FINANCIAL ACCOUNTING AND ANALYSIS PRINCIPLES OF ACCOUNTING

ACCOUNTING The art of recording, classifying and summarizing in a Significant manner in terms of money transactions and events which in part, at least of a financial character and interpreting the results thereof ---by AICPA

OBJECTIVES To ascertain whether the business operations have been profitable or not To ascertain the financial position of the business To generate information

FUNCTIONS Systematic record of business transactions Protecting the property of business Communicating results to interested parties Compliance with legal requirements

USERS Owners Creditors Investors Employees Government Public Research scholar Managers

Financial accounting Cost accounting Management accounting DIFFERENT BRANCHES Financial accounting Cost accounting Management accounting

CLASSIFICATION ACCOUNTS IMPERSONAL PERSONAL

PERSONAL ACCOUNTS Name of a person Name of institution Representative accounts RULE ---DEBIT THR RECIEVER , CREDIT THE GIVER

IMPERSONAL ACCOUNTS REAL NOMINAL IMPERSONAL

REAL ACCOUNTS RULE--- DEBIT WHAT COMES IN, CREDIT WHAT GOES OUT REAL TANGIBLE INTANGIBLE RULE--- DEBIT WHAT COMES IN, CREDIT WHAT GOES OUT

NOMINAL All the accounts which deals with expenses, incomes Profit and losses RULE--- DEBIT ALL EXPENSES AND LOSSES, CREDIT ALL INCOMES AND GAINS

ANALYSIS OF TRANSACTIONS Which are the two accounts involved in transaction to be recorded Whether the accounts are personal, real or nominal What rules of debit and credit are applicable Which accounts should be debited or credited

BASIC TERMS Debtor –Creditor, Incomes –Expenses, Profit –loss, Goods, Capital, Equity, Expenditure, Drawings, Assets –liabilities, Voucher, Net worth, Turnover

ACCOUNTING EQUATION LIABILITIES EQUITY ASSETS

RULES OF ACCOUNTING EQUATION If assets, expenses increase—debit, decrease—credit If liabilities, equity, incomes or profit increase—credit, decrease—debit

ADVANTAGES OF DOUBLE ENTRY SYSTEM Complete record of transactions Accurate information Arithmetical accuracy Ascertain profit or loss Preventing frauds and errors Financial position

ACCOUNTING CYCLE ACCOUNTING PROCESS JOURNAL LEDGER TRAIL BALENCE FINAL ACCOUNTS

BASIC ACCOUNTING CONCEPTS BUSINESS ENTITY MONEY MEASUREMENT GOING CONCERN ACCOUNTING PERIOD COST CONCEPT DUALITY ASPECT REALISATION ACCRUAL MATCHING

JOURNAL A daily record of business transactions For this we enter in 5 coloumns 1 –date : to record on date wise 2 –particulars : regarding the transaction In 1st sentence ends with dr, 2nd starts with cr 3 –l.f :ledger folio number :in which ledger the transaction entered 4 –debit amount 5 –credit amount

LEDGER All the individual accounts are to be prepared This is to be prepared for the month This is a T –shaped format On the left side of T all the debits are posted On the right side of T all the credits are posted

THANK YOU -----BY ROHIT KUMAR