summarized.
This document discusses the nature, scope, and objectives of business. It defines business and outlines the business system/process, which includes entrepreneurial activity, production, and marketing. It also categorizes businesses into those that produce goods, services, distribute goods, facilitate distribution, and deal in finance. Industries are classified based on their nature of activity and competitive structure, including monopoly, oligopoly, monopolistic competition, and perfect competition.
A business plan outlines a business idea, goals, objectives, and how they will be achieved. It is important for managing the business, obtaining financial support, securing contracts, and communicating with professionals. A typical business plan includes an executive summary, business overview, products, industry overview, marketing strategy, management, regulatory issues, risks, implementation plan, and financial plan. It should be based on research and realistic projections to convince readers.
This document discusses production decisions made by firms. It covers:
1. A firm's production technology can be represented by a production function that shows how inputs like labor and capital can be transformed into outputs.
2. In the short run, a firm may vary only one input like labor while capital is fixed, facing diminishing marginal returns.
3. In the long run, a firm can vary both inputs and their combinations are shown on isoquants maps, with marginal rate of technical substitution measuring the tradeoff between inputs.
4. Returns to scale describes how output changes when all inputs are increased proportionately, with possibilities being increasing, constant, or decreasing.
There are several main forms of business ownership including sole proprietorships, partnerships, corporations, franchises, and cooperatives. Sole proprietorships involve single owner management and unlimited liability, while partnerships have multiple owners who share risks and profits. Corporations separate owners from management and provide limited liability. Franchises allow businesses to use another's proven systems through contractual agreements. Cooperatives are owned and operated by their members. Entrepreneurs must understand the characteristics of each to select the best fit for their needs.
This document discusses risk management in banks. It defines risk and risk management, noting that risk management aims to reduce risks to an acceptable level. It outlines some key risk management strategies like risk identification, measurement, and control. It then discusses several types of risks that banks face, including credit risk, interest rate risk, liquidity risk, foreign exchange risk, regulatory risk, technological risk, and strategic risk. It provides brief explanations and examples of each type of risk.
Poverty in Indonesia has halved in the last 15 years but reduction is slowing as the remaining poor are harder to reach. While much of the population lives just above the poverty line, many remain vulnerable to economic shocks. Research is needed to address challenges across the lifecycle from birth to old age to promote opportunities and protect the vulnerable. Key areas for research include improving child nutrition and education, expanding access to good jobs, reducing maternal mortality, and ensuring social security for the elderly.
Risk management in banks is important as banks are exposed to various risks in the changing Indian economy. The key risks include credit risk, market risk, operational risk, and legal risk. Effective risk management involves identifying risks, measuring them quantitatively and qualitatively, monitoring exposures, and taking steps to mitigate risks. Banks must have robust policies, processes, and systems to properly identify, measure, control, and manage the various risks they face.
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The document outlines qualities needed to mobilize resources, such as passion, curiosity, optimism, prudence, competitiveness, risk-taking, confidence, persistence, frugality, and self-belief. Sources of resources discussed include banks, relatives and friends, microcredit organizations, equipment suppliers, and government agencies. A few steps for effective resource mobilization are preparing a business plan, examining funding prospects, creating an action plan,
This document discusses the functions and roles of central banks. It defines a central bank as the bank responsible for a country's financial and economic stability. Central banks regulate other commercial banks, formulate monetary policies, and advise governments. The first central bank was the Bank of England in 1694. Now central banks play key roles like controlling money supply, credit levels, foreign exchange reserves, public debt, and developing other financial institutions. Central banks also provide services to commercial banks like acting as a lender of last resort and managing clearinghouse activities. The document examines different methods that central banks use to issue currencies.
Central banks serve important functions in regulating currency, credit, and monetary policy. Some key functions of central banks include acting as a banker, agent and advisor to governments; controlling money supply through tools like interest rates, reserve requirements, and open market operations; acting as a lender of last resort to banks; and regulating credit allocation. Central banks aim to achieve economic stability through proper monetary management. The Reserve Bank of India operates as India's central bank and performs traditional central banking functions like currency regulation as well as development functions to support financial systems.
