sundar Shrestha Deputy Director Of Studies NAsc Accounting sundar Shrestha Deputy Director Of Studies NAsc

Accounting Session Outline Concept Importance Branches of Accounting Accounting Information System Accounting system in the context of Nepal Practical Problem (Cash Vs Accrual accounting Basis)

Concept Accounting is a systematic process of identifying, recording, measuring, classifying, verifying, summarizing, interpreting and communicating financial information. It discloses profit or loss/surplus or deficit for a given period, and value and nature of a firm’s assets, liabilities and owner’s equity.

Importance of Accounting When transactions should be recognized in financial statements. How assets and liabilities should be measured. How financial statements should be presented for clear and effective communication. The accounting by an entity in its financial statements for interests in other entities.

Branches of Accounting Financial Accounting: Financial Accounting involves recording and classifying any transactions, and preparing and presenting financial statements to be used by internal and external users, the management. Management Accounting: Management accounting focuses on providing information for use by internal users. Cost Accounting: Sometimes considered accountings a subset of Management accounting, cost accounting refers to the recording, and analysis of cost.

Accounting Information System Input - Process - Output

Accounting Information System Input - Transactions or Events Process - Principles , Procedures and basis of accounting Output - Financial Statement

Process Principles Concept of Dual aspect : Each transaction has two aspects Money measurement concept: Only those transactions are recorded which can be expressed in monetary units such as rupee ,dollar and so on. Matching concept: Cost or expenses of a particular period are matched or compared with the revenue of that period in order to calculate profit or loss.

Process Principles Going concern concept: Business continuous to exist forever. Realization concept: Revenue is recorded at time when goods are sold or service is rendered. Business entity concept: Business is treated as a separate unit from the owner of a business Cost concept: Transactions are recorded at cost price. Accounting Period: The entire life of business is divided into different period(Generally one year) to know the result of business operation

Procedures Transactions Recording Classification Summarizing Interpretation and Evaluation Communication

Basis of accounting Cash Basis Accounting Under the cash basis accounting, revenues and expenses are recognized as follows: Revenue : Revenue is recognized when cash is received. Expense : Expense is recognized when cash is paid.

Accrual Basis Accrual method recognizes income when it is earned and expenses when they are incurred Accrued Revenue Revenue is recognized before cash is received Accrued Expense Expense is recognized before cash is paid.

Hybrid Those methods that are neither strictly cash nor strictly accrual but combine elements of both

Output Financial Statement Income Statement Cash Flow Statement Balance Sheet Statement of Changes in Equity Notes, comprising a summary of significant accounting policies and other explanatory notes.

In the context of Nepal Ma le pa faram no -10 Anusuchi - 14 Ledgers Ma le pa faram no -5 Ma le pa faram no 15 ( Inactive-After TSA) Ma le pa faram no - 8 Ma le pa faram no -13 Ma le pa faram no -17