This document provides a brief introduction to accounting. It defines accounting as recording, classifying, and summarizing financial transactions and events in terms of money. Accounting is necessary for businesses to track their finances and is useful for various stakeholders like owners, investors, creditors, employees and the government. The document outlines the accounting process, including books of original entry, ledger, trial balance, financial statements, and the accounting cycle. It describes accounting as both an art and a science, and discusses the objectives and functions of accounting for businesses.
Financial statements are formal records that evaluate a company's financial stability, performance, and liquidity. There are three main financial statements:
1) The income statement shows profits/losses over time.
2) The balance sheet presents assets, liabilities, and equity on a given date.
3) The cash flow statement shows cash inflows and outflows from operating, investing, and financing activities over time.
Together these statements provide useful information to investors and management, while also having some limitations since they only represent past performance and financial snapshots versus future potential.
This document provides an introduction to management accounting. It defines management accounting as accounting that deals with presenting information to management in a systematic way to aid in planning, controlling, and decision-making. The document outlines the scope, objectives, tools, advantages, limitations, and differences between management accounting and financial accounting.
This presentation provides an overview of accounting information systems. It defines an accounting information system as a subsystem of management information systems that collects and processes transaction data and communicates financial information to decision makers. It notes that an accounting information system consists of people, procedures, data, software, and information technology. It also distinguishes between computerized accounting systems used by large businesses and manual systems used by small businesses. Finally, it outlines the basic functions of an accounting information system, including collecting and storing data, processing it into useful information, providing controls to safeguard assets, and generating financial statements and managerial reports.
The document provides an overview of basic accounting concepts, including:
- Accounting is the process of recording, classifying, and summarizing financial transactions to prepare financial statements.
- Key accounting concepts include business entity, money measurement, dual aspect, cost, accounting period, conservatism, realization, and matching.
- Accounting conventions include going concern, consistency, and accrual.
- The document also discusses classifying accounting events as capital, revenue, or deferred revenue expenditures.
This presentation is based on the subject Financial Accounting which helps the beginners to know the basic concept of accounting . This is according to the syllabus of Pt. Ravishankar University , Raipur and Durg University, Durg.
This document discusses inflation accounting and its objectives, techniques, advantages, and disadvantages. It introduces inflation and deflation as two types of economic conditions caused by changes in price levels. Inflation accounting aims to facilitate comparisons of company performance over periods by adjusting monetary values for inflation, show the current value of assets, and ensure profits reflect real purchasing power. Techniques include adjusting fixed asset and investment values, using current costs and purchasing power. Advantages are maintaining capital intact and showing realistic values, while disadvantages are complexity and challenges valuing assets given changing replacement costs.
The document discusses Indian accounting standards, including the meaning and benefits of accounting standards. It provides details on several specific accounting standards such as AS1 on disclosure of accounting policies, AS6 on depreciation accounting, AS9 on revenue recognition, and AS10 on accounting for fixed assets. The standards cover topics such as selection and disclosure of accounting policies, methods of depreciation, timing of revenue recognition, calculation of costs of fixed assets, and revaluation of fixed assets. The overall objective of the accounting standards is to standardize different accounting policies and practices in India.
The document discusses accounting concepts and the accounting cycle. It defines accounting as a tool for decision making. It distinguishes between financial and management accounting based on their users. It also describes the key components of the accounting cycle including journalizing transactions, the general journal, debit and credit rules, and how the double-entry system ensures equal debits and credits.
The document discusses capital structure and its theories. It defines capital structure as the proportion of long-term debt and equity used to finance a company's assets. A company's capital structure determines its risk and cost of capital. There are several theories on capital structure including the net income, net operating income, traditional, and Modigliani-Miller approaches. The optimal capital structure balances minimum costs and risks. Factors like tax rates, control, flexibility, and legal requirements influence a company's choice of capital structure.
The document defines accounting as recording, classifying, and summarizing financial transactions and events to prepare financial statements. It discusses the basic accounting concepts like the accounting equation, assets, liabilities, equity, revenues and expenses. It also explains the key steps in accounting cycle which includes recording transactions, posting to ledger accounts, preparing an unadjusted trial balance, making adjusting entries, preparing an adjusted trial balance and financial statements, and closing temporary accounts. The accounting cycle aims to generate useful financial information for decision making in the form of income statement, balance sheet, and other financial reports.
The Cash Flow Statement translates earnings in the Income Statement into cash inflows. Explained in detail above as a part of the topic “Financial accounting”, is brought to you by Welingkar’s Distance Learning Division.
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This document provides definitions and explanations of key accounting concepts and terms. It discusses accounting as a system to record and communicate financial information. Key topics covered include the accounting equation, double-entry bookkeeping system, types of accounts, accounting cycle, journals, ledgers, debits and credits, balancing accounts, and more.
This document provides an overview of financial accounting and financial statements. It discusses the objectives, components, and characteristics of financial statements, including the balance sheet, income statement, and statement of cash flows. The key components covered are the trading account, profit and loss account, manufacturing account, and appropriation account. Examples are provided of how to prepare trading and profit and loss accounts from given financial information. The document also discusses the treatment of adjustments in financial statements such as closing stock, outstanding expenses, prepaid expenses, and depreciation.
Accounting is defined as the art of Recording, Classifying and Summarizing transactions in monetary terms (in Money terms) for preparation of Financial Statements
Book- keeping includes recording of journal, posting in ledgers and balancing of accounts. All the records before the preparation of trail balance is the whole subject matter of book- keeping.
Accounting, is an information system is the process of identifying, measuring and communicating the economic information of an organization to its users who need the information for decision making.
This document provides an overview of basic financial accounting concepts. It defines key accounting terms like accounts, accounting, the accounting cycle and basis. It describes the different types of accounts, rules of double entry system and branches of accounting. It also explains the accounting process including journal, ledger, trial balance and errors. The accounting concepts, conventions and terminology are introduced along with the different books of accounts used.
Accounting for Entrepreneurs.
Presented by: Ms. Rand Marar, GOL Trainer
Socialize your Business, Maadi Public Library, Cairo, Egypt.
Organized by IRC, US-Embassy in Cairo
26 March, 2013
Accounting records, classifies, and summarizes business transactions to provide financial information to both internal and external users. It aims to determine profits and financial position, facilitate management control, and assess tax liability. However, accounting has limitations as it uses monetary values and estimates, and may be manipulated. The main accounting systems are cash basis, accrual basis, and mixed basis. Stakeholders like shareholders, creditors, management, employees, and the government rely on accounting information for decision making.
This document provides an introduction to financial accounting. It discusses the development of accounting from ancient texts through modern times. Accounting involves recording, classifying, summarizing, analyzing and communicating financial transactions. The main users of accounting information are proprietors, managers, creditors, bankers, investors and governments. Accountants work either in public practice providing auditing and other services, or employed within businesses. The objectives of financial accounting are to keep records, protect assets, determine profits/losses, ascertain financial position and facilitate decision making.
Accounting is defined as the process of recording, classifying, and summarizing financial transactions and events to produce useful information for decision making. It involves identifying and measuring financial data, and communicating that information through financial reports like income statements and balance sheets. These reports provide information on a company's profits, losses, assets, and liabilities to stakeholders like owners, investors, employees and customers. Accounting is essential for businesses as it aids management in planning, controlling costs, and making informed financial decisions.
Accounting identifies, measures, records, and communicates economic transactions. It has two main branches: financial accounting provides information to external users, while management accounting provides information internally. The legal structure of a business determines aspects like the number of owners, their liability, capital raising, and financial reporting requirements. Limited companies must publicly disclose annual financial statements to inform present and potential investors, employees, lenders, suppliers, customers, governments, and the public.
Accounting serves three primary purposes: score keeping, attention directing, and problem solving. Score keeping deals with the financial health of an enterprise by answering questions like "How are we doing?". Attention directing gives signals to decision makers about when a decision is needed, such as when actual performance deviates from budgets. Problem solving provides information to find solutions to issues, like make-or-buy decisions or whether to continue or drop product lines. Accounting accumulates data to understand organizational performance, focuses attention on deficiencies, and enables quantification of alternative solutions.
This document lists the names and IDs of five group members working on an accounting project. It then discusses the importance of accounting for keeping records, protecting business assets, determining profits and losses, and understanding a business's financial position. Accounting is also important for society to understand economic transactions and how businesses are performing financially. It allows companies, small businesses, and the healthcare industry to accurately track costs and revenues. Upon completing this course, students will be able to describe accounting systems and processes, and analyze and interpret cost information for management use.
Here are the key causes and solutions to gap 2:
Causes:
- Inadequate service quality specifications and standards
- Lack of integration between departments in developing service standards
Solutions:
- Define clear, measurable service quality standards based on customer expectations
- Involve all departments in developing and agreeing on service standards
- Train employees on service standards and empower them to meet standards
- Monitor service delivery against standards and take corrective action for any gaps
Closing the gap involves setting the right service quality standards based on customer research and ensuring a coordinated effort across departments to deliver to those standards. Regular monitoring and improvement is also important.
Research on Comparative Perception of Mess food vis a vis College Canteen food
This document summarizes a student presentation comparing perceptions of mess food versus canteen food at a college. It includes an introduction outlining factors that influence eating decisions. A literature review cites several relevant studies. The methodology describes a survey of 60 students to assess differences in taste, service, hygiene, and satisfaction between the mess and canteen. Analysis found that mess food was preferred for quality, value, variety, and cleanliness while the canteen had longer wait times. Recommendations included improving cleanliness, seating and payment speed at the canteen.
The accounts receivable clerk is responsible for collecting payments from customers, maintaining customer accounts and records, resolving queries, and following collection processes. Key tasks include generating and sending invoices, monitoring accounts for non-payment, collecting and allocating payments, and reporting. The clerk aims to maximize collection within deadlines and targets, analyzing metrics like debt coverage, aging reports, and balances. Maintaining accurate records and customer communication are important.
Management accounting provides accounting information to managers within organizations to help them make informed business decisions. It involves identifying, measuring, analyzing, and communicating financial and non-financial information. The key functions of management accounting are to modify raw accounting data, interpret financial analyses, and assist with management control through tools like budgeting and performance analysis to evaluate operations and fix issues. Management accounting differs from financial accounting in its focus on internal users, future orientation, and inclusion of both monetary and non-monetary information to support management planning, implementation, and decision-making.
The document discusses the importance of engineering economy in decision making for individuals, businesses, and government agencies. Engineering economy provides quantitative analysis techniques to evaluate and compare the costs and benefits of project alternatives over time. It helps structure the estimates needed to evaluate alternatives and select the most economically favorable option based on metrics like present worth, rate of return, and benefit-cost ratio.
- Financial accounting refers to accounting for revenues, expenses, assets, and liabilities. It involves basic processes like recording, classifying, and summarizing transactions for external users like customers and investors.
- Cost accounting deals with recording, classifying, allocating, and reporting current and prospective costs. It focuses on costs for internal reporting, for example calculating production costs.
- Managerial accounting provides information to various management levels to enhance controls and allow managers to monitor performance for internal decision making.
