a brief presentation on accounting

7/27/2019 A Brief Presentation on Accounting

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A Brief Presentation on

Accounting


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Accounting

Accounting is the art of collecting, arranging,

summarising facts & figures in terms of money,transaction and events which are in part of a

financial character.

In other words we can say it as keeping trackof records & figures related to financial

statements.

Accounting plays a vital role in our life for e.g

depositing money in bank is related to financialmatter that gets added up in the savings

passbook & the final statement of transaction

is prepared, the whole process can be termed

here as Accounting.


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Why do we need accounting?Studying accounting helps to serve for various

purpose:- It helps to keep systematic record of business

transaction is considered to be the main

objective of accounting. As we encounter that

bank transaction are recorded & updated ondaily basis.

To calculate net profit earned or loss suffered on

account of business transaction of a particularperiod. For e.g profit & loss occurred in a

business firm or in an MNC.

To prevent and detect errors and frauds so that

any anonymous person cant misinterpret with


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Book-keeping

With the word Accounting there arises various

synonymous(similar words) & Book-keepingis considered as one of such words.

Book-keeping is mainly concerned with

maintaining systematic record of financialtransaction.

It is considered as the primary stage of

accounting.


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Accounting Principles

It is defined as set of principles,assumptions & concepts that are laid

down to evaluate accounting in a

particular manner.

Accounting principles can be subdivided

into two categories: -

1.Accounting Concepts

2. Accounting Convention


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Accounting ConceptsAny of the general assumptions on which

accounts are prepared based onaccounting concept.

They are of various types:-

1. Basic Entity Concept2. Dual Aspect Concept

3. Money Measurement Concept

4. Cost Concept5. Going Concern Concept

6. Realization Concept


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us ness n yAssumptionAs per this assumption the owner of a

business is always considered distinct

separate from the business he owns.

Dual Aspect Concept

Each transaction has two aspects, that is,the receiving benefit by one party and thegiving benefit by the other which isconsidered to be one of the core principle

of accountancy. Thus, the dual aspect can be expressed as

underCapital + Liabilities = Assets

or=


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Money Measurement Concept

In this concept we record only those

transaction which are expressed inmonetary terms.

Cost Concept

Transactions are entered in the books ofaccounts at the amount actually involved.Suppose a commodity is purchased at Rs

8,000/- the real value of which is Rs10,000/-, the purchase will be recordedas Rs 10,000/- and not any more, it helpsus to prevents arbitrary values being put

on transactions entry.


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Going Concern Concept

According to this concept, it is assumedthat the business will exist for a long time

and transactions are recorded on this

basis. This concept forms the basis for the

distinction between expenditure that will

yield benefit over a long period of timeand short period of time.


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Realization Concept

It is considered as one of the basic

concepts of accounting.

Realization means that the money has

exchanged hands, or been realized.

For e.g if a person things of purchasinga car then there is no realization but

when he exchange money with

whomever he/she has purchased the carthen realization takes place.


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Accounting Convention

It refers to signify customs and traditions

as a guide to the presentation of

accounting statements.

There are three kinds of convention in

accounting:-

1. Convention of Consistency

2. Convention of Disclosure

3. Convention of Conservation


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Convention of Consistency

It is essential that accounting practices

and methods remain unchanged from one

accounting period to another.

The comparison of one accounting period

with that of another is possible only when

the convention of consistency is followed.


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Convention of Disclosure

This convention implies that accountsmust be honestly prepared and all

material information must be disclosed

therein.

Convention of Conservation

Financial statements are always drawn up

on rather a conservative basis.

In other words, secret reserves are not

permitted.


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Limitations of accounting

Based on Accounting concepts &convention:- Accounts are prepared on

the basis of a number of accounting

concepts & convention. So there lies

some difference for e.g fixed assets are

shown in their cost and not at their

market value.

Unsuitable for forecasting:- Financialaccounts are only a record of past

events. As such, the financial analysis

based on past events may not be of


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Thank You

a brief presentation on accounting

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