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Professor

This document provides an introduction to accounting. It explains that accounting is the language of business and acts as an information system by collecting, recording, and processing financial transactions and events and outputting statements like the profit and loss statement and balance sheet. The accounting cycle involves journalizing, posting transactions to ledgers, preparing a trial balance, and ultimately generating financial statements. Stakeholders like owners, investors, and government agencies are interested in the accounting information. The document outlines key accounting principles like consistency, full disclosure, conservatism, materiality, and concepts like the business entity assumption, going concern, money measurement, matching, and the dual aspect principle.

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Santanu Choudhury
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67 views30 pages

Professor

This document provides an introduction to accounting. It explains that accounting is the language of business and acts as an information system by collecting, recording, and processing financial transactions and events and outputting statements like the profit and loss statement and balance sheet. The accounting cycle involves journalizing, posting transactions to ledgers, preparing a trial balance, and ultimately generating financial statements. Stakeholders like owners, investors, and government agencies are interested in the accounting information. The document outlines key accounting principles like consistency, full disclosure, conservatism, materiality, and concepts like the business entity assumption, going concern, money measurement, matching, and the dual aspect principle.

Uploaded by

Santanu Choudhury
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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PROFESSOR

Why should I learn accounting ?

Why should I learn accounting ?

Why should I learn accounting ?

Why should I learn accounting ?

Why should I learn accounting ?

Why should I learn accounting ?

Why? What ? Who ?

Introduction to Accounting

Why Accounting?
Accounting is the Language of Business Accounting as an Information System

Introduction to Accounting

Accounting is the Language of Business

Introduction to Accounting

Accounting as an Information System

INPUT

CPU

OUTPUT

Introduction to Accounting

INPUT

Financial transactions and events (Raw Data) relating to an business entity for the accounting period, supplemented by documentary evidence

CPU

Data collected, recorded, classified, grouped, valued, tabulated, arranged, summarized

OUTPUT

Statement showing Profit/Loss Statement showing health/position of a business

What is Accounting?
According to AICPA, Accounting is -

an art of recording, classifying and summarizing in terms of money transactions and events of financial nature and interpreting results thereof

Introduction to Accounting

Accounting Cycle
Profit & Loss Account Balance Sheet (Closing)

Trading Account

Balance Sheet (Opening)

Transactions

Trial Balance Journalizing Ledger Posting

Stakeholders

Who are interested in Accounting Information?


Owners Suppliers Bankers Investors Employees Managers Government Consumers Research Scholars

Introduction to Accounting

Principles of Accounting
Conventions
Consistency Full Disclosure Conservatism Materiality

Concepts
Business Entity Going Concern Money Measurement Cost Matching Dual-Aspect

Introduction to Accounting

Consistency
Continuous observation and application of accounting rules and practices. Example Valuation of Stock Method of Charging Dep.

Full Disclosure
Accounting reports should disclose fully and fairly the information they purport to represent

Conservatism
Anticipate for no profit, but provide for all losses Example Valuation of Closing Stock Provision for bad and doubtful debts

Materiality
Whether something should be disclosed or not in the financial statements depends on the materiality, i.e. amount involved Example An expenditure of Rs.5 for the purchase of a waste bucket

Business Entity
A business unit is separate and distinct from the owner who supply capital to it Example Interest on capital and Interest on drawings

Going Concern
It is assumed that a business unit has a reasonable expectation of continuing business at a profit for an indefinite period of time Example Fixed assets Prepaid Expenses

Cost
Assets are recorded in the books of accounts at the acquisition cost, not at the market values or realizable values Example Change in price of machine

Money Measurement
Only those transactions and events which can be measured in terms of money are to be considered Example Conflict between Sales manager and production manager

Matching
Matching between recognized revenue and expired cost. Revenue is considered to be recognized from the date of delivery of goods even though payment may be received at some future date. Expired cost means costs related to the period, not all costs incurred during the period. Example Sales revenue Salary paid

Dual-Aspect
Every transaction has got two fold aspects, viz. yielding of a benefit and giving of that benefit

?
any question please...

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