Financial Performance Analysis Of Janata Bank Limited
This document provides an overview and analysis of a report on the financial performance of Janata Bank Ltd. It begins with an introduction to the bank, describing its role in Bangladesh's economy and financial system. It then outlines the objectives, methodology and scope of the report, which includes analyzing Janata Bank's financial statements from 2009-2013 to identify strengths and weaknesses. The document provides context on the bank's background, objectives, and awards it has received. It describes the report's purpose as evaluating the bank's past financial performance to help inform management decision-making.
The document provides an overview of Square Pharmaceuticals Ltd. (SPL) and Orion Pharmaceuticals Ltd. (OPL). SPL was established in 1958 and is the largest pharmaceutical company in Bangladesh, while OPL was founded in 1965 as a pharmaceutical manufacturer. Both companies have grown significantly over the decades and now manufacture a wide range of drug formulations. SPL supplies to both domestic and international markets in over 36 countries, while OPL produces over 110 generic drugs and 220 presentations. The document outlines the objectives, scope, methodology and limitations of the financial analysis report, which involves analyzing the companies' financial statements to assess their profitability and growth performance over recent years.
The document discusses the accounting practices of ACI Limited, a large Bangladeshi conglomerate. It outlines the company's history, objectives to analyze its accounting style, and lists group members. It also covers ACI's products, competitors, mission, vision and values. The document analyzes ACI's accounting standards, transactions recording, accounting system, error resolution, basis of accounting, accounts entries, inventory, costs, controls, fraud prevention, depreciation, and dividend policy.
This chapter discusses accounting concepts including the definition of accounting, users and uses of accounting information, and financial statements. Accounting is defined as a process of identifying, recording, and communicating financial information about an entity. The major users of accounting information are internal users like managers and external users like investors and creditors. Accounting information is used to make informed decisions. There are two main types of accounting - financial accounting which prepares external financial reports, and managerial accounting which provides information for internal decision making. The chapter also discusses the key financial statements - the balance sheet, income statement, and statement of cash flows.
This document provides an overview of accounting principles and concepts. It defines accounting as the process of identifying, analyzing, recording, and reporting financial transactions and information. The key concepts discussed include the accounting equation, the basic financial statements (income statement, balance sheet, statement of owner's equity, statement of cash flows), and the different types of business entities and users of accounting information.
This document provides an overview of key accounting concepts including bookkeeping, accounting, financial accounting, cost accounting, management accounting, accounting cycle, accounting equation, types of accounts, rules of accounting, analysis of transactions, and journal entries. It defines accounting as the process of collecting, recording, classifying, and summarizing financial transactions. It also describes the different types of accounts (asset, liability, capital, income, expense), users of accounting information, and the steps in the accounting cycle.
This document provides an overview of accounting concepts and principles covered in Chapter 1. It defines accounting as an information system that measures and processes financial data to communicate to internal and external users. There are three main types of accounting - financial, management, and tax accounting. The four main types of business organizations are proprietorships, partnerships, corporations, and non-profits. The accounting equation, assets = liabilities + owner's equity, is introduced to track business transactions and their impact on accounts. Financial statements including the income statement, statement of owner's equity, balance sheet, and statement of cash flows are prepared to evaluate business performance.
The document provides an overview of basic accounting concepts and the accounting cycle. It defines accounting as a process to record and communicate financial information. It explains the accounting equation that balances assets, liabilities, and owner's equity. Transactions are exchanges that affect accounts. The accounting cycle includes analyzing transactions, journalizing, posting, preparing a trial balance, adjusting entries, financial statements, and closing entries. The document also outlines users and branches of accounting.
The document provides an overview of basic accounting concepts and the accounting cycle. It defines accounting as a process to record and communicate financial information. It explains the accounting equation that balances assets, liabilities, and owner's equity. Transactions are exchanges that affect accounts. The accounting cycle includes analyzing transactions, journalizing, posting, preparing a trial balance, adjusting entries, financial statements, and closing entries. The document also outlines users and branches of accounting.
The document provides an introduction to accounting. It defines accounting as a systematic process of recording, measuring, and communicating financial information. It discusses the accounting equation and balance sheet, which show that assets must equal liabilities plus equity. Assets represent what is owned, and liabilities and equity represent who owns the assets. Debits and credits are used to keep the accounting equation and balance sheet in balance. The document also outlines accounting standards, functions, history, and some common myths.
Vacation rental management budgeting and financial management 401
Budgeting and managing finances for vacation rental managers: An in-depth four hour boot camp incorporating more hands-on knowledge of how to manage the financial landscape and use budgeting as a foundational tool to grow the business and meet future goals.
1) The document provides an overview of accounting and finance concepts including the accounting process, generally accepted accounting principles, the basic accounting equation, and transaction analysis.
2) It explains that accounting involves recording, classifying, and summarizing economic events, and communicating this information through financial reports, while finance is the broader term referring to asset and liability management and planning for growth.
3) Several examples of accounting transactions are analyzed to demonstrate the application of the basic accounting equation and how accounting records increases and decreases in assets, liabilities, and owner's equity.
The document discusses accounting concepts including assets, liabilities, owner's equity, and how transactions affect the accounting equation. It defines assets as things of value owned by a business, liabilities as amounts owed, and owner's equity as the owner's claim against assets. Transactions are analyzed by identifying which accounts are affected, whether they are assets, liabilities, or owner's equity, and if each account increases or decreases. Keeping accurate accounting records helps businesses make good decisions.
Accounting measures and records business transactions, processes data into reports, and communicates results to decision makers. It provides information in the form of financial statements to external parties like investors and creditors based on generally accepted accounting principles. The objective of financial accounting is to provide useful information for making investment and lending decisions.
Accounting provides essential financial information to both internal and external users by measuring business activities, processing data into reports, and communicating results. It represents transactions and financial information through the accounting equation of assets equaling liabilities plus owner's equity. Adherence to generally accepted accounting principles ensures consistent and reliable reporting.
The document provides an overview of accounting concepts, principles, and financial statements. It defines accounting and describes the accounting system and process. It also outlines the key functions and users of accounting information. Additionally, it discusses important accounting concepts like the accounting equation and accounting conventions. Finally, it explains the three main financial statements - the trading account, profit and loss account, and balance sheet.
Accounting has existed since 2600 BC in ancient Babylon, though double-entry accounting originated in 15th century Italy. It involves identifying, measuring, classifying, and communicating an organization's financial information to help decision-making. The key aspects of accounting are assets, liabilities, equity, revenue, and expenses. Financial statements like the income statement, balance sheet, and statement of cash flows are prepared using accounting information.
Lecture_1_Accounting_ Elements & Accounting_Procedure.ppt
1. The accounting process involves identifying economic events, recording them in the accounting system, and preparing and communicating financial reports to both internal and external users.
2. The basic accounting equation states that assets must equal liabilities plus owner's equity. This equation must remain in balance at all times.
3. The double-entry system of accounting requires equal debit and credit entries to be made for every transaction to keep the accounting equation in balance.
Introduction to Accounting
Theory base of Accounting
Recording of Transactions – I
Recording of Transactions – II
Bank Reconciliation Statement
Trial Balance and Rectification of errors
Depreciation, Provisions and Reserves
Bill of Exchange
Financial Statements -I
Financial Statements -II
Accounts from Incomplete Records
Application of Computers in Accounting
Computerised Accounting System
This document discusses the role and objectives of accounting. It covers topics such as recording business transactions, the accounting process, objectives of accounting, who uses accounts internally and externally, who produces accounts, and key business statements. Accounting involves systematically recording and managing financial transactions and data to facilitate decision making, evaluate performance, and communicate financial information to internal and external users. The main statements produced are the income statement, balance sheet, cash flow statement, and trial balance.
Accounting provides information for decision making. There are three main types of accounting: financial, managerial, and tax accounting. Financial accounting provides information on a company's financial resources and activities. Managerial accounting assists management in operating the business through budgeting, performance evaluation, and other decisions. Tax accounting prepares tax returns based on financial information but adjusted for tax requirements. Accounting information supports both external users like investors and creditors as well as internal users like managers. It aims to objectively represent a company's transactions and financial status.
The document provides an overview of the accounting cycle and key concepts in financial accounting. It discusses [1] what accounts are and how they are used to record business transactions, [2] the basic steps in the recording process including journalizing, posting to ledgers, and preparing a trial balance, and [3] key adjusting entries related to deferrals like prepaid expenses and unearned revenues, and accruals like accrued revenues and accrued expenses. The purpose is to explain the fundamentals of recording and reporting financial information according to generally accepted accounting principles.
This chapter introduces accounting and discusses how it assists in decision making. It describes the key components of the balance sheet, including assets, liabilities, and owners' equity. Business transactions are analyzed and related to changes in the balance sheet. Finally, it compares features of different business organizations like proprietorships, partnerships, and corporations.
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Christmas Decorations_ A Guide to Small Christmas Trees, Candle Centerpieces,...
Transform your home into a festive wonderland this Christmas with our guide to small Christmas trees, elegant candle centerpieces, and unique wreaths for your front door. Discover the perfect small Christmas tree for limited spaces, learn how to create stunning candle centerpieces, and find the best unique wreaths for your front door to welcome guests. Embrace sustainable decorating ideas, personalize your decor, and achieve a cohesive holiday look that spreads joy throughout your home.
Discover who your target audience is and reach them
This presentation goes through a number of elements you need to consider when going through the process of identifying your target audience in order to enable to you be able to reach them and sell to them. I go through the importance of customer profiling, along with a number of ways you can discover what they really want, and where they are.
TPH Global Solutions Overview: Successful Strategies for Selling to Mass Merc...
TPH Global Solutions makes it easy to get your products to market, through the maze of retailer requirements and complex supply chain challenges that include missed deliveries, packaging errors, and shipping damage.
From pitch to profits, TPH delivers successful retail merchandising campaigns with custom point of purchase (POP) displays and custom packaging that meet the toughest demands of retailer buyers and customers at Costco, Sam’s Club, BJ’s, Walmart, Home Depot, Lowe’s, Walgreens, CVS, Kroger, Meijer, Petco, and more.
If you’re an established brand needing to take the pain out of your supply chain, TPH ensures global, on-time and on-budget delivery so you can focus on making great products instead of dealing with headaches.
If you’re an emerging brand needing to convert new retail opportunities, TPH will help you land and pass the test order – we know all major retailer requirements and provides you with total cost visibility, so you will negotiate with confidence and fly through the toughest approval process.
With deep expertise in retailer requirements and global supply chain management, we deliver confidence for brand managers – since 1965.
Innovative Full Stack Developer Crafting Seamless Web Solutions
As an innovative full stack developer, I specialize in creating complete web solutions from front-end design to back-end functionality. With expertise in HTML, CSS, JavaScript, and server-side technologies like Node.js and Python, I build scalable, responsive, and user-friendly applications. My focus is on delivering high-quality, efficient, and impactful digital experiences.
Expert International Executive Recruiters for Global Expansion
In the high speed and serious universe of worldwide business, having the right administration group is fundamental for progress. International executive recruiters representatives assume an imperative part in assisting organizations with recognizing, draw in, and hold top leader ability for their worldwide development endeavors. Their profound comprehension of worldwide business sectors, broad organizations, and skill in cross-line enlistment guarantee that organizations can with certainty explore the intricacies of global employing and construct major areas of strength for a group that drives manageable development and achievement.
