Upload
ajitav-silu
View
214
Download
0
Embed Size (px)
Citation preview
8/4/2019 Financial Accounting Copy
1/14
8/4/2019 Financial Accounting Copy
2/14
FINANCIAL
ACCOUNTINGBase for your MBA
8/4/2019 Financial Accounting Copy
3/14
MEANINGOFACCOUNTING
Accounting is an art of correctly recording the day-to-day business transactions. It is a science ofkeeping the business records in a regular and mostsystematic manner so as to know the business
results and position of business with minimumtrouble.
Therefore, it is said to be a statistical procedure forthe collection, classification and summarization offinancial information.
Thus, accounting is an art of recording, classifyingand summarizing financial transactions in asystematic manner and communicating the result tothe interested parties.
8/4/2019 Financial Accounting Copy
4/14
ACCOUNTING
Accounting is defined as an art of
recording, classifying and summarizing
in a significant manner in terms ofmoney, transactions and events of
financial character and interpreting the
results there of. American Institute of
Certified Public Accountanta-1941.
8/4/2019 Financial Accounting Copy
5/14
FEATURESOF ACCOUNTING
Recording transactions in terms of money.
Accounting is an art of Recording.
Classifying business transactions.(cash account)
Summarizing transactions. Historical in nature.
8/4/2019 Financial Accounting Copy
6/14
BRANCHES OF ACCOUNTING
1. Financial Accounting
2. Cost Accounting
3. Management Accounting
8/4/2019 Financial Accounting Copy
7/14
Objective for AccountingO To know the Profit or loss from
operation
O To determine the financial positionof the firm
O To maintain records in systematicmanner.
O To provide information for decisionmaking
8/4/2019 Financial Accounting Copy
8/14
Event
Materials arepurchasedon account.
Criterion Is the financial position (assets, liabilities, orShareholders equity) of the company changed?
An employeeis hired. Dividends are
paid to
Shareholders.
Record/Dont Record
Transactions
8/4/2019 Financial Accounting Copy
9/14
Types of Accounts
PersonalAccount
All human
beings, soletrading,partnershipfirm,company,club,
association,hospital,University,institution,Government
etc..
RealAccount
Cash, Stock,Land &
Building,Furniture &
Fittings,Vehicles,Plant &
machinery,
NominalAccountRent, wages,
salaries,discount ,commissionpaid,depreciation,
fees,transportation, Power,water,electricity,
etc..
8/4/2019 Financial Accounting Copy
10/14
Golden Rules of accounts
PersonalAccount
RealAccount
NominalAccount
Debit the receiverCredit The giver
Debit what comes inCredit what goes out
Debit all expenses & losses
Credit all income & gains
8/4/2019 Financial Accounting Copy
11/14
Assets Liabilitie
s
Capital= +
The Basic Accounting Equation
8/4/2019 Financial Accounting Copy
12/14
Capital
Cash
`150000
1. He invested `150000 as his capital
Assets = Liabilities +
Simple problem on Accounting Equation
Mr. A Commences business on April2010
= + `150000
8/4/2019 Financial Accounting Copy
13/14
8/4/2019 Financial Accounting Copy
14/14
4. Purchased Goods worth ` 35000 on credit
Assets = Liabilities + Capital
Cash 25000Bank 55000Machinery 50000Furniture 20000Stock 35000 = 35000(Creditors) + 150000 (As Capital )