This document provides an introduction and overview of project management. It outlines the course objectives, which are for participants to be able to design, plan, implement, monitor and evaluate projects using practical tools. It defines what a project and project management are, and discusses key aspects like the work breakdown structure, stakeholders, planning, scheduling and risk management. The importance of proper planning, identifying risks and taking mitigation actions is emphasized.
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2) Components of quality of life include physical health, psychological state, social relationships, environment, and spirituality.
3) Quality of life is assessed using valid, reliable questionnaires to evaluate things like burden of disease, impact of health policies, and patient outcomes after treatment. Common measures are quality-adjusted life years (QALYs) and disability-adjusted life years (DALYs).
This document discusses different forms of business ownership, including sole proprietorships, partnerships, and corporations. It describes sole proprietorships as businesses owned and run by one person, who takes all profits but also bears all losses and responsibilities alone. Partnerships are owned by two or more individuals who share profits, losses, and management responsibilities according to a partnership agreement. There are general partnerships, limited partnerships, and limited liability partnerships. Corporations are independent legal entities owned by shareholders, who elect directors to manage the company and share profits through dividends but have limited liability for debts.
This document discusses the importance of positive thinking for entrepreneurial success. It states that one's outlook and attitude determine one's limitations and ability to achieve success despite challenges and risks. Positive thinking means expecting to succeed and seeing opportunities rather than problems. It also involves taking responsibility for mistakes and focusing on possibilities rather than pain. The document provides examples contrasting positive thinking, which sees learning opportunities and finds solutions, with negative thinking, which makes excuses and believes problems can't be solved.
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2. 1. Introduction
The primary objective of financial reporting is to
provide information useful for making investment
and lending decisions.
To be useful, information must be relevant, reliable,
and comparable.
These basic accounting concepts and principles are
part of the foundation for the financial reports that
companies present.
The approach is not to develop the Islamic accounting
concepts directly from the Islamic principles,
instead the modern accounting concepts are tested
against the Islamic values and Shari’ah principles.
3. Introduction
Those concepts that are not violating the Islamic
principles will be accepted and those that are found
to be in violation will be then either rejected or
modified.
This pragmatic approach is more feasible as an
approach to develop the preliminary foundations of
Islamic accounting theory.
Islamic accounting theory so far has not been properly
developed by accounting and Islamic scholars.
4. 2.Conventional Accounting Concepts
Accounting Concepts are the necessary assumptions
and conditions upon which the accounting is based.
They are developed to facilitate communication of
the accounting and financial information to all
the readers of the Financial Statements, so that
all readers understand the statements in the same
meaning and context.
Actually, there are a number of accounting concepts
and principles based on which we prepare our
accounts.
5. Continues…
These generally accepted accounting principles lay
down accepted assumptions and guidelines and are
commonly referred to as accounting concepts.
Financial accounting generally deals with;
Recognition,
Measurement,
Recording and
Presentation of the elements of financial
statements.
The elements of financial statements are – assets,
liabilities, revenue (income), expenses and equity.
6. Continues…
Underlying Assumptions are those principles,
concepts or practices that enterprises assumed to apply
in preparing and presenting financial statements.
There are three basic assumptions namely:
a) Accruals
b) Going Concern
c) Periodicity
7. Continues…
According to the Framework ‘qualitative
characteristics are attributes that make the
information provided in financial statements
useful to users’.
The Framework identifies four principle
qualitative characteristics.
Understandability
Relevance
Reliability
Comparability
8.
9. 3. Accounting Concepts and Shari’ah
Requirements
AAOIFI has issued a Statement of Accounting Concepts to
guide in the practice of accounting for Islamic financial
institutions.
The conventional accounting concepts have scrutinized to
ensure that they are in lined with Islamic principles and
Shari’ah.
A. Accounting Assumptions
B. Accounting Recognition
C. Accounting Measurement
D. Accounting Disclosure
10. A) Accounting Assumptions
AAOIFI has examined the accounting assumptions of;
The accounting unit concept,
going concern concept,
periodicity concept, and
the monetary unit concept.
It was found that the accounting unit concept i.e.
the entity created as a separate unit of accountability
is acceptable in Islam as it look like the widely
practiced of waqf (trust foundation) and Baitul
Mal(Islamic Treasury) in Muslim traditions
11. Continues…
Thus accounting unit concept requires the
identification of economic activities that are
associated with the Islamic financial institution as a
separate entity can be expressed as the institution’s
assets, liabilities, revenues, expenses, gains and
losses.
