Assignment

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Name : Abhishek Bajpai

Class : MBA | A
Course : Financial and Management
Accounting Course Code : F010702
Name Of Faculty : Dr. Sanjeev Kumar Singh
Department : Department of Business management
School : School of Business Management
University : CSJM University

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Introduction of
Accounting
➢ Accounting is the process of identifying,
m e a s u r i n g , r e c o r d i n g , c l a s s i f yi n g , s u m m a r i z i n g ,
interpreting, and communicating financial
information. Accounting is the language of
business.

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Objectives ofstyleaccounting
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➢Maintaining accounting Records.

➢Determining Profit or Loss.
➢Determining financial Position.
➢Facilitating Management.
➢Providing Accounting information to users.

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Accounting Cycle
Accounting is one of the basic and inseparable
activity in business. The functions of accounting
are simple and complex yet in helps us in
communicating various important things. Now let
us understand the functions of accounting which
are
▪ Identifying
▪ Recording
▪ Classifying
▪ Summarizing
▪ Analyzing
▪ Interpretation
▪ Communicating
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 Branches Of Accounting
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Financial accounting Management accounting

Cost accounting

Is the branch of accounting Is the branch of accounting Is the branch of

which records financial concerning with ascertaining accounting concern with
transactions and events, cost of product, operations, generating information
summarises and interprets processes of activity, with a which helps the
them before communicating objective of reducing and Management in Decision
the results to the users. controlling cost. -Making.

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 System of
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Accounting
There are following two system of recording transaction in the book of account
• Double entry system
• Single entry system

• Double entry system

➢ The double entry system is based on the dual Aspect principle

➢ Every transaction has two aspect a debit and a credit of an equal amount
➢ Minimum two accounts are involved

• Single entry system

➢ Under the system both aspect are not recorded for all transaction.
➢ Either only one aspect is recorded or both the aspect are not recorded for all
the transaction. 6 6
 Basis of Accounting
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❖ Cash basis of accounting
❖ Accrual basis of accounting

Cash basis of accounting:

• Cash flow & Revenue/Expense recognition –Same time

Accrual basis of accounting;

• Cash flow & Revenue/Expense recognition –Different time

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Users of Accounting Information
Internal users External users
➢ Owners ➢ Bank.
➢ Management ➢ Creditors.
➢ Employees & ➢ Government and its
Workers Authorities.
➢ Suppliers.
➢ Auditors.
➢ Public. 8 8
 Trading account
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Definition- The trading account show the result of buying and
selling of goods. In preparing this account the general
establishment changes are ignored and only the transaction in
goods are included.
Objective of trading account
• To know the gross results arising from the buying and selling of goods.
• To know information on the direct expenses of which percentage bear
to gross profit.
• Cost of goods sold – direct expenses incurred up to sale.
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 Format of trading account
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Amount Particular Amount

To opening stock xxx By sales

To purchase xxx Less; returns xxx
Less; return By closing stock xxx
To direct expenses xxx By gross loss xxx
Wages xxx (Transfer to P&L A/c)
Factory expenses xxx
Cartage xxx
Freight xxx
Factory rent xxx
Gas and water xxx
Excise duty xxx
Dock charges xxx
To Gross Profit (Transfer to P&L A/C)
Total xxx xxx 1010
 Profit and Loss
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Account
Definition-profit and loss account is the outcome of both trail
balance and trading account. P/L account is prepared to know the
business result. How much net profit and net loss derived in the
business concern for a given financial year.

Objective of P/L account

➢ To ascertain the net profit and net loss in the certain period of time in
the business entity.
➢ To compare the profit and loss of the current year with the previous
year.
➢ It shows the financial performance of enterprise during on accounting
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period
 Format of Profit and Loss account
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Particulars Amount Particulars Amount
To Gross loss xxx By Gross profit xxx
To Administration Expenses xxx By Discount Received xxx
To postage & telegram xxx By Commission Received xxx
To Audit Fees xxx By Rent Received xxx
To Repair and renewals xxx By dividend and shares xxx
To Advertisement xxx By profit on sale of asset xxx
To Carriage outwards xxx By Net loss xxx
To Bad Debts xxx
To Selling Commission xxx
To Bank charges xxx
To Interest and loans xxx
To Loss on sale of assets xxx
To Net Profit xxx
Total xxx xxx12
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 Balance
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Sheet
Definition- A Balance sheet is on item wise list of assets,
liabilities and proprietorship of a business at a certain data.

