Ledger Name Tally Head
Sale Return Sales
Sale Sales
Purchase Return Purchase
Purchase Purchase
Carriage Direct Expenses
Freight & Cartage Direct Expenses
Import duty Direct Expenses
Rent (Dr) Direct Expenses
Royalty Direct Expenses
Wages Direct Expenses
Role of Accountant: An accountant performs financial functions related to the collection,
accuracy, recording, analysis and presentation of a business, organization or company’s financial
operations. An accountant has several roles and responsibilities to meet in their job, both in terms
of their competence at carrying out accounting practices as well as their ethics and approach to
the job. In most cases, accountants use the financial records compiled by bookkeepers to prepare
financial statements and reports, and to perform financial analysis. An accountant is one who is
engaged in accounts keeping. In addition to playing this general role, different types of
accountants perform different, specialised roles.
Role of Accountant
The role of accountant may be summarized as under:
(i) Maintenance of Books of Accounts: The primary role of an accountant is to offer his
services for maintaining systematic records of financial transactions in order to ascertain the net
profit or loss for the accounting period and the financial position as on a particular date.
(ii) Statutory Audit: Every limited company is required to appoint a chartered accountant as an
auditor who is statutorily required to report each year whether the financial statements have been
prepared in accordance with the generally accepted accounting principles, accounting standards
and legal requirements and that they show a true and fair view of the financial position and profit
and loss.
(iii) Internal Audit: In addition to statutory audit, a big company employs its own staff to
conduct internal audit to ensure that the transactions are recorded, classified and summarized in
accordance with the established accounting procedures to ensure that instructions of the
management are being followed throughout the company.
(iv) Budgeting: Budgeting means the planning of business activities before they occur. On
completion of the actual activities for a given period, the planned activities are compared with
the actual activities to find out the variation, if any.
(v) Taxation: An accountant can handle the taxation matters of a business and can represent
before the tax authorities and settle the tax liability under the prevailing statute. He also assists in
reducing the tax burden by proper tax planning.
(vi) Investigation: Accountants are often called upon to carry out investigation to ascertain the
financial position of the business for the information of interested parties.
(vii) Management Advisory Service: An accountant is largely responsible for internal reporting
to the management for planning, controlling, decision-making on matters for long-term plans. He
provides management consultancy services in the areas of management information systems,
expenditure control and evaluation of appraisal techniques.
(viii) Other Activities: Accountants among many other duties perform duties of arbitrator
registrars for settling of disputes, liquidators, cost accountants, etc.
Depreciation Guidance Note – Some Important
Points
Action items
1. Companies need to determine the useful life of fixed assets as at the commencement of each
year for all the carrying assets as at that date and also for newly acquired assets during the course
of the year as and when capitalized,
2. Companies need to assess whether there have been any changes to the estimated pattern of
consumption/loss of value/wear and tear of assets during the year and in case of any such
changes, the useful life of the related asset needs to be re-estimated,
3. The interpretation of the term ‘Continuous Process Plants’ should be made with reference to
the inherent nature of the item of plant namely the technical design,
4. Where for an item of fixed asset, the useful life was estimated by the company on a single
shift basis, but in reality used for more than one shift, then not only the related depreciation
charge for the year should reflect the extra shifts used but the company should also determine at
the commencement of the next fiscal year, whether the extra usage in the prior year was on a
sporadic or non-sporadic basis. Where such an assessment concludes that the use would not be
sporadic, then the company needs to reassess the useful life of the asset. Otherwise, such re-
assessments are not required,
5. In applying the Unit of Production method for depreciation accounting, the limiting factor
that needs to be considered is the number of units that can be produced or serviced from the use
of the related asset. There also needs to be a periodic review of the same,
6. Those companies that used revaluation as a base for measurement of fixed assets and
followed an accounting policy of recouping the related additional depreciation from the income
statement would be permitted by Companies Act 2013 to recoup the additional depreciation only
from revenue reserves and such companies need to disclose this accounting change as a change
in accounting policy,
7. In order to implement component accounting for fixed assets, companies may use certain
criteria in an order i.e. a) vendor provided break-up costs, b) internal/external technical expertise,
c) fair value approach, or d) current replacement cost of the component of the related asset and
applying the same basis on the assets historic cost,
8. Every company may adopt an accounting policy of fully depreciating fixed assets in the year
of acquisition up to certain threshold limits by considering materiality aspects,
9. The use of different methods of accounting for depreciation for similar assets at different
geographical locations by a company is permitted only if the depreciation methods selected are
in compliance with the factors for depreciation prescribed by the related accounting standard AS
6
Conclusion
A number of action items emanate from the release of the Guidance Note (GN (A) 35) by the
ICAI. Companies and auditors would need to take these into consideration. At the same time,
one would need to take a fresh look at other components of costs of fixed assets that are not
specifically addressed in the latest guidance note namely, borrowing costs, foreign exchange
differences etc., as all the components would to an extent work in tandem from the accounting
standpoint. As companies gear for the upcoming changes to corporate financial reporting
framework (IND-AS), depreciation and carrying amount of fixed assets would come in for a
fresh re-look as one transitions for the first-time to Indian Accounting Standards (IND AS 101)
Depreciation
Book keeping ensures :
(1) whether all the transactions are recorded in systematic and accurate manner so as to show the
true financial position.
(2) Whether the affect of all the transactions on financial position is correctly recorded. and the
inputs required for accounting are kept ready in a timely manner.
Difference between Book Keeping & Accounting
Many people assume that there is no difference between book-keeping and accounting. But there
are many considerable differences between the two. They are as under :
S.no Book keeping Accounting
It mainly consist of the activities
Accounting focuses on summarising the results
1 that focus on recording the
of book keeping .
transactions
Book keeping is an indispensable Accounting is a language to communicate the
2
base of accounting financial position of business/activity
Book keeping helps to execute the Accounting provides the required information
process of accounting by for managerial decision making and helps the
3
providing the basic data required stakeholders to understand the business
for it. performance
Book keeping does not have any
4 Accounting contains many sub fields
sub fields in it
Book keeping does not require Accounting requires expert knowledge to deal
5
expert knowledge with
Some of the activities involved in Book keeping
are :
(1) Performing checks, reconciliations of various aspects of business like inventory , bank
reconciliations etc.,
(2) Performing the activities related to common business administration.
(3) Billing the transactions .
(4) Verifying and entering the data in invoices issued by suppliers.
(5) Payroll processing and looking after the statutory compliance related to social security
schemes like PF and ESI etc.,
(6) Calculation of depreciation and forwarding these details to accounting section.
(7) Filing of tax returns.