12. Continues…
The going concern concept is also applicable as many
Islamic financial contracts especially musharakah and
mudharabah are for a number of specific periods.
We have to assume that the contract shall continue until
one or all of the parties involved decide to terminate such
contracts.
Going concern is an assumption the business or the entity
as a going concern or to continue for foreseeable future
unless there is a significant evidence to the contrary.
Thus, this assumption is important especially for Islamic
banks as it assumed, based on financial
position(Balance sheet) and financial performance
(Profit and Loss), the continuity of the bank’s activities
in the future including its investment activities.
13. Continues…
The conventional accounting periodicity concept is
also acceptable in Islam on the basis that even in the case
of zakat, it is being paid once a year as a period of
measurement.
The concept of haul determined that the wealth must be
owned at least one year to qualify for the payment of zakat.
Thus, the periodicity concept for an Islamic financial
institution means the life of the institution can be
broken into reporting periods to prepare financial
reports to the interested parties and stakeholders.
This will assist the users to periodically evaluate the
institution’s financial performance and position.
In addition, the periodic preparation of the financial
statements will be useful to determine the financial
obligations and the financial rights of the bank and other
interested parties.
14. Continues…
AAOIFI also found that the stability of the purchasing power of
the monetary unit is acceptable to be used as one of the main
assumption.
As financial accounting uses monetary unit of a given currency
as a common denominator, this will assist the users to usefully
evaluate the financial performance and position during a
specific.
If there is a need to revalue the assets and liabilities, these
can be accounted for and undertaken annually at the end of
financial period and specific disclosures are required.
This will assist the users to be provided proper information on
the financial performance and position of a business entity.
15. B) Accounting Recognition
Accounting recognition refers to recording the basic
elements of the financial statements.
Recognition is described as ‘’ the process of
incorporating in the balance sheet and income
statement an item that meets the definition of the
element’’ (i.e., asset, liability, equity, income, or
expense, )
The concepts of accounting recognition define the
basic principles that determine the timing of
revenue, expense, gain and loss recognition in the
entity’s income statement and, in turn, the basic
principles that determine the timing assets and
liabilities recognition.
16. Continues…
AAOIFI’s SFA 2 recommends that “revenues should be
recognized when realized”.
Realization of revenues shall take place when one of
the three conditions is met:
The entity has the right to receive the revenue;
There is an obligation on the part of another party
to remit; and
The amount of revenue should be known and
collectible with reasonable degree of certainty.
17. Continues…
The above recommendation indicates the use of accrual
basis accounting, which has been claimed to be better
than the alternative cash basis accounting.
Accrual basis of income recognition does meet the
requirement of Islamic objectives as it aims to measure the
‘real’ wealth of an entity.
Contrary to accrual accounting, cash accounting most
likely provides an underestimate value of wealth as the
recognition is based on actual cash received and paid.
Cash or accrual accounting has been the subject of
discussion among Shari’ah jurists. Fiqh experts (fuqaha)
have determined that cash basis of accounting to be a
mode of practice to account for Islamic transactions in
the past.
18. Continues…
As economies develop and new transactions emerge to
cater for new ways of doing business, the nature of
contracts and its underlying transactions have
compelled examination of the cash accounting to
ensure that accounting and financial reporting of
these transactions reflect the true nature of the
business and its underlying transactions.
Co-mingling of funds in mudarabah contracts,
separate legal entity, going concern are concepts that
cash accounting has failed to address completely but
they exist in the Islamic banking business today.
19. C) Accounting Measurement
The conventional accounting measurement is based
on the cost principle that considers the acquisition
cost or historical cost as appropriate measurement
basis.
However, this principle is questionable from the
Islamic point of view due to its conflicts with the
concept of fairness and justice.
In case of zakat determination, majority scholars
recommended the use of current prices on the due
date of zakat.
20. Continues…
The argument for the use of current market value
has been based on the needs for the most accurate
valuation of wealth to be subjected for zakat in order
to serve justice to both the zakat recipients and zakat
payers.