Family/Indoor Entertainment Centers Market: Regulation and Compliance Updates
The global family/indoor entertainment centers market is valued at US$ 41 Bn in 2022 and is projected to exhibit growth at a CAGR of 12.2% and reach US$ 130 Bn by the end of 2032.
Cryptocurrency KYC Policies: Comparing Binance KYC Bypass with Rivals
Analyze the idea behind Binance KYC Bypass and compare it to the KYC policies of other cryptocurrency exchanges. Find out about the dangers of trying to bypass KYC and the verification procedure.
Explore the strengths and weaknesses of each Zodiac Sign to understand yourself and others better. Discover detailed insights with MyPandit and enhance your personal growth and relationships.
Research Methodology, Objectives, Types and Significance of Research
Research methodology refers to the systematic, theoretical analysis of the methods applied to a field of study. It comprises the theoretical analysis of the body of methods and principles associated with a branch of knowledge. research is integral to every aspect of business operations. It supports informed decision-making, identifies opportunities and threats, enhances customer understanding, improves efficiency, fosters innovation, aids in strategic planning, refines marketing strategies, manages risk, boosts employee satisfaction, enhances financial performance, and informs policy formulation. This comprehensive understanding and application of research allow businesses to operate more effectively and sustainably in a competitive environment. Research methodology refers to the systematic, theoretical analysis of the methods applied to a field of study. It encompasses the principles, procedures, and techniques used by researchers to collect, analyze, and interpret data. Essentially, research methodology provides the blueprint for the entire research process, ensuring that the study is carried out in a structured, reliable, and valid manner.
The document discusses the cash flow statement and how it provides information about cash inflows and outflows during a period of time for operating, investing, and financing activities. It explains that the cash flow statement highlights cash flows from different activities and is useful for short-term financial planning and cash management. However, it does not show the total financial position or liquidity of a firm.
This document discusses key accounting concepts and principles, including:
- Business entity, which treats a business and its owners as separate entities
- Money measurement, which records all transactions in monetary terms
- Going concern, which assumes a business will continue operating indefinitely
It also outlines principles such as historical cost, conservatism, consistency, and disclosure, and how they guide financial reporting. Challenges in revenue and expense recognition are addressed, along with users of financial statements and limitations of conventional reports.
This document provides a brief introduction to accounting. It defines accounting as recording, classifying, and summarizing financial transactions and events in terms of money. Accounting is necessary for businesses to track their finances and is useful for various stakeholders like owners, investors, creditors, employees and the government. The document outlines the accounting process, including books of original entry, ledger, trial balance, financial statements, and the accounting cycle. It describes accounting as both an art and a science, and discusses the objectives and functions of accounting for businesses.
Financial statements are formal records that evaluate a company's financial stability, performance, and liquidity. There are three main financial statements:
1) The income statement shows profits/losses over time.
2) The balance sheet presents assets, liabilities, and equity on a given date.
3) The cash flow statement shows cash inflows and outflows from operating, investing, and financing activities over time.
Together these statements provide useful information to investors and management, while also having some limitations since they only represent past performance and financial snapshots versus future potential.
This document provides an introduction to management accounting. It defines management accounting as accounting that deals with presenting information to management in a systematic way to aid in planning, controlling, and decision-making. The document outlines the scope, objectives, tools, advantages, limitations, and differences between management accounting and financial accounting.
This presentation provides an overview of accounting information systems. It defines an accounting information system as a subsystem of management information systems that collects and processes transaction data and communicates financial information to decision makers. It notes that an accounting information system consists of people, procedures, data, software, and information technology. It also distinguishes between computerized accounting systems used by large businesses and manual systems used by small businesses. Finally, it outlines the basic functions of an accounting information system, including collecting and storing data, processing it into useful information, providing controls to safeguard assets, and generating financial statements and managerial reports.
The document provides an overview of basic accounting concepts, including:
- Accounting is the process of recording, classifying, and summarizing financial transactions to prepare financial statements.
- Key accounting concepts include business entity, money measurement, dual aspect, cost, accounting period, conservatism, realization, and matching.
- Accounting conventions include going concern, consistency, and accrual.
- The document also discusses classifying accounting events as capital, revenue, or deferred revenue expenditures.
This presentation is based on the subject Financial Accounting which helps the beginners to know the basic concept of accounting . This is according to the syllabus of Pt. Ravishankar University , Raipur and Durg University, Durg.
This document discusses inflation accounting and its objectives, techniques, advantages, and disadvantages. It introduces inflation and deflation as two types of economic conditions caused by changes in price levels. Inflation accounting aims to facilitate comparisons of company performance over periods by adjusting monetary values for inflation, show the current value of assets, and ensure profits reflect real purchasing power. Techniques include adjusting fixed asset and investment values, using current costs and purchasing power. Advantages are maintaining capital intact and showing realistic values, while disadvantages are complexity and challenges valuing assets given changing replacement costs.
The document discusses Indian accounting standards, including the meaning and benefits of accounting standards. It provides details on several specific accounting standards such as AS1 on disclosure of accounting policies, AS6 on depreciation accounting, AS9 on revenue recognition, and AS10 on accounting for fixed assets. The standards cover topics such as selection and disclosure of accounting policies, methods of depreciation, timing of revenue recognition, calculation of costs of fixed assets, and revaluation of fixed assets. The overall objective of the accounting standards is to standardize different accounting policies and practices in India.
The document discusses accounting concepts and the accounting cycle. It defines accounting as a tool for decision making. It distinguishes between financial and management accounting based on their users. It also describes the key components of the accounting cycle including journalizing transactions, the general journal, debit and credit rules, and how the double-entry system ensures equal debits and credits.
The document discusses capital structure and its theories. It defines capital structure as the proportion of long-term debt and equity used to finance a company's assets. A company's capital structure determines its risk and cost of capital. There are several theories on capital structure including the net income, net operating income, traditional, and Modigliani-Miller approaches. The optimal capital structure balances minimum costs and risks. Factors like tax rates, control, flexibility, and legal requirements influence a company's choice of capital structure.
The document defines accounting as recording, classifying, and summarizing financial transactions and events to prepare financial statements. It discusses the basic accounting concepts like the accounting equation, assets, liabilities, equity, revenues and expenses. It also explains the key steps in accounting cycle which includes recording transactions, posting to ledger accounts, preparing an unadjusted trial balance, making adjusting entries, preparing an adjusted trial balance and financial statements, and closing temporary accounts. The accounting cycle aims to generate useful financial information for decision making in the form of income statement, balance sheet, and other financial reports.
The Cash Flow Statement translates earnings in the Income Statement into cash inflows. Explained in detail above as a part of the topic “Financial accounting”, is brought to you by Welingkar’s Distance Learning Division.
For more such innovative content on management studies, join WeSchool PGDM-DLP Program: http://bit.ly/SlideshareFaccounting
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Follow us on Twitter: https://twitter.com/WeLearnIndia
Read our latest blog at: http://welearnindia.wordpress.com
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This document provides definitions and explanations of key accounting concepts and terms. It discusses accounting as a system to record and communicate financial information. Key topics covered include the accounting equation, double-entry bookkeeping system, types of accounts, accounting cycle, journals, ledgers, debits and credits, balancing accounts, and more.
This document provides an overview of financial accounting and financial statements. It discusses the objectives, components, and characteristics of financial statements, including the balance sheet, income statement, and statement of cash flows. The key components covered are the trading account, profit and loss account, manufacturing account, and appropriation account. Examples are provided of how to prepare trading and profit and loss accounts from given financial information. The document also discusses the treatment of adjustments in financial statements such as closing stock, outstanding expenses, prepaid expenses, and depreciation.
Accounting is defined as the art of Recording, Classifying and Summarizing transactions in monetary terms (in Money terms) for preparation of Financial Statements
Book- keeping includes recording of journal, posting in ledgers and balancing of accounts. All the records before the preparation of trail balance is the whole subject matter of book- keeping.
Accounting, is an information system is the process of identifying, measuring and communicating the economic information of an organization to its users who need the information for decision making.
This document provides an overview of basic financial accounting concepts. It defines key accounting terms like accounts, accounting, the accounting cycle and basis. It describes the different types of accounts, rules of double entry system and branches of accounting. It also explains the accounting process including journal, ledger, trial balance and errors. The accounting concepts, conventions and terminology are introduced along with the different books of accounts used.
Accounting for Entrepreneurs.
Presented by: Ms. Rand Marar, GOL Trainer
Socialize your Business, Maadi Public Library, Cairo, Egypt.
Organized by IRC, US-Embassy in Cairo
26 March, 2013
Accounting records, classifies, and summarizes business transactions to provide financial information to both internal and external users. It aims to determine profits and financial position, facilitate management control, and assess tax liability. However, accounting has limitations as it uses monetary values and estimates, and may be manipulated. The main accounting systems are cash basis, accrual basis, and mixed basis. Stakeholders like shareholders, creditors, management, employees, and the government rely on accounting information for decision making.
This document provides an introduction to financial accounting. It discusses the development of accounting from ancient texts through modern times. Accounting involves recording, classifying, summarizing, analyzing and communicating financial transactions. The main users of accounting information are proprietors, managers, creditors, bankers, investors and governments. Accountants work either in public practice providing auditing and other services, or employed within businesses. The objectives of financial accounting are to keep records, protect assets, determine profits/losses, ascertain financial position and facilitate decision making.
Accounting is defined as the process of recording, classifying, and summarizing financial transactions and events to produce useful information for decision making. It involves identifying and measuring financial data, and communicating that information through financial reports like income statements and balance sheets. These reports provide information on a company's profits, losses, assets, and liabilities to stakeholders like owners, investors, employees and customers. Accounting is essential for businesses as it aids management in planning, controlling costs, and making informed financial decisions.
Accounting identifies, measures, records, and communicates economic transactions. It has two main branches: financial accounting provides information to external users, while management accounting provides information internally. The legal structure of a business determines aspects like the number of owners, their liability, capital raising, and financial reporting requirements. Limited companies must publicly disclose annual financial statements to inform present and potential investors, employees, lenders, suppliers, customers, governments, and the public.
Accounting serves three primary purposes: score keeping, attention directing, and problem solving. Score keeping deals with the financial health of an enterprise by answering questions like "How are we doing?". Attention directing gives signals to decision makers about when a decision is needed, such as when actual performance deviates from budgets. Problem solving provides information to find solutions to issues, like make-or-buy decisions or whether to continue or drop product lines. Accounting accumulates data to understand organizational performance, focuses attention on deficiencies, and enables quantification of alternative solutions.
This document lists the names and IDs of five group members working on an accounting project. It then discusses the importance of accounting for keeping records, protecting business assets, determining profits and losses, and understanding a business's financial position. Accounting is also important for society to understand economic transactions and how businesses are performing financially. It allows companies, small businesses, and the healthcare industry to accurately track costs and revenues. Upon completing this course, students will be able to describe accounting systems and processes, and analyze and interpret cost information for management use.
