Accounting

Introduction  What is Accounting?  What is the need for maintaining books of account?  Compulsory maintenance of books of account u/s.44AA of the Income tax Act, 1961  Compulsory audit u/s.44AB of the Income Tax act, 1961

Statutory Requirements  Sales tax registration- basic minimum limit – VAT – what it is?-TNGST and CST  Central Excise registration  GST (GOODS AND SERVICE TAX) RANGING FROM 14% TO 16% IS THE TARGET OF THE GOVERNMENT – TO BE ACHIEVED IN THE YEAR 2010  Service Tax Registration  Fringe Benefit tax- Need for maintaining books for Firms, Companies etc.,

Informal Books  If books of accounts are not maintained, what are the Consequences?  Types of Books of Account Informal and Formal Books  Informal Books- Chitta-Usefulness-Diary format is sufficient

Formal Books  Books of Account -Usually prepared for a “Uniform Accounting Year” Daybook Ledger- General Ledger and Subsidiary Books/Ledgers  Ex: for Subsidiary Books-Petty cash Register- Sales Register-Purchase Register-Expenses Register, in construction areas-M-book, etc.,

End Product  What is the end product of the Books of account?  Manufacturing Account  Trading Account  Profit and loss Account  Balance Sheet

Manufacturing Account  Manufacturing Account for the year ended_  Direct Materials Consumed Transfer to -Opening stock of materials Trading account -Add Purchases & Related Expenses (Freight + unloading wages) -Less Closing Stock Direct Wages Prime cost Add: Manufacturing Overhead Add: Opening WIP Less: Closing WIP Works cost Cost of Production _____________________ ===================

 Manufacturing Account for the year ended_  Direct Materials Consumed -Opening stock of materials -Add Purchases & Related Expenses (Freight + unloading wages) -Less Closing Stock  Direct Wages  Prime cost  Add: Manufacturing Overhead  Add: Opening WIP  Less: Closing WIP  Cost of Production

Trading Account  Trading Account for the year ended  Opening stockSales  Cost of Production Closing stock (For Manufacturers) or Purchases(For traders)  Gross Profit  _________ ___________  ========= ========== 

Profit and Loss Account  Profit and Loss Account for the year ended   Salaries and BonusGross Profit  RentCommission  TravelingOther Incomes  Postage  Printing and Stationery  Telephone Expenses  Bad debts (Limitation Act)  Conveyance  Vehicle maintenance  Interest on Bank Loan  Discount  Commission & Brokerage  Depreciation  Bank charges  Insurance premium(Gen.Insurance only)  All other expenses (except personal expenses and capital expenses)  Net profit  _____________________   ===================

Balance Sheet Balance sheet as at Liabilities  Opening Capital  Add: Net Profit  Less: Drawings Closing Capital  Loan from Financial Institutions  Current Liabilities __________ ========= Assets  Current Assets  Fixed Assets (At Book value-as reduced by Depreciation) _______ ======

Other Points  Project report preparation – A Write up containing Financial Feasibility Market Feasibility Administrative feasibility

Financial Feasibility  Preparation of Annual Income Statement  Preparation of Projected Cash Flow Statements  Preparation of Projected Fund Flow Statement  Projected Balance sheets  Assumptions made in the computation of the projections

Budgeting –An Introduction  Union Budget  State Budget  Householder’s Budget  Taking leave temporarily