One of the basic accounting principles is the use of
historical cost for asset valuation that basically derived
from the concept of conservatism. The principles of
zakat will cast doubt on the relevance of the concept of
conservatism
21. Continues…
Zakat for trade is normally determined on the current
market value (or cash equivalent value) of the trade
assets (AAOIFI FAS 9).
Adherence to the conventional accounting cost
principles may lead to the accounting practice of asset
valuation that is lower of cost or market value. This
may lead to understatement of trade assets to be
subjected for zakat. Thus, the cost concept may be
problematic especially in the context of zakat.
AAOIFI, however, asserts that the measurement
attributes should be guided by the relevance,
reliability, understandability and comparability of
the information to be provided to the users.
22. Continues…
AAOIFI has recommended the use of cash equivalent
value that indicates the value that would be realized if an
asset was sold for cash in the normal course of business as
at the date of the financial statement.
In order to ensure the reliability and comparability of the
cash equivalent value, it must be supported with objective
indicators; logical and relevant valuation methods;
consistency of the use of valuation methods; expert
valuation; and conservatism in the valuation process
(AAOIFI SFA 1). AAOIFI also recommends an alternative
method i.e. historical cost that refers to its fair value at the
date of its acquisition including amounts incurred to make
it usable or ready for disposition.
23. D) Accounting Disclosure
In terms of disclosure requirements, there are at least
four objectives of accounting disclosure for an Islamic
firm.
avoid riba’
pay zakat.
social accountability’ and
‘full disclosure’.
The first two are specific requirements laid down by
Shari’ah for the firm to avoid riba’ and pay zakat.
The second two objectives are based on inferred
general requirements which can be referred to as
‘social accountability’ and ‘full disclosure’.
24. Continues…
While the first two objectives i.e. prohibition of riba’
and payment of zakat have extensively been covered by
many past literature, the second two objectives require
special attention.
The Islamic concept of social accountability
encompasses the accountability ultimately to
Allah.
The fundamental concept of Islamic accountability is
where Muslims believed that all resources are made
available to individuals in a form of trust.
25. Continues…
The success of individuals in the life hereafter depends
upon their performance in this world.
The implications of Islamic accountability on
accounting is that the management and providers of
capital need to be accountable for their actions (or
inactions) both within and outside the firm by
providing proper accounting and reporting.
The Islamic concept of social accountability departs
clearly from the western attitudes toward
accountability which are most applicable to the
concept of private accountability.
26. Continues…
The concept of social accountability in Islam is also
related to the principle of full disclosure.
Full disclosure does not mean to disclose everything
down to every minute detail of transactions.
There is, however, the need for the preparer of account
to disclose everything that is believed as importance
to users for purposes of serving Allah.
27. Continues…
In a more precise word, AAOIFI’s Statement of
Financial Accounting No. 2 on Concepts of Financial
Accounting for Islamic Banks and Financial
Institutions (SFA 2) made it very clear that the Islamic
concept of disclosure revolved around the concept of
‘adequate’ disclosure.
Here, adequate disclosure means that the financial
statements should contain all material information
necessary to make them useful to users.
28. Continues…
AAOIFI’s SFA 2 elaborated the concept of adequate
disclosure into two aspects namely optimal
aggregation and appropriate descriptions and
clarifications.
Optimal aggregation means the financial
statements should provide sufficient details to meet
the users’ need for information. However, too much
detail can contribute to confusion.
Therefore, it needs appropriate descriptions and
clarifications to make the information provided to be
useful to users and sufficient additional notes become
necessary.
29. 4.Conclusion
The above discussion is a preliminary effort to critically
evaluate accounting concepts from an Islamic
perspective. The unique Shari’ah requirements on
issues such as level of certainty in income recognition;
current value in asset valuation especially zakatable
assets; observing justice to parties involved in
accounting transactions; and transparency in
accounting disclosure, pose new dimensions to
modern accounting debates.
30. 4. Conclusion
These issues are still debatable even in the
conventional accounting theory and practice.
The Islamic perspective as presented in this chapter
opens up a new ethical and religious dimension on
these emerging issues.
The challenges will be for both the scholars and
practitioners, to discuss, research and engage towards
developing a just and fair accounting that will benefit
not only the business but more importantly to
humanity.