Here are the key causes and solutions to gap 2:
Causes:
- Inadequate service quality specifications and standards
- Lack of integration between departments in developing service standards
Solutions:
- Define clear, measurable service quality standards based on customer expectations
- Involve all departments in developing and agreeing on service standards
- Train employees on service standards and empower them to meet standards
- Monitor service delivery against standards and take corrective action for any gaps
Closing the gap involves setting the right service quality standards based on customer research and ensuring a coordinated effort across departments to deliver to those standards. Regular monitoring and improvement is also important.
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Accounting Department Structure in BriefAslan Umarov
The accounts receivable clerk is responsible for collecting payments from customers, maintaining customer accounts and records, resolving queries, and following collection processes. Key tasks include generating and sending invoices, monitoring accounts for non-payment, collecting and allocating payments, and reporting. The clerk aims to maximize collection within deadlines and targets, analyzing metrics like debt coverage, aging reports, and balances. Maintaining accurate records and customer communication are important.
Management accounting provides accounting information to managers within organizations to help them make informed business decisions. It involves identifying, measuring, analyzing, and communicating financial and non-financial information. The key functions of management accounting are to modify raw accounting data, interpret financial analyses, and assist with management control through tools like budgeting and performance analysis to evaluate operations and fix issues. Management accounting differs from financial accounting in its focus on internal users, future orientation, and inclusion of both monetary and non-monetary information to support management planning, implementation, and decision-making.
The document discusses the importance of engineering economy in decision making for individuals, businesses, and government agencies. Engineering economy provides quantitative analysis techniques to evaluate and compare the costs and benefits of project alternatives over time. It helps structure the estimates needed to evaluate alternatives and select the most economically favorable option based on metrics like present worth, rate of return, and benefit-cost ratio.
- Financial accounting refers to accounting for revenues, expenses, assets, and liabilities. It involves basic processes like recording, classifying, and summarizing transactions for external users like customers and investors.
- Cost accounting deals with recording, classifying, allocating, and reporting current and prospective costs. It focuses on costs for internal reporting, for example calculating production costs.
- Managerial accounting provides information to various management levels to enhance controls and allow managers to monitor performance for internal decision making.
Financial Performance Analysis Of Janata Bank LimitedHasnan Imtiaz
This document provides an overview and analysis of a report on the financial performance of Janata Bank Ltd. It begins with an introduction to the bank, describing its role in Bangladesh's economy and financial system. It then outlines the objectives, methodology and scope of the report, which includes analyzing Janata Bank's financial statements from 2009-2013 to identify strengths and weaknesses. The document provides context on the bank's background, objectives, and awards it has received. It describes the report's purpose as evaluating the bank's past financial performance to help inform management decision-making.
The document provides an overview of Square Pharmaceuticals Ltd. (SPL) and Orion Pharmaceuticals Ltd. (OPL). SPL was established in 1958 and is the largest pharmaceutical company in Bangladesh, while OPL was founded in 1965 as a pharmaceutical manufacturer. Both companies have grown significantly over the decades and now manufacture a wide range of drug formulations. SPL supplies to both domestic and international markets in over 36 countries, while OPL produces over 110 generic drugs and 220 presentations. The document outlines the objectives, scope, methodology and limitations of the financial analysis report, which involves analyzing the companies' financial statements to assess their profitability and growth performance over recent years.
The document discusses the accounting practices of ACI Limited, a large Bangladeshi conglomerate. It outlines the company's history, objectives to analyze its accounting style, and lists group members. It also covers ACI's products, competitors, mission, vision and values. The document analyzes ACI's accounting standards, transactions recording, accounting system, error resolution, basis of accounting, accounts entries, inventory, costs, controls, fraud prevention, depreciation, and dividend policy.
Finance and Managerial Accounting NoteAbdulAhmed73
This chapter discusses accounting concepts including the definition of accounting, users and uses of accounting information, and financial statements. Accounting is defined as a process of identifying, recording, and communicating financial information about an entity. The major users of accounting information are internal users like managers and external users like investors and creditors. Accounting information is used to make informed decisions. There are two main types of accounting - financial accounting which prepares external financial reports, and managerial accounting which provides information for internal decision making. The chapter also discusses the key financial statements - the balance sheet, income statement, and statement of cash flows.
This document provides an overview of accounting principles and concepts. It defines accounting as the process of identifying, analyzing, recording, and reporting financial transactions and information. The key concepts discussed include the accounting equation, the basic financial statements (income statement, balance sheet, statement of owner's equity, statement of cash flows), and the different types of business entities and users of accounting information.
This document provides an overview of key accounting concepts including bookkeeping, accounting, financial accounting, cost accounting, management accounting, accounting cycle, accounting equation, types of accounts, rules of accounting, analysis of transactions, and journal entries. It defines accounting as the process of collecting, recording, classifying, and summarizing financial transactions. It also describes the different types of accounts (asset, liability, capital, income, expense), users of accounting information, and the steps in the accounting cycle.
CHAPTER 1 Accounting and the Business EnvironmentGene Carboni
This document provides an overview of accounting concepts and principles covered in Chapter 1. It defines accounting as an information system that measures and processes financial data to communicate to internal and external users. There are three main types of accounting - financial, management, and tax accounting. The four main types of business organizations are proprietorships, partnerships, corporations, and non-profits. The accounting equation, assets = liabilities + owner's equity, is introduced to track business transactions and their impact on accounts. Financial statements including the income statement, statement of owner's equity, balance sheet, and statement of cash flows are prepared to evaluate business performance.
The document provides an overview of basic accounting concepts and the accounting cycle. It defines accounting as a process to record and communicate financial information. It explains the accounting equation that balances assets, liabilities, and owner's equity. Transactions are exchanges that affect accounts. The accounting cycle includes analyzing transactions, journalizing, posting, preparing a trial balance, adjusting entries, financial statements, and closing entries. The document also outlines users and branches of accounting.
The document provides an overview of basic accounting concepts and the accounting cycle. It defines accounting as a process to record and communicate financial information. It explains the accounting equation that balances assets, liabilities, and owner's equity. Transactions are exchanges that affect accounts. The accounting cycle includes analyzing transactions, journalizing, posting, preparing a trial balance, adjusting entries, financial statements, and closing entries. The document also outlines users and branches of accounting.
The document provides an introduction to accounting. It defines accounting as a systematic process of recording, measuring, and communicating financial information. It discusses the accounting equation and balance sheet, which show that assets must equal liabilities plus equity. Assets represent what is owned, and liabilities and equity represent who owns the assets. Debits and credits are used to keep the accounting equation and balance sheet in balance. The document also outlines accounting standards, functions, history, and some common myths.
Vacation rental management budgeting and financial management 401Amy Hinote
Budgeting and managing finances for vacation rental managers: An in-depth four hour boot camp incorporating more hands-on knowledge of how to manage the financial landscape and use budgeting as a foundational tool to grow the business and meet future goals.
CH01 Introduction to Finance and Accounting.ppthassanakhar
1) The document provides an overview of accounting and finance concepts including the accounting process, generally accepted accounting principles, the basic accounting equation, and transaction analysis.
2) It explains that accounting involves recording, classifying, and summarizing economic events, and communicating this information through financial reports, while finance is the broader term referring to asset and liability management and planning for growth.
3) Several examples of accounting transactions are analyzed to demonstrate the application of the basic accounting equation and how accounting records increases and decreases in assets, liabilities, and owner's equity.
The document discusses accounting concepts including assets, liabilities, owner's equity, and how transactions affect the accounting equation. It defines assets as things of value owned by a business, liabilities as amounts owed, and owner's equity as the owner's claim against assets. Transactions are analyzed by identifying which accounts are affected, whether they are assets, liabilities, or owner's equity, and if each account increases or decreases. Keeping accurate accounting records helps businesses make good decisions.
Accounting measures and records business transactions, processes data into reports, and communicates results to decision makers. It provides information in the form of financial statements to external parties like investors and creditors based on generally accepted accounting principles. The objective of financial accounting is to provide useful information for making investment and lending decisions.
Accounting provides essential financial information to both internal and external users by measuring business activities, processing data into reports, and communicating results. It represents transactions and financial information through the accounting equation of assets equaling liabilities plus owner's equity. Adherence to generally accepted accounting principles ensures consistent and reliable reporting.
The document provides an overview of accounting concepts, principles, and financial statements. It defines accounting and describes the accounting system and process. It also outlines the key functions and users of accounting information. Additionally, it discusses important accounting concepts like the accounting equation and accounting conventions. Finally, it explains the three main financial statements - the trading account, profit and loss account, and balance sheet.
Accounting has existed since 2600 BC in ancient Babylon, though double-entry accounting originated in 15th century Italy. It involves identifying, measuring, classifying, and communicating an organization's financial information to help decision-making. The key aspects of accounting are assets, liabilities, equity, revenue, and expenses. Financial statements like the income statement, balance sheet, and statement of cash flows are prepared using accounting information.
Lecture_1_Accounting_ Elements & Accounting_Procedure.pptSkMumtahina1
1. The accounting process involves identifying economic events, recording them in the accounting system, and preparing and communicating financial reports to both internal and external users.
2. The basic accounting equation states that assets must equal liabilities plus owner's equity. This equation must remain in balance at all times.
3. The double-entry system of accounting requires equal debit and credit entries to be made for every transaction to keep the accounting equation in balance.
Introduction to Accounting
Theory base of Accounting
Recording of Transactions – I
Recording of Transactions – II
Bank Reconciliation Statement
Trial Balance and Rectification of errors
Depreciation, Provisions and Reserves
Bill of Exchange
Financial Statements -I
Financial Statements -II
Accounts from Incomplete Records
Application of Computers in Accounting
Computerised Accounting System
This document discusses the role and objectives of accounting. It covers topics such as recording business transactions, the accounting process, objectives of accounting, who uses accounts internally and externally, who produces accounts, and key business statements. Accounting involves systematically recording and managing financial transactions and data to facilitate decision making, evaluate performance, and communicate financial information to internal and external users. The main statements produced are the income statement, balance sheet, cash flow statement, and trial balance.
Accounting provides information for decision making. There are three main types of accounting: financial, managerial, and tax accounting. Financial accounting provides information on a company's financial resources and activities. Managerial accounting assists management in operating the business through budgeting, performance evaluation, and other decisions. Tax accounting prepares tax returns based on financial information but adjusted for tax requirements. Accounting information supports both external users like investors and creditors as well as internal users like managers. It aims to objectively represent a company's transactions and financial status.
The document provides an overview of the accounting cycle and key concepts in financial accounting. It discusses [1] what accounts are and how they are used to record business transactions, [2] the basic steps in the recording process including journalizing, posting to ledgers, and preparing a trial balance, and [3] key adjusting entries related to deferrals like prepaid expenses and unearned revenues, and accruals like accrued revenues and accrued expenses. The purpose is to explain the fundamentals of recording and reporting financial information according to generally accepted accounting principles.
This chapter introduces accounting and discusses how it assists in decision making. It describes the key components of the balance sheet, including assets, liabilities, and owners' equity. Business transactions are analyzed and related to changes in the balance sheet. Finally, it compares features of different business organizations like proprietorships, partnerships, and corporations.
