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    Scan 13-Aug-2017

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    Anirudh Prabhu
    This document discusses the key concepts and processes of financial accounting. It outlines the functions of financial accounting as maintaining accounting records, calculating results, and communicating results to users. It then describes the need for financial accounting as achieving the aims of record keeping, calculating profits/losses, and informing both internal and external users of a company's performance. Finally, it outlines the main steps in the accounting process as identifying transactions, recording transactions, posting to ledgers, preparing trial balances, adjusting entries, final accounts, and communicating information.

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    Scan 13-Aug-2017

    Uploaded by

    Anirudh Prabhu
    101 views7 pages
    This document discusses the key concepts and processes of financial accounting. It outlines the functions of financial accounting as maintaining accounting records, calculating results, and communicating results to users. It then describes the need for financial accounting as achieving the aims of record keeping, calculating profits/losses, and informing both internal and external users of a company's performance. Finally, it outlines the main steps in the accounting process as identifying transactions, recording transactions, posting to ledgers, preparing trial balances, adjusting entries, final accounts, and communicating information.

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    Financial Accounting notes from welingkar

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    Scan 13-Aug-2017 (2)

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    This document discusses the key concepts and processes of financial accounting. It outlines the functions of financial accounting as maintaining accounting records, calculating results, and communicating results to users. It then describes the need for financial accounting as achieving the aims of record keeping, calculating profits/losses, and informing both internal and external users of a company's performance. Finally, it outlines the main steps in the accounting process as identifying transactions, recording transactions, posting to ledgers, preparing trial balances, adjusting entries, final accounts, and communicating information.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    101 views7 pages

    Scan 13-Aug-2017

    Uploaded by

    Anirudh Prabhu
    This document discusses the key concepts and processes of financial accounting. It outlines the functions of financial accounting as maintaining accounting records, calculating results, and communicating results to users. It then describes the need for financial accounting as achieving the aims of record keeping, calculating profits/losses, and informing both internal and external users of a company's performance. Finally, it outlines the main steps in the accounting process as identifying transactions, recording transactions, posting to ledgers, preparing trial balances, adjusting entries, final accounts, and communicating information.

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    of 7

    @

    Note COl'npiled by M.B. Tltakoor


    FINANCI L CCOUNTING

    1. Functions of Financial Accounting


    2. Need for Financial Accounting
    3. Concepts & Convention
    4. Classification of Expenditure & Receipt
    5. Depreciation - Need for Depreciation
    6. Process of Preparation of Financial Statement
    7. Golden Rules of Accounting

    COST ACCOUNTING
    1. Need for Cost Accounting
    2. Classification of Cost
    3. Cost Centre
    4. Cost Unit
    5. Introduction to Methods of Costing - Cost Sheet
    6. Introduction to echniques of Costing
    Notes Compiled by M.B. Tltakoor
    NEED FOR FINANCIAL ACCOUNTING

    The need for financial accounting arises because if achieves certain Aims or
    objectives.

    (]) Maintaining of Accounting Records


    Now a days the volume of transactions are so large that human
    memory cannot remember them. Hence the need arises to keep a systematic
    record of all financial transactions & of all assets & all liabilities.

    (2) alculation of Results


    The main purpose of doing any business is to earn more & more
    profits. Once the records arc maintained of the business then it is easy to
    calculate the profit or loss & the financial position of the business. The profit
    & loss statement & financial position statement measures the performance of
    the business.

    (3) om municati ng the res ult to be uscn


    The U!><:rs arc (I) Internal Users, (2) External Usen. l"he Internal u~cr-.
    un: basi'-ally ·r OP Level Management who require, information for
    planning. 'Il1c information is provided in lht! fonn of report~
    I·xtemal u~r arc (I) Creditor, (2) Government, (3) lnve~tor~ who ar~
    interested m the solvenc) & profitability of the busin~i.

