Scribd Logo
Upload

Welcome to Scribd!

  • 190 views

    Prof. (DR.) Paresh Shah: Fundamentals of Accounts and Finance Part I - Basics of Accounting

    Uploaded by

    Paresh Shah
    The document provides an overview of fundamentals of accounts and finance. It introduces accounting as the language of business that records economic events and transactions to provide feedback to management. Accounting involves systematically recording transactions through bookkeeping and preparing financial statements like income statements, balance sheets, and cash flow statements. It has several sub-fields and uses accrual or mercantile basis to record incomes when earned and expenses when incurred to provide an accurate view of profit and loss. Bookkeeping forms the base for accounting by recording transactions but does not produce financial statements.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd

    Prof. (DR.) Paresh Shah: Fundamentals of Accounts and Finance Part I - Basics of Accounting

    Uploaded by

    Paresh Shah
    190 views18 pages
    The document provides an overview of fundamentals of accounts and finance. It introduces accounting as the language of business that records economic events and transactions to provide feedback to management. Accounting involves systematically recording transactions through bookkeeping and preparing financial statements like income statements, balance sheets, and cash flow statements. It has several sub-fields and uses accrual or mercantile basis to record incomes when earned and expenses when incurred to provide an accurate view of profit and loss. Bookkeeping forms the base for accounting by recording transactions but does not produce financial statements.

    Original Title

    5_6323134287205892982

    Copyright

    © © All Rights Reserved

    Available Formats

    PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    The document provides an overview of fundamentals of accounts and finance. It introduces accounting as the language of business that records economic events and transactions to provide feedback to management. Accounting involves systematically recording transactions through bookkeeping and preparing financial statements like income statements, balance sheets, and cash flow statements. It has several sub-fields and uses accrual or mercantile basis to record incomes when earned and expenses when incurred to provide an accurate view of profit and loss. Bookkeeping forms the base for accounting by recording transactions but does not produce financial statements.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    190 views18 pages

    Prof. (DR.) Paresh Shah: Fundamentals of Accounts and Finance Part I - Basics of Accounting

    Uploaded by

    Paresh Shah
    The document provides an overview of fundamentals of accounts and finance. It introduces accounting as the language of business that records economic events and transactions to provide feedback to management. Accounting involves systematically recording transactions through bookkeeping and preparing financial statements like income statements, balance sheets, and cash flow statements. It has several sub-fields and uses accrual or mercantile basis to record incomes when earned and expenses when incurred to provide an accurate view of profit and loss. Bookkeeping forms the base for accounting by recording transactions but does not produce financial statements.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 18

    Fundamentals of Accounts and Finance Part I – Basics of

    Accounting

    Instructor

    Prof. (Dr.) Paresh Shah


    FCMA., Ph.D., D.Ed., D.D.M., D.Ed. Psy.
    Alumnus of Indian Institute of Management,
    Ahmedabad, (India); Institute of Cost
    Accountants of India; University of London, UK;
    University of Illinois, US; Darden School of
    Business, University of Virginia, US; IESE
    Business School, University of Navarra, Spain;
    University of New South Wales, Sydney,
    Australia; and Alison Education, US.
    Cell no. 9824358505
    Book Keeping, Accounting, and Accountancy
    Accountancy

    Accounting

    Book-
    keeping

    Prof. (Dr.) Paresh Shah’s FENIL INSTITUTE 2


    Accountancy
    • Acts as a language of finance
    • Economic events
    • Monetary transactions
    • Provides feedback to management
    • Financial results
    • Status
    • recordation

    Prof. (Dr.) Paresh Shah’s FENIL INSTITUTE 3


    Introduction to Accounting
    Business Earnings of
    Activities Profits

    Business
    Maximise the
    cannot run in
    wealth
    isolatiion

    People
    coming
    together for
    common
    purpose

    Prof. (Dr.) Paresh Shah’s FENIL INSTITUTE 4


    Rules of Business: Accounting -
    Language of Business

    Resources –
    Management Principles of Principles of Statutory
    Limited and
    of Resources Trade Social Values Framework
    Multiple Use

    Prof. (Dr.) Paresh Shah’s FENIL INSTITUTE 5


    Accounting?

