Financial Accounting Meaning Nature And Role Of Accounting-PDF Free Download

FINANCIAL ACCOUNTING MEANING NATURE AND ROLE OF ACCOUNTING
08 Nov 2019 | 164 views | 2 downloads | 662 Pages | 4.09 MB

Share Pdf : Financial Accounting Meaning Nature And Role Of Accounting

Download and Preview : Financial Accounting Meaning Nature And Role Of Accounting

Report CopyRight/DMCA Form For : Financial Accounting Meaning Nature And Role Of Accounting



Transcription

2
1 0 OBJECTIVE
After reading this lesson you should be able to
a Define accounting and trace the origin and growth of accounting
b Distinguish between book keeping and accounting
c Explain the nature and objectives of accounting
d Discuss the branches role and limitations of accounting
1 1 INTRODUCTION
Accounting has rightly been termed as the language of the business
The basic function of a language is to serve as a means of communication
Accounting also serves this function It communicates the results of business
operations to various parties who have some stake in the business viz the
proprietor creditors investors Government and other agencies Though
accounting is generally associated with business but it is not only business which
makes use of accounting Persons like housewives Government and other
individuals also make use of a accounting For example a housewife has to keep a
record of the money received and spent by her during a particular period She can
record her receipts of money on one page of her household diary while payments
for different items such as milk food clothing house education etc on some
other page or pages of her diary in a chronological order Such a record will help
her in knowing about
i The sources from which she received cash and the purposes for which it
was utilised
ii Whether her receipts are more than her payments or vice versa
iii The balance of cash in hand or deficit if any at the end of a period
3
In case the housewife records her transactions regularly she can
collect valuable information about the nature of her receipts and payments For
example she can find out the total amount spent by her during a period say a
year on different items say milk food education entertainment etc Similarly
she can find the sources of her receipts such as salary of her husband rent from
property cash gifts from her relatives etc Thus at the end of a period say a
year she can see for herself about her financial position i e what she owns and
what she owes This will help her in planning her future income and expenses or
making out a budget to a great extent
The need for accounting is all the more great for a person who is
running a business He must know i What he owns ii What he owes iii
Whether he has earn a profit or suffered a loss on account of running a business
iv What is his financial position i e whether he will be in a position to meet all
his commitments in the near future or he is in the process of becoming a bankrupt
1 2 ORIGIN AND GROWTH OF ACCOUNTING
Accounting is as old as money itself However the act of accounting
was not as developed as it is today because in the early stages of civilisation the
number of transactions to be recorded were so small that each businessman was
able to record and check for himself all his transactions Accounting was practised
in India twenty three centuries ago as is clear from the book named Arthashastra
written by Kautilya King Chandragupta s minister This book not only relates to
politics and economics but also explain the art of proper keeping of accounts
However the modern system of accounting based on the principles of double entry
system owes it origin to Luco Pacioli who first published the principles of Double
Entry System in 1494 at Venice in Italy Thus the art of accounting has been
practised for centuries but it is only in the late thirties that the study of the subject
accounting has been taken up seriously
4
1 3 MEANING OF ACCOUNTING
The main purpose of accounting is to ascertain profit or loss during
a specified period to show financial condition of the business on a particular
date and to have control over the firm s property Such accounting records are
required to be maintained to measure the income of the business and communicate
the information so that it may be used by managers owners and other interested
parties Accounting is a discipline which records classifies summarises and
interprets financial information about the activities of a concern so that intelligent
decisions can be made about the concern The American Institute of Certified
Public Accountants has defined the Financial Accounting as the art of recording
classifying and summarising in as significant manner and in terms of money
transactions and events which in part at least of a financial character and
interpreting the results thereof American Accounting Association defines
accounting as the process of identifying measuring and communicating economic
information to permit informed judgements and decisions by users of the
information
From the above the following attributes of accounting emerge
i Recording It is concerned with the recording of financial transactions in
an orderly manner soon after their occurrence In the proper books of accounts
ii Classifying It Is concerned with the systematic analysis of the recorded
data so as to accumulate the transactions of similar type at one place This function
is performed by maintaining the ledger in which different accounts are opened to
which related transactions are posted
iii Summarising It is concerned with the preparation and presentation of
the classified data in a manner useful to the users This function involves the
5
preparation of financial statements such as Income Statement Balance Sheet
Statement of Changes in Financial Position Statement of Cash Flow Statement
of Value Added
iv Interpreting Nowadays the aforesaid three functions are performed by
electronic data processing devices and the accountant has to concentrate mainly
on the interpretation aspects of accounting The accountants should interpret the
statements in a manner useful to action The accountant should explain not only
what has happened but also a why it happened and b what is likely to happen
under specified conditions
1 4 DISTINCTION BETWEEN BOOK KEEPING AND ACCOUNTING
Book keeping is a part of accounting and is concerned with the
recording of transactions which is often routine and clerical in nature whereas
accounting performs other functions as well viz measurement and
communication besides recording An accountant is required to have a much
higher level of knowledge conceptual understanding and analytical skill than is
required of the book keeper
An accountant designs the accounting system supervises and checks
the work of the book keeper prepares the reports based on the recorded data and
interprets the reports Nowadays he is required to take part in matters of
management control and planning of economic resources
1 5 DISTINCTION BETWEEN ACCOUNTING AND ACCOUNTANCY
Although in practice Accountancy and Accounting are used
interchangeably yet there is a thin line of demarcation between them The word
Accountancy is used for the profession of accountants who do the work of
accounting and are knowledgeable persons Accounting is concerned with