    .,
    Notes Compiled by Af.B. Thakoor
    The users can be sunm1arized as under:-

    Users Their Needs


    1 Short tem1 creditors Whether the amount owing to them will
    be paid within due time or not
    2 Long tenn creditors Information to decide whether their
    principal & interest will be paid when
    due or not
    3 Present I Existing investors To judge the prospects for their
    investment and to decide whether they
    should purchase or sell the shares
    4 Potential investors To judge the prospects of enterprises &
    decide whether they should purchase the
    shares of the company or not
    5 Employees Information bout the stability &
    profitability of the employees and to
    assess the ability to pay salary,
    retirement benefits and providing
    employment opportunities
    6 Management To review the short term solvency, long
    term solvency, profitability & to decide
    course of action like expansion,
    diversification
    7 Tax Authorities Information to assess the tax liabilities
    of any enterprise
    8 Government Interested to regulate the activities of
    enterprise, deciding taxation policies as
    base for National Income
    9 Customer Information about continuation of an
    enterprise
    10 Public Substantial contribution to be local
    economy

    3
    Notes Conipihd by M.B. Thal.oor
    PROCE OF PREPARATIO OF
    Fl ClAL T TEMENT
    OR
    CCOUNTING PROCE

    ... TEP-I
    IDENTIFICATIO OF
    TRAN ACTIO

    • TEP-II
    PREPARATIO OF BU I ES DOCUMENTS
    I.E. VOUCHER . CA H MEMO . BILL

    . TF:P-11I
    RECORDING OF TR.Ai ACTIO
    IN JOURNAL

    .. TEP-1\'
    PO Tl 1G LEDGER PO TlNG

    TEP-V

    PREPARATION OF TRIAL BALA CE (UNADJUSTED TRIAL BALANCE)

    i
    TEP-V I

    PA ING OF ADJUSTING ENTRIES

    TEP-Vil
    PREPARATION OF ADJU TED TRIAL BALANCE

    PREPARATION OF FINAL A/C'


    i.e. Profit & Loss Ale. & Balance heel

    4
    'ote Compil •d by M.B. Thakoor

    AC O TA CY

    I
    i l l i
    Bok ccounting Auditing Consultancy
    .
    eep1ng Services

    Tran a tion Journal Ledger Trial Final


    Balance Accounts
    ot ompil d by M. B. Thakoor

    I I

    inancial Ace unting is the pro ess of Identifying, ea urmg ifying1


    ec rding and mmunicating the economic inform tion to the u rs wh
    n d i for deci i n m king.

    (1

    2 RI

    7)

    6
    Notes Compiled by 1'1.B. Tl,akoor

    ACCOUNTING COVERS THE FOLLOWING ACTIVITIES:


    + + + + + + + +
    rIdentifying I!Measuring I[Recording I Classifying [s ummarising l~nalysing l l1nterpretingl ....
    lc_o_m_m_u_n_ic-a-tin- g-,]

    ( 1) Identifying the Transaction: A transactions is an exchange in which


    each participant receives or sacrifices value, while an event is happening of
    consequences of an entity (economic unit like TISCO, TATA, Reliance etc.)
    (2) Measuring: Accounting measures the transactions in terms of a
    common measurement unit like Rupee, Dollar, Pound etc.
    (3) Recording: It is concerned with the recording of financial transaction
    in an orderly manner in the proper books of accounts.
    (4) Classifying: It is related by maintaining the ledger in which different
    accounts are opened to which related transactions are posted at appropriate
    accounts. For example, all sales are written in one account known as sales
    account.
    (5) Summarising: It is related with the summarization of the classified
    transactions in a specified manner. lt involves the preparation of various
    types of statements such as income statement, statement of Cash Flow and
    Balance Sheets etc.
    (6) Analysing: It is related with the establishment of relationship between
    the various items taken from Income Statement or Balance Sheet. The main
    purpose is to identify the financial strength or weakness of the organisation.
    (7) Interpreting: It is concerned with explaining the meaning of the
    relationship between various items. The accountant has to concentrate on the
    interpretation aspects of accounting. The accountant has to explain why it
    happened and what is likely to happen under given conditions.
    (8) Communicating: It 1s concerned with the transmission of
    summarized, analysed and interpreted information to make suitable
    decisions.
    Thus accounting 1s an information system, which communicates the
    accounting information to the users for taking suitable decisions.

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