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With deep expertise in retailer requirements and global supply chain management, we deliver confidence for brand managers – since 1965.
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Research Methodology, Objectives, Types and Significance of Researchindumathi967565
Research methodology refers to the systematic, theoretical analysis of the methods applied to a field of study. It comprises the theoretical analysis of the body of methods and principles associated with a branch of knowledge. research is integral to every aspect of business operations. It supports informed decision-making, identifies opportunities and threats, enhances customer understanding, improves efficiency, fosters innovation, aids in strategic planning, refines marketing strategies, manages risk, boosts employee satisfaction, enhances financial performance, and informs policy formulation. This comprehensive understanding and application of research allow businesses to operate more effectively and sustainably in a competitive environment. Research methodology refers to the systematic, theoretical analysis of the methods applied to a field of study. It encompasses the principles, procedures, and techniques used by researchers to collect, analyze, and interpret data. Essentially, research methodology provides the blueprint for the entire research process, ensuring that the study is carried out in a structured, reliable, and valid manner.
5. Accounting.. is an information system that... measures business activities, processes information, and... communicates financial information.
6. Accounting – The Language of Business Accounting is the information system that... measures business activities, processes data into reports, and communicates results to decision makers.
7. - a process of identifying, recording, summarizing, and reporting economic information to decision makers in the form of financial statements. Accounting
8. Definitions of Accounting “ The process of identifying, measuring, and communicating economic information to permit informed judgements and decisions by users of the information.” — American Accounting Association (AAA) “ A service activity whose function is to provide quantitative information, primarily financial in nature, about economic entities that is intended to be useful in making economic decisions.” — American Institute of Certified Public Accountants (AICPA)
9. Primary Functions of Accounting Recording data about business transactions - In the Egyptian era they used a quill pen to record the data and stored it on papyrus scrolls. Today we might use a bar code and scan data into a computer system and store it on a magnetic disk. Summarizing results of business activity into useful report- The balance sheet and income statement have been standard reports for many years. More recently we added a statement of cash flows. However, managers in today's environment demand more detailed reports like sales by district or sales by product type.
10. Providing assurances that the business is operating as intended and that the assets of the organization are protected- All parties to a business event have looked to accountants to provide assurance that the transaction is properly handled, accurately recorded, and accurately reported. Throughout most of this century the assurance has been based on a system of internal controls and an audit of the published financial statements.
11. Accounting as an Aid to Decision Making Accounting helps in decision making by showing where and when money has been spent, by evaluating performance, and by showing the implications of choosing one plan instead of another. Fundamental relationships in the decision-making process: Event Accountant’s analysis and recording Financial statements Users
14. Identification of Users User Information Needs Accounting System Accounting — An Information Process
15. Identification of Users User Information Needs Accounting System Economic Data and Activities Accounting — An Information Process
16. Identification of Users User Information Needs Accounting System Economic Data and Activities Reports Accounting — An Information Process
17. Identification of Users User Information Needs Accounting System Reports Economic Data and Activities Accounting — An Information Process User Decisions
18. The Flow of Accounting Information 1. Business transactions occur 3. People make decisions. 2. Businesses prepare reports to Show the results of their operations
19. The Flow of Accounting Information Accounting systems are designed to meet the needs of the decision makers who use the financial information. Every business maintains some type of accounting system. These accounting systems may be very complex or very simple, but the real value of any accounting system lies in the information that the system provides.
20. Users of Accounting Information Individuals Businesses Investors and creditors Government regulatory agencies Taxing authorities Nonprofit organizations
21. investors creditors regulators customers competitors EXTERNAL USERS Financial Accounting Users of Accounting Information
23. Users of Accounting Information External users make decisions about the entity. Internal users make decisions for the entity. Users of Accounting Information
24. Financial Accounting Its focus is on reporting to external parties. It provides financial statements based on generally accepted accounting principles . It measures and records business transactions.
25. Management Accounting It measures and reports financial and nonfinancial information that helps managers make decisions to fulfill the goals of an organization.
26. Cost Accounting It provides information for both management accounting and financial accounting. It measures and reports financial and nonfinancial data.
27. Some Definitions to remember : Inventory - goods held by a firm for resale to customers Account payable - a liability that results from the purchase of goods or services on account Compound entry - a transaction that affects more than two accounts Creditor - one to whom money is owed Debtor - one who owes money
28. Assets What is an asset? It is something a company owns which has future economic value. land building equipment goodwill
29. Liability What is a liability? It is something a company owes. money service product
30. Revenues What are revenues? They are amounts received or to be received from customers for sales of products or services. sales performance of services rent interest
31. What are Expenses? They are amounts that have been paid or will be paid later for costs that have been incurred to earn revenue. salaries and wages utilities supplies used advertising Expenses
32. Owner’s Equity What is owner’s equity? It is what’s left of the assets after liabilities have been deducted. the same as net assets the owner’s claim on the entity’s assets
33. Transactions that Affect Owner’s Equity OWNER’S EQUITY INCREASES OWNER’S EQUITY DECREASES Owner Investments in the Business Revenues Expenses Owner Withdrawals from the Business Owner’s Equity
43. Assets Resources = Sources The Accounting Equation What are the sources of the assets? Resources used in the business
44. Assets Liabilities Owner’s Equity Resources = Sources Resources used in the business Resources supplied by creditors and owners The Accounting Equation
45. Accounting data is represented by the following relationship among the assets, liabilities and owners’ equity of a business: Assets = Liabilities + Owners’ Equity The equation must be in balance after every recorded transaction in the system. The Basic Accounting Equation
46. a. Sachin deposits RS 25,000 in a bank account for ABC Ltd ASSETS = Business Transactions OWNER’S EQUITY LIABILITIES
47. a. Sachin deposits RS 25,000 in a bank account for ABC Ltd. ASSETS = Business Transactions OWNER’S EQUITY Cash 25,000 LIABILITIES
48. a. Sachin deposits RS 25,000 in a bank account for ABC Ltd. ASSETS = Business Transactions OWNER’S EQUITY Cash 25,000 LIABILITIES Sachin, Capital 25,000
50. Business Transactions b. ABC Ltd. buys land for Rs 20,000. ASSETS = OWNER’S EQUITY LIABILITIES Cash (20,000)
51. Business Transactions b. ABC Ltd buys land for RS 20,000. ASSETS = OWNER’S EQUITY LIABILITIES Cash (20,000) Land 20,000
52. Business Transactions ASSETS = OWNER’S EQUITY LIABILITIES c. ABC Ltd buys goods for RS1,350, agreeing to pay the supplier in the near future.
53. Business Transactions ASSETS = OWNER’S EQUITY LIABILITIES c. ABC Ltd buys goods for RS1,350, agreeing to pay the supplier in the near future. Accounts Payable 1,350 Purchases 1,350
54. Business Transactions ASSETS = OWNER’S EQUITY LIABILITIES e. ABC Ltd paid: wages Rs 2,125; rent, Rs 800; utilities, Rs 450; and miscellaneous, Rs 275.
55. Business Transactions ASSETS = OWNER’S EQUITY LIABILITIES Cash (3,650) e. ABC Ltd paid: wages Rs 2,125; rent, Rs 800; utilities, Rs 450; and miscellaneous, Rs 275.
56. Business Transactions ASSETS = OWNER’S EQUITY LIABILITIES Cash (3,650) Expenses (3,650) e. ABC Ltd paid: wages Rs 2,125; rent, Rs 800; utilities, Rs 450; and miscellaneous, Rs 275.
66. Role of Accounting Good managers plan for the future. They develop a budget . A budget is a formal plan stated in monetary terms.
67. Role of Accounting Accounting helps banks decide to whom they will lend money. Accounting provides information that helps investors pick stocks.
68. Role of Accounting Budgeting Information systems design Cost accounting Internal auditing
69. Role of Accounting Consulting Assurance services including auditing Tax accounting
70. Accounting as an Aid to Decision Making Accounting information is useful to anyone who makes decisions that have economic results. Owners want to know which employees are productive. investors want to know if a company is a good investment. Legislators want to know how a proposed law will affect budgets. Managers want to know if a new product will be profitable. Creditors want to know if they should extend credit, how much to extend, and for how long.
71. ABUSIVE ACCOUNTING PRACTICES CREATIVE ACCOUNTING PRACTICES ENRON DEBTS NOT REPORTED RECOGNITION OF LOSSES WAS POSTPONED REPORT INCOME BEFORE BEING EARNED
73. Financial Accounting Its focus is on reporting to external parties. It provides financial statements based on generally accepted accounting principles. It measures and records business transactions.
74. Generally Accepted Accounting Principles What is the primary objective of financial Accounting and Reporting? To provide information useful for making investment and lending decisions
75. Generally Accepted Accounting Principles and Basic Concepts If every accountant used his or her own rules for recording transactions, the financial statements would be useless in making comparisons. Therefore, accountants have agreed to apply a common set of measurement principles (a common language) to record information for financial statements. Otherwise, decision makers could not use or compare financial statements.
76. Accounting: Principles and Concepts The rules that govern accounting are called GAAP (generally accepted accounting principles) . Accountants follow professional guidelines.
77. Generally Accepted Accounting Principles and Basic Concepts Generally accepted accounting principles (GAAP) - a term that applies to the broad concepts or guidelines and detailed practices in accounting, including all the conventions, rules, and procedures that make up accepted accounting practice at a given time
78. REGULATION OF THE ACCOUNTING PROFESSION Securities And Exchange Commission (SEC) Financial Accounting Standards Board (FASB) American Institute Of Certified Public Accountants (AICPA)
79. Standard Setting Bodies In the United States, GAAP is set primarily by the private sector with government oversight. In many other countries, such as France, the government actually sets accounting standards.
80. Standard Setting Bodies Securities and Exchange Commission (SEC) - the agency designated by the U.S. Congress to hold the ultimate responsibility for authorizing GAAP for companies whose stock is held by the general investing public The SEC has informally delegated the power to make accounting rules to the FASB.
81. Standard Setting Bodies Financial Accounting Standards Board (FASB) - responsible for establishing GAAP in the United States; A private sector body consisting of seven full-time members and a large support staff
82. Standard Setting Bodies International Accounting Standards Board (IASB) - an organization representing over 143 accountancy boards from 104 countries that is developing a common set of accounting standards to be used throughout the world
83. Standard Setting Bodies Interest in harmonizing accounting standards around the world by eliminating differences in accounting principles has grown. Investors are committing more of their money worldwide. Many multinational companies voluntarily issue their financial statements in conformity with the IASB standards.
84. IMPORTANT CONCEPTS ENTITY ASSUMPTION GOING CONCERN ASSET VALUATION HISTORICAL COST MARKET VALUE LIABILITY RECOGNITION
85. IMPORTANT CONCEPTS ACCOUNTING PERIOD REVENUE RECOGNITION MATCHING EXPENSES TO REVENUES UNIT OF MEASUREMENT CONSERVATISM FULL DISCLOSURE
86. Generally Accepted Accounting Principles and Basic Concepts The Entity Concept An accounting entity is an organization that stands apart from other organizations and individuals as a separate economic unit. The entity concept helps relate events to a clearly defined area of accountability.
