The document discusses the principles and objectives of accounting, emphasizing its role as an information system for organizations. It outlines key activities involved in accounting such as identifying, measuring, and summarizing transactions, as well as the importance of maintaining accurate financial records. Additionally, it covers various accounting concepts, financial statements, and ratios used to assess a company's financial health.
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The document discusses the principles and objectives of accounting, emphasizing its role as an information system for organizations. It outlines key activities involved in accounting such as identifying, measuring, and summarizing transactions, as well as the importance of maintaining accurate financial records. Additionally, it covers various accounting concepts, financial statements, and ratios used to assess a company's financial health.
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF or read online on Scribd
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sz __Chaplen ae a ee i —flccuting F
Accounting, :
Accounting as om _infon mation Syslem is the
____Semomic _infomanation af em angemnization to ils asevs ah
necol the inden medion fon _cleaisian salting
_____Actinities _caveneol _tridlen\ “Accounting
Lclenntidying the Thansactions onc! — Events
Measuring the Tdlentified Tnansartons amd Events
Reconcing
cha silyjing
Summani: ing
+ Analysing
Tnienpaeting
ermuumicading
Meaning of Accountancy
Accounlancy aelns tn a Systeanotic Kmauiledge of
accounting Tb éyplain ‘why to alo’ mel "hau to ela” of vanious
aspects of accounting
f E
Beak. Keeping js a put af accounting crn “is
of accounting which is often. noutine cme! olerica) jn
v
node Tt Only caens he dollawiing foun. _a.ckivities = —__
1._Adentifying the _dnanSactions’ “ame! | events eee
ae wnt er: ———
i idewtitiec! ancl mecsumech. tmamSatdianie
2 fetrdeling tht
u._cJossifying tz esate nal gg
— ——— “objectives of — Accounting
“Ja_maindain acco: unting —mbcands
a e the ne bio
fr vl entain inan dia D n.
“To Commmunnicale the infananation. i dhe users.
Adkembages of Accounting
2 Facilitates ta Reploae Memon
2 Facilitates ty creer ith egal Reouinemen
2 Facilitates “to ascentoin — Aled Result df qoenadion
‘ Gales to. tae cial | Pasition
< cil the ision
2 ci a cgi Lach
e Assists the 2ncmagement
eo facilitats minal oven Assets
¢facibitaies the Seti bemnend of Te fabihl
2 a the ascentainment of vblue of Busin
o | fre as Jegal Sa oth -Conenally Ac el f Accounting “Rain oipllaunAyeaae )
__ denied ae experience and practice and when they prow
+ Aecoadling to the Aanevican dnstitule of contitied — Publy
2ccountants — A\ATe pA) the pyincipjes which have
substantial _authaniative uppam. \ heme G\ pant of th
generally accented occannting entarinles
1._Accaunting _cancenis
2 Accomnding Conventians
must be fallniaed eubile dneatiny —husinéss. anel Losi
cash flow, Statement
Motes and Scheclules yyr od
mnolamenta Accounting
2 Acennas
+_fieing concen,
> Consistency Non sedomnend LiAssels
Pnopenty Plan amd Ee uimnendt
i
ii ble asses.
fii j@opita! wank - in pmog ness
iv niangih a. noche) evclopmen
aL men investoncn!
mne, ax A
ym -_ten2n __oams amc! nce.
rhe men Comment \asse/s
cumen! asset:
Comment investment
enin nie
Tnade neceivahtes
Cash ond cash eguiidlenis
hon) tem loans ema sechiances
Othen Coen asset ample- 1 2 Coment the following Stasement of Pyotit a
Nic ompadiah: a Prot an S
BcR Co d
RS RS.
Ponticulons _ 2073-1 2o1y =
Revenue {nam dpmation 60,00,.00 00.
\cif) then incomes Sa. 000
di) _Fepense LU. 00 900
tiv Tmcome 4a BS y-
—___-Panticulans Ve
ba
J Hel
The follausing ane the Balemee sheels af q
| sha t. F
z Ranticulans A1=3-'1s_ 31.8- aay
Eid ond Liabilities.
4 hanehaldens” Funel.
a2 ‘Shane capital 20.00.0000 I5..c0. 0
°
4) 2
@ ca. 000 -G.ca.n00
~ bamowings
3. cumen) tiodibities
Tnacle _peiyerble: Rod 000 — 2.00.00)
Todel _3S\.00, 200 2F 00 000
Ii__Assed,
1.__Dien- coment assets
a) Fired asset
a mgthle assedsi e 2o1 Gai ood AS00000
= Iniaminle — osse ee
Cupneni assed:
= tmeninnies ae ice
= cath Vamsi eneeveaientiead Aca nan = T1_ Assed
1. Non = coment 2
els.
a) Fixed assels
=Tungib
| = Intangible asset
1b) commen} asses.
= _Tnveninnies
a. Sh a2. bh. ial a.
common ze Jement 2
___Common size Statement, also Known cs
_-penceniage Slalemen}, is a finemmoja| _nal__fo) Ste
the Key changes and _tvends
of a
od dpenationa ne
in the Stat financial po
Connery i
7
~
Example :-1 fom the fallawsing
Tncome Statement
24 infection
fon the _yean
Engpane a
endecl _Manch
Common SS 2 non Oo A op 200 £0
Pro GS.,000. 08,000
B ag 2S. th pant 4 a 0 2
r Depreciation pad) a: Opeyciti
Preeane Comrnan Balan hee
Paticulan Diote Alo.