    Art of Significant Terms of Transactions Financial


    Classifying Summarising
    Recording manner money and events character

    Prof. (Dr.) Paresh Shah’s FENIL INSTITUTE 6


    Objectives of Accounting
    Information to decision maker for Decision-making : To Various Users

    Systematic recording of Transactions : Book-keeping: Journal, Ledger and Trial Balance

    Ascertainment of Results : Manufacturing, Trading and Profit and Loss Account

    Ascertainment of Financial Position : Balance Sheet

    Know the Solvency Position : Cash Flow Statement

    Prof. (Dr.) Paresh Shah’s FENIL INSTITUTE 7


    Functions of Accounting

    Prof. (Dr.) Paresh Shah’s FENIL INSTITUTE 8


    Accounting
    • Process concerned with summarizing
    • Language of business
    • Financial statements prepared in this process
    • Supporting for managerial decisions
    • Have several sub-fields
    • Financial position is ascertained

    Prof. (Dr.) Paresh Shah’s FENIL INSTITUTE 9


    Book-keeping
    Recording of financial data
    Manner
    Business
    Operations : Base End Product
    Significantly and
    for accounting Orderly Financial
    Statements : Do not
    form part of this
    process

    Prof. (Dr.) Paresh Shah’s FENIL INSTITUTE 10


    Financial statements
    Income statements
    Manufacturing account
    Trading Account
    Profit and Loss Account

    Balance Sheet

    Cash Flow Statements


    Prof. (Dr.) Paresh Shah’s FENIL INSTITUTE 11
    Objectives of Book-keeping
    • Complete recording of Transactions
    • Ascertainment of Financial Effect on firm
    • Process with recording of financial transactions
    • Base for accounting
    • No sub-field of book-keeping
    • Financial statements do not form part of book-keeping

    Prof. (Dr.) Paresh Shah’s FENIL INSTITUTE 12


    Sub-fields of Accounting

    13
    Prof. (Dr.) Paresh Shah’s FENIL INSTITUTE
    Basis of Accounting

    Accounting

    Accrual Hybrid
    Cash Basis
    Basis Basis
    Prof. (Dr.) Paresh Shah’s FENIL INSTITUTE 14
    Cash Basis of Accounting
    • All incomes considered as earned – when actually received in cash
    • All expenses considered as incurred – when actually paid in cash
    • Profit = Cash income greater than Cash expenses
    • Loss = Cash income lesser than Cash expenses
    • Practical applications – by individuals like Doctors, Lawyers,
    Auditors, Professional people, and some small traders

    Prof. (Dr.) Paresh Shah’s FENIL INSTITUTE 15


    Accrual or Mercantile Basis of
    Accounting
    • All incomes considered as earned – when actually earned
    irrespective whether received in cash or not
    • All expenses considered as incurred – when actually occurred
    irrespective whether paid in cash or not
    • Profit = Total Income earned greater than Total Expenses occurred
    • Loss = Total Income earned lesser than Total Expenses occurred

    Prof. (Dr.) Paresh Shah’s FENIL INSTITUTE 16


    Accrual or Mercantile Basis of
    Accounting
    • Practical applications – Followed everywhere – Generally accepted
    accounting convention in business accounting
    • Represent True and Fair View of the State of Affairs.

    Prof. (Dr.) Paresh Shah’s FENIL INSTITUTE 17


    Hybrid or Mixed Basis of Accounting
    • Revenue accounted for on Cash Basis
    • Expenses accounted for on Accrual Basis
    • Not widely used
    • Failed to measure accurate income

    Prof. (Dr.) Paresh Shah’s FENIL INSTITUTE 18

    You might also like