87. The Entity Concept An accounting entity is an organization that stands apart as a separate economic unit.
88. The Entity Concept Example Assume that John decides to open up a gas station and coffee shop. The gas station made Rs 250,000 in profits, while the coffee shop lost Rs 50,000.
89. The Entity Concept Example How much money did John make? At a first glance, we would assume that John made Rs 200,000. However, by applying the entity concept we realize that the gas station made Rs 250,000 while the coffee shop lost Rs 50,000.
90. Generally Accepted Accounting Principles and Basic Concepts The Going Concern Concept The entity will continue to operate in the future.
91. Generally Accepted Accounting Principles and Basic Concepts Going Concern Convention The assumption that in all ordinary situations an entity persists indefinitely This notion implies that a company’s existing resources will be used to fulfill the business needs of the company rather than be sold. If the continuity of an entity is in doubt, a liquidation approach to the balance sheet is taken, and the assets and liabilities are valued as if the entity were to be liquidated in the near future.
92. Record fixed assets at original cost and depreciate over a period of time. Take prepaid expenses as assets. Business is concerned with net income or earning capacity as compared to market values.
93. Generally Accepted Accounting Principles and Basic Concepts Materiality Convention A financial statement item is material if its omission or misstatement would tend to mislead the reader of the financial statements under consideration Materiality often depends on the size of the organization – what is material to one company might not be material to another company.
94. AAA defines “An item should be regarded as material if there is reason to believe that knowledge of it would influence the decision of informed investor” Disclose only material information. No overburdening with minute details Material information differs organization to organization year to year (change in depreciation method) Materiality may depend upon amount or may not be.
95. Generally Accepted Accounting Principles and Basic Concepts Convention of Conservatism :- “ Anticipate no profits but provide for all possible losses” Policy of ‘caution’ & ‘playing safe’ Policy of safeguarding against possible losses in world of uncertainty
96. Kobler defines :- ‘ Conservatism’ as a guideline which chooses between acceptable accounting alternatives for recording events or transactions so that the least favorable immediate effect on assets , income and owner’s equity is reported. Example:- Making the provision for doubtful debts and discounts on debtors in anticipation of actual bad debts and discount
97. Generally Accepted Accounting Principles and Basic Concepts Cost-Benefit Criterion A system should be changed when the expected additional benefits of the change exceed its expected additional costs The benefits of information should exceed the cost of providing that information. Benefits > Costs
98. Generally Accepted Accounting Principles and Basic Concepts The Stable-Monetary-Unit Concept The purchasing power is stable.
99. Generally Accepted Accounting Principles and Basic Concepts Stable Monetary Unit The monetary unit is the principle means for measuring assets and equities. It is the common denominator for quantifying the effects of transactions. A stable monetary unit is one that is not expected to significantly change in value over time.
100. Generally Accepted Accounting Principles and Basic Concepts The Cost Principle Assets and services acquired should be recorded at their actual cost.
101. Record assets at price paid to acquire and take it as base for subsequent years. Makes financial statements more objective. Limitations Financial statements become irrelevant in case of inflation Remove cost of fixed assets by writing off their cost while asset may be in good condition Don’t show as asset for which no payment has been made for e.g knowledge ,skill of Human Resources.
102. Cash Basis of Accounting Accrual Basis of Accounting TWO METHODS Reporting Revenue and Expense Accrual Basis
103. Revenue reported when cash is received Expense reported when cash is paid Does not properly match revenues and expenses Cash Basis of Accounting
104. Revenue reported when earned Expense reported when incurred Properly matches revenues and expenses in determining net income Requires adjusting entries at end of period It just sounds mean – it really isn’t Accrual Basis of Accounting
105. ACCRUAL VS CASH ACCOUNTING ACCRUAL ACCOUNTING - FOCUSES ON THE ECONOMIC IMPACT OF TRANSACTIONS FIRM MAXIMIZES ASSETS CASH ACCOUNTING - FOCUSES ON WHEN CASH IS RECEIVED AND PAID OUT FIRM MAXIMIZES CASH
107. Revenue Principle When is revenue recognized? When it is deemed earned. Recognition of revenue and cash receipts do not necessarily occur at the same time.
108. Revenue Principle The revenue principle governs two things: When to record revenue and… the amount of revenue to record.
109. Revenue Principle Air & Sea Travel, Inc. Situation 1 No transaction has occurred. – Do Not Record Revenue March 12 I plan to have you make my travel arrangements. photos Disney World Situation 2 The client has taken a trip arranged by Air & Sea Travel. – Record Revenue Air & Sea Travel, Inc. April 2
110. Recognition of Revenues Recognition - a test to determine whether revenues should be recorded in the financial statements for a given period To be recognized, revenue must be: Earned - goods are delivered or a service is performed Realized - cash or a claim to cash (credit) is received in exchange for goods or services
111. The Matching Principle What is the matching principle? It is the basis for recording expenses. Expenses are the costs of assets and the increase in liabilities incurred in the earning of revenues. Expenses are recognized when the benefit from the expense is received.
112. The Matching Principle It is the basis for recording expenses and includes two steps: Identify all the expenses incurred during the accounting period. Measure the expenses and match expenses against revenues earned.
117. Accounting Period concept It requires that accounting information be reported at regular intervals. Interacts with the revenue principle and the matching principle Requires that income be measured accurately each period
118. Accounting Period concept The Time-Period Concept Businesses need regular progress reports, so accountants prepare financial statements for specific periods and at regular intervals . Monthly Quarterly
119. Dual concept Accounting information is based on the double entry system . Under this system, the two-sided effect of a transaction is recorded in the appropriate accounts. The recording is done by means of a “debit-credit” convention (set of rules) applying to all accounts.
120. The Accounting Equation Assets are the economic resources of a business that are expected to produce a benefit in the future. Liabilities are “outsider claims,” or economic obligations payable to outsiders. Owners’ equity represents the “ insider claims” of a business.
121. The Reliability Concept The quality of information that assures decision makers that the information captures the conditions or events it purports to represent Reliable data are supported by convincing evidence that can be verified by independent parties. The impact of events should be measured in a systematic, reliable manner.
122. The Reliability (Objectivity) concept Information must be reasonably accurate. Information must be free from bias. Information must report what actually happened. Individuals would arrive at similar conclusions using same data.
124. Double-Entry Accounting “ Double-entry accounting is based on a simple concept: each party in a business transaction will receive something and give something in return. In bookkeeping terms, what is received is a debit and what is given is a credit. The T account is a representation of a scale or balance.” Scale or Balance Receive DEBIT Give CREDIT T account Left Side Receive DEBIT Right Side Give CREDIT Luca Pacioli Developer of Double-Entry Accounting
125. The Double-Entry System One debit One credit Each transaction is recorded with at least: Total debits must equal total credits. The Double Entry System
126. The Double-Entry System Each transaction must still be analyzed to determine which accounts are involved, whether the accounts increase or decrease, and how much the balance will change. The Double Entry System
127. The Double-Entry system Some businesses enter into thousands of transactions daily or even hourly. Accountants must carefully keep track of and record these transactions in a systematic manner. Accountants use a double-entry accounting system in which at least two accounts are always affected by each transaction. The Double Entry System
128. Classification of Accounts There are some asset accounts? Cash Notes Receivable Accounts Receivable Prepaid Expenses Land Building Equipment
129. Classification of Accounts There are some liability accounts? Notes Payable Accounts Payable Accrued Liabilities (for expenses incurred but not paid) Long-term Liabilities (bonds)
130. Classification of Accounts There are some owner’s equity accounts? Capital or owner’s interest in the business Withdrawals Revenues Expenses
131. Classification of Accounts Real Account = Debit –What comes in Credit- what goes out Personal Account = Debit –Receiver Credit - Giver Nominal Account =Debit –Expenses/Losses Credit- Incomes/Gains
132. The Double-Entry system The system records the two-sided effect of transactions The Double Entry System Transaction Two-sided effect Bought furniture for cash Decrease in one asset Increase in another asset Took a loan in cash Increase in an asset Increase in a liability
133. The Double Entry System Note that the accounting equation equality is maintained after recording each transaction.
134. XYZ Ltd. A Sole Proprietorship “ On November 1, 2002, A started a sole proprietorship called XYZ Ltd. The following double-entry transactions show how amounts received (debits) always equal amounts given (credits).”