T_fquity amel_Liahiléties é
1. Shan ehalden's fume ahh
a hey capital Is.00,000 A200, 0.
_b) Resenyes ancl sinplus. Siaaaoo 20:
Non= coment Lighibities.
J. Dbn- Cmnent. assets
Fixed assets
a)
82, $0,000 . 2) Fixed assets
= Tangible assed
Plant and onochineny
artes: —ot—Sales.— Slack oneal of 4 Mal. tubing Zao “as the
__base yean mel it
indenp net them,
Li Se Yemme Sales CRs, ) Stack (Rs.) Lnofi f
010 1,281 F049 Fal
011 2.20 o dea gs
Bie ly
R027 { Suu S24
3.268 dis ag
art 7- rm 7
Sale {| Bend
1221 Joa. £ 409. Jaq 322 Joo _
Jey 421 110 uas 236
26SS dud
021 261 uu 133 leu
Fnom_the following dada neluting to the assets of Ralumce sheet
pencent: rae oe
loo | J200 1zo
3-64 | qo 131-82 [asco | Jasco |
Pca a Rakas (Shon - tenm huerncy ) i
ability of a finan itn once} it
cae an idea about Campaany. a ilidy te
Jiabiliies with dad stash ushemerven dequ ined
1. Cument Rako 3 4
Tt Shows quhetén Comen/ assets ooo
the canneni _fiahifities a
uunent Radia — Cument Badin
cunpent Liahilities
2. Quick Ratio
Tt is Simian dos the Souiment palin dust iiguicl
asses bike inslen tomy ane mat nsiclenecl
eens ee ,
Quick babilities
3. CaSh Ratio 2
CoSh Dakin onl, inclucles \ Cash somnd cash ednivalents in
CR= 2:2 \the nemenadnds . Ae
(Ren Ale? 1:2 coment hiabilibiets | 1
4. Defensive dried Ratio 2 oe 3 . es Equily
RES env,
genth Sim lus
Gekd dnsily atin Total iabilition
Tota) Shane hololen
quid Od i a An ll equity Shane capilad eel
iii es Reseivesitae a
H “3.00,000 4+.2..00,c00—t— Beeoco - -
Faulty = Shonehololer’s tml = equily Shane + Suef
Resenyes conch np
4p
=_Fictisims assets
= Adluentisement
= unsalved clair
=—Discound Ssue of
2.4 Equity fabs 4 CPooprieteny Radia) vey
Ken} th. finn his malic Ca,
= tat —halls iby yoda ets OF
J Ratio 0 shane heJelen anh clongetenm foams) So
Cument Liabilities BWA, co
+ Asseds
—Fiixedl Assets 4..00,000
Cument Assets U..00..000
___Fictitions auets 1.00, 200
Shane haleon fumel 2 Won ana # 2,00 ann 3 1,20 000 ~ J .no.nen
= 6. 2G 1000 | erepnigémmy Ratio. Shaneho leben
: Tatal_asse
rr Oe
11.00.0090.
0.86. On Sai 2
ahien Radia Q
= U25 69
Copital Geaning Rabin
Capital “teeaning Rabin clividles the
Shanehaldens equity by the fixedl cost
Ammon Sdn ictitious assed
100.006
i: inten Becoming Secunidies = Pref. Share
= Qa. o +
= : pe Biesiiin (noo
=U 00. a
+ 120, 00%
Fails 4+ Resenveg — Fich Hou
= AL 0a, 01
asset
6 L Se
medi} es
Anlenage Deb ton
nediton dmaven Katia (Payable ynoven Rati
This Ratio indicates” np relationship bel weon
eb _cnedit Punchase Onl trade CneclitanS = Tt Shows th
Date 0 hic za equinedl + uy doo the tumor
2 Relics
—cnediten's Taynaven. Ratio — niet cnecfit Purchase
Allerage. Thade ~Paydh/eos
unking Capital Ratio 2.
This_natia indicates the ebliciency om inefficiency
nthe utilization af wonking capital in ezmieh sales
ankKing apital mmowven Radig =
pital Tuwnoven Ratio _:- i aoa a/b) 16 a lala
IS,090 + at cue
-1000 JB ,006
3.90) dunnaven
Ratio 1 Se, 000 rnploy eck
v
pnotitahs bby
derbility, I
U Befane tb
fe) Ta
Exnaing, atten tat
ERITT
—) Tolenest an clebt 3
ERT —
=) Ta 4a Govih
£aT —> Shanehalclné -
C2 pref viniclenel : — —
_ earning fon Cyuidy —
Example $= We
mes pliant 1)
isaac il ileal
LA
Po fs i La lit LL Net _pnatid a
iS the anaried —puicda obi! shares
OS —tmulti nie af fanning pedi Shee Cees)
ROL Com}, S
—Fanming pea_Shand, ~
hané
Paice = es RocE = £61T xX 100 E 5
| Capitol Employee! :
Relunn on _Tnue }anent
an__Redumn 00 Capital
wel
pot. Pnofit hofane tnsenes) ame Take Alaa.
Capital _employecl
ll ea ee 3, Ee:
where 2+ :
2alal fsseis ave the tla! beak “olue of all asses ]
on,
_Capilal, Ermaloyecl = Fitedl AsseHi Ct crmenk Agi < ) bor! EAT + Tax= EQT+ Int. = FBIT
Gp znieest
EBT
fee
Poe ee ey