. b Distinguish between book keeping and accounting c Explain the nature and objectives of accounting d Discuss the branches role and limitations of accounting 1 1 INTRODUCTION Accounting has rightly been termed as the language of the business The basic function of a language is to serve as a means of communication

Related Books

MEANING NATURE amp DEFINITION OF POLITICAL SCIENCE I Meaning

MEANING NATURE amp DEFINITION OF POLITICAL SCIENCE I Meaning

MEANING NATURE amp DEFINITION OF POLITICAL SCIENCE I Meaning Man is a social animal He cannot live in isolation because he is not self sufficient and the natural instinct to survive compels him to live a collective life According to Aristotle this collective life necessitates a political mechanism of rules regulations and leadership An organized society needs some system to make and

Financial Accounting amp Reporting 1 Financial Accounting

Financial Accounting amp Reporting 1 Financial Accounting

Financial Accounting SOURCES OF GAAP AND BASIC FRAMEWORK AND CONCEPTS I INTRODUCTION Generally accepted accounting principles GAAP are those accounting principles that have substantial authoritative support Substantial authoritative support is a question of fact and a matter of judgment The power to establish GAAP actually rests with the Securities and Exchange Commission SEC

Lesson 1 Business Economics Meaning Nature Scope and

Lesson 1 Business Economics Meaning Nature Scope and

Lesson 1 Business Economics Meaning Nature Scope and significance Introduction and meaning Author Dr M S Khanchi Business Economics also called Managerial Economics is the application of economic theory and methodology to business Business involves decision making Decision making means the process of selecting one out of two or more alternative courses of action The question

UNIT 1 PUBLIC ADMINISTRATION MEANING NATURE SCOPE AND

UNIT 1 PUBLIC ADMINISTRATION MEANING NATURE SCOPE AND

Public Administration therefore refers to that part of administration which pertains to the administrative activities of the government Now we will try to look into the definitions of Public Administration provided by various scholars Woodrow Wilson Public administration is the detailed and systematic application of law

Unit 1 Meaning Nature and Scope of Translation

Unit 1 Meaning Nature and Scope of Translation

Unit 1 Meaning Nature and Scope of Translation Structure 1 0 Objectives 1 1 Introduction 1 2 Meaning and Definition of Translation 1 2 1 Meaning of Translation 1 2 2 Definition of Translation 1 3 Nature of Translation 1 3 1 Qualities of a Good Translator 1 3 2 Audience and Purpose of Translation 1 4 Scope of Translation 1 4 1 Translation as Mediator 1 4 2 Translation as a Democratizing Agent

INTERNATIONAL POLITICS MEANING NATURE AND SCOPE

INTERNATIONAL POLITICS MEANING NATURE AND SCOPE

International Politics as an academic discipline is of a recent origin This discipline is so new that it can be called as the youngest of all the social sciences It is dynamic in nature In the present time the need to tackle environmental problems growing international terrorism violation of Human Rights Nuclear non proliferation unjust economic order negative impacts of

CHAPTER 1 Meaning Nature Importance and Scope of IR

CHAPTER 1 Meaning Nature Importance and Scope of IR

CHAPTER 1 Meaning Nature Importance and Scope of IR By CA Anushri Agrawal AIR 6 anulohia agrawal gmail com www anushriagrawal com MEANING Also known as employment relations It emerge in a work situation IR covers I Economic Exchange Process II Social Relationships III Controls norms and institutions emerging from the social relationships CA ANUSHRI AGRAWAL 2 Definitions DALE YODER

Financial Accounting and Accounting Standards

Financial Accounting and Accounting Standards

Intermediate Accounting IFRS 2nd Edition Kieso Weygandt and Warfield 9 9 3 5 Determine ending inventory by applying the gross profit method 6 Determine ending inventory by applying the retail inventory method 7 Explain how to report and analyze inventory After studying this chapter you should be able to Inventories Additional 9 Valuation Issues LEARNING OBJECTIVES 1 Describe and

Chapter I 1 1 HUMAN RESOURCE ACCOUNTING MEANING

Chapter I 1 1 HUMAN RESOURCE ACCOUNTING MEANING

Human Resource Accounting suggests the following information Information for Human Resource Planning 1 To facilitate manpower planning 2 To gather data on actual costs of recruitment and selection training etc 3 Collection of figures over the past period provide reasonable basis for projecting future expenses

The Human Relation With Nature and Technological Nature

The Human Relation With Nature and Technological Nature

The Human Relation With Nature and Technological Nature Peter H Kahn Jr Rachel L Severson and Jolina H Ruckert University of Washington ABSTRACT Two world trends are powerfully reshaping human existence the degradation if not destruction of large parts of the natural world and unprecedented technologicaldevelopment

MANAGEMENT ACCOUNTING NATURE AND SCOPE

MANAGEMENT ACCOUNTING NATURE AND SCOPE

Applying management accounting principles to financial matters can arrive at no single perfect solution It is therefore an inexact science which uses its own conventions rather than standardized principles The facts to be studied here can be interpreted in different ways and the precision of the inferences depends upon the skill judgement and common sense of different management

The Nature of Accounting Information Reliability

The Nature of Accounting Information Reliability

The Nature of Accounting Information Reliability Inferences from Archival and Experimental Research Laureen A Maines Indiana University James M Wahlen Indiana University November 3 2003 Please do not quote without permission from the authors This paper is intended for discussion purposes at the 2003 AAA FASB Financial Reporting Issues