135. Amit deposits Rs25,000 in a bank account for XYZ Ltd.. Business Transactions Journal give Credit XYZ Ltd (investee) Amit (investor) give Credit Entry A. Date Description Debit Credit 11/1 receive Debit
136. Amit deposits Rs25,000 in a bank account for XYZ Ltd.. Business Transactions l Journal give Credit XYZ Ltd.(investee) Cash Amit (investor) give Credit Entry A. Date Description Debit Credit 11/1 Cash 25,000 receive Debit
137. Amit deposits Rs 25,000 in a bank account for XYZ Ltd.. Business Transactions Journal Date Description Debit Credit 11/1 Cash 25,000 Amit, Capital 25,000 give Credit XYZ Ltd.(investee) Cash A promise to the owner Amit (investor) give Credit Entry A. receive Debit
138. XYZ Ltd. buys land for Rs20,000. Business Transactions give Credit XYZ Ltd(buyer) Land Owner (seller) give Credit Entry B. Journal Date Description Debit Credit 11/5 receive Debit
139. XYZ Ltd. buys land for Rs20,000. Business Transactions give Credit XYZ Ltd(buyer) Land Land Owner (seller) give Credit Entry B. General Journal Date Description Debit Credit 11/5 Land 20,000 receive Debit
140. XYZ Ltd. buys land for Rs 20,000. Business Transactions give Credit XYZ Ltd(buyer) Land Cash Land Owner (seller) give Credit Entry B. Journal Date Description Debit Credit 11/5 Land 20,000 Cash 20,000 receive Debit
141. XYZ Ltd. buys supplies for Rs1,350, agreeing to pay in the near future. Business Transactions give Credit XYZ Ltd (buyer) Supplier (seller) give Credit Entry C. Journal Date Description Debit Credit 11/10 receive Debit
142. XYZ Ltd. buys goods for Rs1,350, agreeing to pay in the near future. Business Transactions give Credit XYZ Ltd. (buyer) Supplies Supplier (seller) give Credit Entry C. General Journal Date Description Debit Credit 11/10 Purchases 1,350 receive Debit
143. XYZ Ltd. buys goods for Rs1,350, agreeing to pay in the near future. Business Transactions give Credit XYZ Ltd. (buyer) Supplies Supplier (seller) give Credit Entry C. A promise to pay later Journal Date Description Debit Credit 11/10 purchases 1,350 Accounts Payable 1,350 receive Debit
144. XYZ Ltd. earns fees of Rs7,500, receiving cash. Business Transactions give Credit XYZ Ltd. (seller) Customer (buyer) give Credit Entry D. Journal Date Description Debit Credit 11/18 receive Debit
145. XYZ Ltd. earns fees of Rs7,500, receiving cash. Business Transactions give Credit XYZ Ltd. (seller) Cash Customer (buyer) give Credit Entry D. Journal Date Description Debit Credit 11/18 Cash 7,500 receive Debit
146. XYZ Ltd. earns fees of Rs7,500, receiving cash. Business Transactions give Credit XYZ Ltd. (seller) Cash Customer (buyer) give Credit Entry D. Services Journal Date Description Debit Credit 11/18 Cash 7,500 Fees Earned 7,500 receive Debit
147. Date Description Debit Credit XYZ Ltd. paid: wages, Rs 2,125; rent, Rs 800; commissions, Rs450; and misc, Rs275. Business Transactions Journal give Credit XYZ Ltd. (buyer) Various suppliers give Credit Entry E. receive Debit
148. Date Description Debit Credit 11/18 Wages Expense 2,125 Rent Expense 800 Commission 450 Misc. Expense 275 XYZ Ltd. paid: wages, Rs 2,125; rent, Rs 800; commissions, Rs450; and miscellaneous, Rs275. Business Transactions Journal give Credit XYZ Ltd. (buyer) Services, benefits Various suppliers give Credit Entry E. receive Debit
149. Date Description Debit Credit 11/18 Wages Expense 2,125 Rent Expense 800 Commission 450 Misc. Expense 275 Cash 3,650 XYZ Ltd. paid: wages, Rs 2,125; rent, Rs 800; commissions, Rs 450; and misc Rs 275. Business Transactions Journal give Credit XYZ Ltd. (buyer) Services, benefits Various suppliers give Credit Entry E. Cash receive Debit
150. XYZ Ltd. pays Rs950 to creditors on account. Business Transactions give Credit XYZ Ltd. (payor) Supplier (payee) give Credit Entry F. Journal Date Description Debit Credit 11/30 receive Debit
151. XYZ Ltd. pays Rs950 to creditors on account. Business Transactions give Credit XYZ Ltd. (payor) Reduction in obligation Supplier (payee) give Credit Entry F. Journal Date Description Debit Credit 11/30 Accounts Payable 950 receive Debit
152. XYZ Ltd. pays Rs950 to creditors on account. Business Transactions give Credit XYZ Ltd. (payor) Reduction in obligation Supplier (payee) give Credit Entry F. Cash Journal Date Description Debit Credit 11/30 Accounts Payable 950 Cash 950 receive Debit
153. Amit withdraws Rs 2,000 in cash. Business Transactions give Credit XYZ Ltd. (payor) Amit (payee) give Credit Entry H. Journal Date Description Debit Credit 11/30 receive Debit
154. Amit withdraws Rs 2,000 in cash. Business Transactions give Credit XYZ Ltd. (payor) Reduction in obligation Amit (payee) give Credit Entry H. Journal Date Description Debit Credit 11/30 Amit, Drawing 2,000 receive Debit
155. Amit withdraws Rs 2,000 in cash. Business Transactions give Credit XYZ Ltd. (payor) Reduction in obligation Amit (payee) give Credit Entry H. Cash Journal Date Description Debit Credit 11/30 Amit, Drawing 2,000 Cash 2,000 receive Debit
157. 1. Analyze the transaction 2. Journalize the transaction 3. Post the transaction to accounts in ledger 4. Prepare the trial balance 5. Prepare financial statements The Accounting Cycle: Steps
158. The Recording Process The sequence of steps in recording transactions: Transactions Documentation Journal Financial Statements Trial Balance Ledger
159. The Recording Process The process starts with source documents, which are the supporting original records of any transaction. Examples are sales slips or invoices, check stubs, purchase orders, receiving reports, and cash receipt slips.
160. The Recording Process In the second step, an analysis of the transaction is placed in the book of original entry, which is a chronological record of how the transactions affect the balances of applicable accounts. The most common example is the general journal - a diary of all events (transactions) in an entity’s life.
161. The Recording Process In the third step, transactions are entered into the ledger. Remember that a transaction is not entered in just one place; it must be entered in each account that it affects. Depending on the nature of the organization, analysis of the transactions could occur continuously or periodically.
162. The Recording Process The fourth step includes the preparation of the trial balance, which is a simple listing of all accounts from the ledger with their balances. Aids in verifying accuracy and in preparing the financial statements Prepared periodically as necessary
163. The Recording Process In the final step, the financial statements are prepared. Financial statements may be prepared after each quarter of the year. the companies may prepare financial statements at various other intervals to meet the needs of their users. December 2002
164. 1. Transactions are analyzed and recorded in journal. Documents Journal Journal, Ledger, Trial Balance
165. 1. Transactions are analyzed and recorded in journal. Documents Journal 2. Transactions are posted from journal to ledger. Journal Ledger Journal, Ledger, Trial Balance
166. 1. Transactions are analyzed and recorded in journal. Documents Journal 2. Transactions are posted from journal to ledger. Journal Ledger 3. Trial balance is prepared. Journal, Ledger, Trial Balance Trial Balance
167. Manual Accounting Cycle 1. Transactions are analyzed and recorded in journal. Documents Journal
168. Manual Accounting Cycle 1. Transactions are analyzed and recorded in journal. Documents Journal 2. Transactions are posted from journal to ledger. Journal Ledger
169. Manual Accounting Cycle 1. Transactions are analyzed and recorded in journal. Documents Journal 2. Transactions are posted from journal to ledger. Journal Ledger 3. Trial balance is prepared, Trial balance
170. Manual Accounting Cycle 1. Transactions are analyzed and recorded in journal. Documents Journal 2. Transactions are posted from journal to ledger. Journal Ledger 3. Trial balance is prepared, 4. Financial statements are prepared and distributed. Financial Statements IS SOE BS
172. Computerized Accounting Cycle 1. Transactions are analyzed and entered in the computer. Documents Computer 2. Preliminary reports are analyzed, adjustments are prepared and entered in the computer. Computer Reports Computer
173. Computerized Accounting Cycle 1. Transactions are analyzed and entered in the computer. Documents Computer 2. Preliminary reports are analyzed, adjustments are prepared and entered in the computer. Computer Reports 3. Financial statements are printed and distributed. Computer
174. Computerized Accounting Cycle 1. Transactions are analyzed and entered in the computer. Documents Computer 2. Preliminary reports are analyzed, adjustments are prepared and entered in the computer. Computer Reports 3. Financial statements are printed and distributed. Computer 4. Reports are analyzed and interpreted for decision- making purposes. Financial Statements IS SOE BS SCF ?
176. Journal What is a journal? It is a list in chronological order of all the transactions for a business. Identify transaction from source documents. Specify accounts affected. Apply debit/credit rules. Record transaction with description.
177. Journal entry Journal entry - an analysis of the effects of a transaction on the accounts, usually accompanied by an explanation of the transaction This analysis identifies the accounts to be debited and credited.
178. Journal entry What does a journal entry include? date of the transaction title of the account debited title of the account credited amount of the debit and credit description of the transaction (narration)
181. JOURNALIZING TRANSACTIONS THE JOURNAL IS A CHRONOLOGICAL LISTING OF TRANSACTIONS. ENTER DATE IN FIRST COLUMN IDENTIFY APPROPRIATE ACCOUNTS ENTER THE TITLE OF THE ACCOUNT DEBITED ENTER THE TITLE OF THE ACCOUNT TO BE CREDITED INSERT APPROPRIATE AMOUNTS IN DEBIT AND CREDIT COLUMN INSERT A BRIEF DESCRIPTION OF TRANSACTION
182. Recording Transactions On April 2, Garge invested Rs 30,000 in Gay GillenTravel. What is the journal entry? Date Particulars Debit Credit April Rs 2 Cash Account Dr 30,000 To Garge Capital 30,000 (Received initial investment from owner)
183. Types of journal entries: Types of journal entries: Simple entry - an entry for a transaction that affects only two accounts Compound entry - an entry for a transaction that affects more than two accounts Remember: whether the entry is simple or compound, the debits (left side) and credits (right side) must always equal.
185. Ledger What is a ledger? It is a digest of all accounts utilized by an entity during an accounting period. Bound books Computer printout Cards Loose leaf pages
186. Ledger Accounts Ledger - a group of related accounts kept current in a systematic manner Think of a ledger as a book with one page for each account. Ledger
188. Accts. Payable Ledger A B C D Customer Accounts Supplies Ledger Cash Accts. Receivable
189. Ledger Supplies Accts. Payable Ledger A B C D Customer Accounts A B C D Creditor Accounts Cash Accts. Receivable
190. Ledger Accounts A simplified version of a ledger account is called the T-account. They allow us to capture the essence of the accounting process without having to worry about too many details. The account is divided into two sides for recording increases and decreases in the accounts. Account Title Left Side Right Side
191. Debits and Credits Debit (dr.) - an entry or balance on the left side of an account Credit (cr.) - an entry or balance on the right side of an account Remember: Debit is always the left side! Credit is always the right side!
193. Posting What is posting? It is the transfer of information from the journal to the appropriate accounts in the ledger.
194. POSTING TO THE LEDGER POSTING REFERS TO TRANSFERRING THE INFORMATION IN A JOURNAL ENTRY TO THE APPROPRIATE LEDGER ACCOUNT ENTER DATE ENTER AMOUNT IN PROPER DEBIT OR CREDIT COLUMN ENTER JOURNAL SOURCE INFO
195. Debit Credit Proforma for Account Amt. L.f Particulars Date Amt. L.f Particulars Date
198. Ledger Accounts Balance - difference between total left-side amounts and total right-side amounts at any particular time Assets have left-side balances. Increased by entries to the left side Decreased by entries to the right side Liabilities and Owners’ Equity have right-side balances. Decreased by entries to the left side Increased by entries to the right side
199. Details of Journals and Ledgers Date Particulars Debit Credit April 2 Cash 30,000 Garge Capital 30,000 (Received initial investment from owner) Journal Page 1
200. Date Ref. Particulars Amount Date Ref Particulars Amount April 2 1 To G. Cap 30,000 Debit Cash Account Credit Insert the number of the journal page. Posting
201. L.F . Date Description Debit Credit 12/1 Prepaid Insurance 2,400 Cash 2,400 Journal Page 1 Recording and Posting an Entry 1. Analyze and record the transaction as shown. 2. Post the debit side of the transaction. 3. Post the credit side of the transaction.
202. L.f Date Description Debit Credit 12/1 Prepaid Insurance 15 2,400 Cash 2,400 Journal Ledger Prepaid Insurance Account Dr. Cr. Page 1 Recording and Posting an Entry 2400 1 To Cash 12/1 Amt. Fol. Particulars Date Amt. Fol. Particulars Date
203. Recording and Posting an Entry Date Description L.f. Debit Credit 12/1 Prepaid Insurance 15 2,400 Cash 11 2,400 Journal Ledger Page No.15 Prepaid insurance Account Dr. Cr. Page 1 1 3 2 4 2400 1 To Cash 12/1 Amt. Fol. Particulars Date Amt. Fol. Particulars Date
205. TRIAL BALANCE What is a Trial balance? It is an internal document. It is a listing of all the accounts with their related balances. It provide a check on accuracy by showing whether total debits equal total credits.
