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Accounting Assignment Formatted

The document outlines the scope and functions of accounting in modern business, detailing areas such as financial, cost, and management accounting. It discusses the advantages and limitations of accounting, emphasizing its usefulness for decision-making while acknowledging its imperfections. Additionally, it covers business transactions, account classifications, and the golden rules of accounting with examples.

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4 views3 pages

Accounting Assignment Formatted

The document outlines the scope and functions of accounting in modern business, detailing areas such as financial, cost, and management accounting. It discusses the advantages and limitations of accounting, emphasizing its usefulness for decision-making while acknowledging its imperfections. Additionally, it covers business transactions, account classifications, and the golden rules of accounting with examples.

Uploaded by

badboy893637
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Accounting Theory Assignment

Table of Contents

1. Scope and Functions of Accounting in Modern Business

2. Areas of Accounting with Examples

3. Difference Between Financial, Cost, and Management Accounting

4. Advantages of Accounting

5. Limitations of Accounting

6. 'Accounting is useful, but not perfect.' Justification

7. Business Transaction and Examples

8. Classification of Accounts and Rules of Debit and Credit

9. Golden Rules of Accounting with Examples

1. Scope and Functions of Accounting in Modern Business

Scope includes financial accounting, cost accounting, management accounting, and auditing.

Functions:

- Recording transactions

- Classifying and summarizing data

- Preparing financial statements

- Budgeting and forecasting

- Assisting in decision-making and internal control

2. Areas of Accounting with Examples

- Financial Accounting: E.g., Preparing Balance Sheet

- Cost Accounting: E.g., Cost per unit analysis

- Management Accounting: E.g., Budget reports

- Tax Accounting: E.g., Filing income tax

- Auditing: E.g., External statutory audit

3. Difference Between Financial, Cost, and Management Accounting

- Financial Accounting: For external reporting based on historical data

- Cost Accounting: For tracking and controlling product costs


Accounting Theory Assignment

- Management Accounting: For internal planning and decision-making

4. Advantages of Accounting

1. Assists in decision-making

2. Provides financial data to stakeholders

3. Ensures tax and legal compliance

4. Helps measure business performance

5. Useful for future planning

5. Limitations of Accounting

- Ignores non-monetary aspects

- Based on estimates and historical data

- Does not account for inflation

- Subjective judgments may vary

6. 'Accounting is useful, but not perfect.' Justification

Accounting is useful for decision-making and record-keeping, but imperfect due to:

- Historical focus

- Exclusion of qualitative aspects

- Estimates and assumptions

7. Business Transaction and Examples

A business transaction is a measurable financial activity.

Examples:

1. Sale of goods

2. Purchase of inventory

3. Payment of salary

4. Loan taken from a bank

5. Rent received
Accounting Theory Assignment

8. Classification of Accounts and Rules of Debit and Credit

- Personal Account: Debit the receiver, Credit the giver

- Real Account: Debit what comes in, Credit what goes out

- Nominal Account: Debit expenses/losses, Credit incomes/gains

9. Golden Rules of Accounting with Examples

- Personal A/c: Debit the receiver, Credit the giver (e.g., Cash to Ram)

- Real A/c: Debit what comes in, Credit what goes out (e.g., Machinery bought)

- Nominal A/c: Debit expense, Credit income (e.g., Rent paid)

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