Objective of Balance sheet:

➢ To find out the financial position of the business firm for a particular
financial period.
➢ To know the sources and application of the fund.
➢ To assist in decision making for future course of action.
➢ To obtain the information about assets and liabilities.
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 Format of balance
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sheet
Liabilities Amount Assets Amount
Current Liabilities Current Assets
Bank overdraft xxx Cash in hand xxx
Bills payable xxx Cash in bank xxx
Outstanding expenses xxx Bill Receivable xxx
Income received in advance xxx Prepaid expenses xxx
Sundry Creditors xxx Accrued income xxx
Fixed Liabilities Investment xxx
Long term loan reserves xxx Sundry Debtors xxx
Capital
Add: Net Profit Stock(closing) xxx
Add: Net Profit Loose Tools xxx
Add: Interest on capital Fixed Assets
Less: Drowning xxx Goodwill
Less: Interest on Drowning xxx Long term investment xxx
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Total xxx xxx
GENERALLY ACCEPTED
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ACCOUNTING
PRINCIPLES(GAAP);
ACCOUNTING CONCEPTS ACCOUNTING CONVECTIONS
1. GOING COCERN ASSUMPTIONS. 1. BUSINESS ENTITY PRINCIPLES.
2. CONSISTENCY ASSUMPTIONS. 2. MONEY MEASURMENT PRINCIPLES.
3. ACCRUAL ASSUMPTIONS. 3. ACCOUNTING PERIOD PRINCIPLES.
4. COST CONCEPTS PRINCIPLES.
5. DUAL ASPECT PRINCIPLES.
6. REVENUE RECOGNITION PRINCIPLES.
7. MATCHING PRINCIPLES.
8. MATERIALITY PRINCIPLES.
9. OBJECTIVITY PRINCIPLES.
10.FULL DISCLOSURE PRINCIPLES.
11.CONVENTION OF CONSERVATISM PRINCIPLES.
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ACCOUNTING CONCEPTS:
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1. GOING COCERN ASSUMPTIONS- In this ordinary course accounting assumes that the
business will continue to exist & carry on its operations for an indefinite period in the future.
2. CONSISTENCY ASSUMPTIONS- there should be uniformity in accounting processes and
policies from one period to another.
3. ACCRUAL ASSUMPTIONS- accounting to recognize non-cash events and circumtances as
they accure. Accrual is concerned with expected future cash receipt and payment.

ACCOUNTING CONVECTIONS:
1. BUSINESS ENTITY PRINCIPLE- Under this concept the business enterprise is totally separate organisation
and different from the owner of the business.
2. MONEY MEASURMENT PRINCIPLES- Transaction and event that can be measured in money term are
recorded in books of account of enterprises.
3. ACCOUNTING PERIOD PRINCIPLES- when the business will exist for a longer duration.it is necessary to
maintain account with reference to a convenient period.
4. COST CONCEPTS PRINCIPLES- cost concepts is of special significance only for fixed assets. Which is
recorded in the books of account.
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5. DUAL ASPECT PRINCIPLES- In this concepts every transaction affect two account.
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6. REVENUE Master title
RECOGNITION style
PRINCIPLES- Revenue is considered to have been
realised when a transaction has been entered.
7. MATCHING PRINCIPLES- One of the objectives of every business firm is to know
its results for a given period time.
8. MATERIALITY PRINCIPLES- One those item should be disclosed that have
significance effect or relevant to the user.
9. OBJECTIVITY PRINCIPLES- Says that accounting should be free from personal
bais.
10.FULL DISCLOSURE PRINCIPLES- Apart from legal requirements, good
accounting practices requires all material and significant information to be disclosed.
11.CONVENTION OF CONSERVATISM PRINCIPLES- This convention is based on
the principle that “anticipate no profit, but provide for all possible losses.

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Thank
you
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