206. TRIAL BALANCE A listing of all accounts with balances at the end of the accounting period after all transactions have journalized and posted Purpose to determine that debits = credits to identify accounts to be adjusted
207. TRIAL BALANCE A listing of all accounts with balances at the end of the accounting period after all transactions have journalized and posted To determine that debits = credits
208. Preparing the Trial Balance The purposes of the trial balance: To help check on accuracy of posting by proving whether the total debits equal the total credits To establish a convenient summary of balances in all accounts for the preparation of formal financial statements
209. Preparing the Trial Balance The trial balance is usually prepared with the balance sheet accounts first, followed by the income statement accounts. An example of a trial balance: Account (Rs) Number Account Title Debit Credit 100 Cash 3,50,000 3,50,000 130 Merchandise inventory 150,000 150,000 202 Note payable 100,000 100,000 300 Paid-in capital 400,000 400,000 500,000 500,000 ================== ===================
210. Locating Trial Balance Errors Note that a trial balance may balance even when errors were made in recording or posting. A transaction may be recorded as different amounts in two different accounts. A transaction may be recorded in a wrong account. In both situations, the total debits will still equal total credits on the trial balance. Dr. = Cr.
211. Correcting Errors Three Types of Errors Journal Entry Ledger Posting 1. incorrect not posted
212. Correcting Errors Three Types of Errors Journal Entry Ledger Posting 1. incorrect not posted 2. correct incorrectly posted
213. Correcting Errors Three Types of Errors Journal Entry Ledger Posting 1. incorrect not posted 2. correct incorrectly posted incorrect
214. Locating Trial Balance Errors What if it doesn’t balance ? Is the addition correct? Are all accounts listed? Are the balances listed correctly? DEBITS CREDITS
215. Locating Trial Balance Errors Divide the difference by two. Is there a debit/credit balance for this amount posted in the wrong column? Check journal postings. Review accounts for reasonableness. Computerized accounting programs usually prohibit out-of-balance entries.
216. Subsidiary Books Cash Accounts Payable Purchase Book Ledger All subsidiary books combined make up the ledger. Cash transactions liability accounts Credit purchases
218. Rendering of services on account SELLING Sales Book BUYING Special Journals recorded in
219. Rendering of services on account SELLING Sales Book Cash Book Receipt of cash from any source BUYING Special Journals recorded in recorded in
220. Rendering of services on account SELLING Sales Book Cash Book Purchases Book Receipt of cash from any source Purchase of items on account BUYING Special Journals recorded in recorded in recorded in
221. Special Journals Rendering of services or selling of product on account SELLING Sales Book Cash Book Purchases Book Cash Book Receipt of cash from any source Purchase of items on account Payment of cash for any purpose BUYING recorded in recorded in recorded in recorded in
222. 3/2 615 MyMusicClub.com 2,200 3/6 616 RapZone.com 1,750 3/18 617 Web Cantina 2,650 3/27 618 MyMusicClub.com 3,000 Totals 9,600 Sales Journal Invoice Date No. Particulars Details Amount Page 35 The Sales Journal All sales on credit are recorded in this journal. Each sales invoice is listed in numerical order. This journal is often referred to as an invoice register.
223. 3/3 Howard Supplies 600 3/7 Donnelly Supplies 420 3/19 Donnelly Supplies 1,450 3/27 Howard Supplies 960 Totals 3,430 Purchases Journal Page 11 The Purchases Journal All purchases on account are recorded in this journal. Date Particulars Details Amount
224. Cash journals Single column Cash Book = Simple cash Book Double column Cash Book = Cash Book with bank column Triple column Cash Book =Cash Book with Bank & Discount Column Petty Cash Book = Record small cash payouts
225. The Financial Statements The financial statements are a picture of the company in financial terms. Each financial statement relates to a specific date or covers a particular period.
226. Information Reported on the Financial Statements 1. How well did the company perform (or operate) during the period? Revenues – Direct Expenses Gross income (Gross loss) Trading Account Question Answer Financial Statement 1. How well did the company perform (or operate) during the period? Gross Profit – Indirect Expenses Net income (Net loss) Profit and Loss Account
227. Information Reported on the Financial Statements 3. What is the company’s financial position at the end of the period? Assets = Liabilities + Owners’ equity Balance sheet Question Answer Financial Statement 4. How much cash did the company generate and spend during the period? Operating cash flows ± Investing cash flows ± Financing cash flows Increase or decrease in cash Statement of cash flows
228. Income Statement The income statement, reports the company’s revenues, expenses, and net income or net loss for the period.
229. Introduction to the Income Statement The income statement is a financial tool that provides information about a company’s past performance .
231. Income Statement Format Sales revenues – Cost of goods sold Gross profit Operating income Selling and administrative expenses – = Add: Other revenues and gains Less: Other expenses and losses
232. Income Statement Revenue - the proceeds that come from sales to customers Cost of Goods Sold - an expense that reflects the cost of the product or good that generates revenue. . Gross Margin - also called gross profit, this is revenue minus COGS Operating Expenses - any expense that doesn't fit under COGS such as administration and marketing expenses. Net Income before Interest and Tax - net income before taking interest and income tax expenses into account. Interest Expense - the payments made on the company's outstanding debt. Income Tax Expense - the amount payable to government. Net Income - the final profit after deducting all expenses from revenue.
233. The Income Statement can be divided into: Trading Account Profit and Loss Account
234. The Accounting Terms Revenues are inflows or other enhancements of assets to an entity. Revenues They result from delivering or producing goods, rendering services, or other activities that constitute the entity’s major or central operations.
235. The Accounting Terms Expenses are outflows or other using up of assets. Expenses They result from delivering or producing goods, rendering services, or other activities that constitute the entity’s major or central operations.
236. The Accounting Terms Gross profit (gross margin) - excess of sales revenue over the cost of inventory that was sold Operating expenses - a group of recurring expenses that pertain to a firm’s routine operations Operating income (operating profit) - gross profit less all operating expenses Other revenues and expenses - items not directly related to the main operations of a firm
237. The Accounting Terms Net income - the remainder after all expenses (including income taxes) have been deducted from revenue Often seen as the “bottom line” Net loss - the excess of expenses over revenues
238. The Income Statement DANIELS COMPANY Income Statement for the Year Ended June 30, 2002 Sales Rs98,600 Expenses: Wages expense Rs45,800 Rent expense 12,000 Carriage 6,500 Depreciation expense 5,000 Total expenses 69,300 Net Income Rs29,300 ==============
239. Proforma for the Trading Account for the year ending on 31.12.2005
240. Sales Less: Returns Closing stock Goods Lost by fire (Gross Loss c/d) Opening stock Purchases Less:- Returns :-Drawings Direct Expenses:- Carriage inward Wages Fuel & Power Manf. Expenses Coal, water & gas Foreman/Works Manager’s salary Royalty on manf. Goods Gross profit c/d(bal) Amount Particulars Amount Particulars
241. Proforma for the Profit and Loss Account for the year ending on 31.12.2005
242. Profit and Loss Account for the period ending on -----Debit Credit Gross Profit b/d Interest Received Discount Received Comm. Received Net Loss c/d Gross loss b/d Selling & Dist Exp :- Advertisement Traveller’s Salary, exp. & commission Bad Debts Administration Expenses Rent, Rates & Taxes Office salaries Printing & Stationary Net Profit c/d (bal) Amount Particulars Amount Particulars
243. Introduction to the Balance Sheet The balance sheet is the financial tool that focuses on the present condition of a business.
244. The Balance Sheet The Balance sheet shows the financial position of a company at a particular point in time. The balance sheet is also referred to as the statement of financial position or the statement of financial condition. The left side lists assets – the right side lists liabilities and owners’ equity
245. The Accounting Elements Probable future economic benefits obtained or controlled by a particular entity as a result of past transactions events. Assets
246. The Accounting Elements Probable future sacrifices of economic benefits arising from present obligations of a particular entity to transfer assets or provide services to other entities in the future as a result of past transactions or events. Liabilities
247. The Accounting Elements The residual interest in the assets of an entity that remains after deducting its liabilities. Equity Investment by owners Earned equity
248. Formats of Balance Sheets Balance sheet formats: Report format - a classified balance sheet with assets at the top and liabilities and equity below Account format - a classified balance sheet with assets at the left and liabilities and equity at the right Regardless of format, balance sheets always contain the same basic information.
249. Balance Sheet Transactions The balance sheet is affected by every transaction that an entity encounters. Each transaction has counterbalancing entries that keep total assets equal to total liabilities and owners’ equity.
250. BALANCE SHEET RESOURCES AVAILABLE FOR USE BY THE FIRM (ENTITY) ASSETS - PROBABLE FUTURE ECONOMIC BENEFITS HOW RESOURCES ARE FINANCED LIABILITIES - DEBT OWED TO OTHERS OWNERS’ EQUITY - INVESTMENT BY OWNERS DIRECT INDIRECT
251. The Balance Sheet STEVENS COMPANY Balance Sheet as on June 30, 2005 Liabilities Assets Owner’s Equity Hamilton, capital Reserves Secured Loans Unsecured Loans Current liabilities: Wages payable Tax payable Bills Payable Bank balance Cash balance Fixed Assets: Land Plant Equipment Total Fixed Asset Current assets: Bills Receivable
252. PROFORMA BALANCE SHEET LIABILITIES ASSETS SHARE CAPITAL Authorised Issued Subscribed Less:- Calls unpaid Add:- Forfeited shares RESERVES AND SURPLUS SECURED LOANS UNSECURED LOANS: CURRENT LIABILITIES AND PROVISIONS: A. CURRENT LIABILITIES: a) Acceptances. b) Sundry Creditors c) Subsidiary companies. d) Advance Payments e) Unclaimed dividends f) Other liabilities (if any) g) Interest accrued but not due on loans. B. PROVISIONS a) Provision for taxation. b) Proposed dividends. c) For contingencies. FIXED ASSETS a) Land , b) Buildings, c) Goodwill, d) Plant and Machinery e) Furniture and fittings f) Patents, trade marks and designs. INVESTMENTS: a) Investments in Government or Trust Securities, in shares, debentures or bonds, b) Immovable Properties. CURRENT ASSETS, LOANS AND ADVANCES: (A) Current Assets: a) Interest accrued on Investments. b) Stores and Spare Parts,c) Loose Tools d) Stock in trade, e) Works in progress. f) Sundry Debtors, g) Cash balance on hand h) Bank balances (B) LOANS AND ADVANCES: a) Advances and loans to subsidiaries. b) Bills of Exchange. c) Advances recoverable in cash or in kind MISCELLANEOUS EXPENDITURE: a) Preliminary expenses. b) Expenses including commission or brokerage on underwriting or subscription of shares or debentures. c) Discount allowed on the issue of shares or debentures.
253. The Balance Sheet Elements of the balance sheet: Assets - resources of the firm that are expected to increase or cause future cash flows (everything the firm owns) Liabilities - obligations of the firm to outsiders or claims against its assets by outsiders (debts of the firm) Owners’ Equity - the residual interest in, or remaining claims against, the firm’s assets after deducting liabilities (rights of the owners)
254. Classifying Assets and Liabilities Current assets Long-term assets Current liabilities Long-term liabilities
259. Summary Original evidence records Accounting records Financial Statements Source documents Journals Ledger Trial Balance Statement of cash flows Balance Sheet Profit and Loss Statement Closing Entries