Unit-1. Account.
+2 1st year
Who the father of modern accounting?
Luca pacioli, a mathematician and philosopher known as the father of modern
accounting.
What is bookkeeping?
The art of recording business transaction in a set of books is termed as bookkeeping.
What is accountancy?
Accounting denotes a discipline which explains how to prepare books of accounts.
What are the needs of accounting?
• It provides valuable information for economic decision making.
• It Provides information is internal as well as external users.
• It is the language of business, which provides accounting information to various
users.
Define bookkeeping?
According to A. H. Rosenkampff,
“Bookkeeping is the art of recording business transaction in a systematic manner”.
Objectives/ important and characteristic of bookkeeping?
• Bookkeeping is a fundamental accounting activity.
• Every transaction properly analysed before recording.
• It is both art as well as science.
• It Helps to know receivables and payables.
• To prevent error and frauds.
• Disclose factors responsible for earning profit and suffering loss.
Explain the process of bookkeeping?
• Identify business transaction.
• Measure the identified transaction.
• Recording business transaction in journal and sub journal.
• Posting in the Ledger.
• Balancing of Ledger accounts.
• Prepare schedules of sundry debtor and creditors.
• Preparation of trial balance.
What do you mean by accounting?
Accounting is the art of recording classifying and summarising in the terms of money
which are financial character and interpreting.
Define accounting?
According to Bierman & Derbin,
“ Accounting May be defined as the identifying, measuring, recording and
communicating of financial information.
Advantages or objectives of accounting?
• To keep systematic records.
• To protect and control business properties.
• To calculate operational profit and loss.
• To Calculate financial position of the business.
• To prevent error and frauds.
Process or functions of accounting?
• Identifying the business transaction and events.
• Measuring the identifier transactions and events.
• Recording the business transactions.
• Classifying the business transactions.
• Summarising the business transaction.
• Analysing the financial statements.
• Interpreting the financial statements.
• Communicating the interpreted data to the users.
Branches of accounting:
1. Financial accounting:
It helps to find out the profit and loss and financial position of the business, which leads
to prepare final accounts. it is used by owners, creditors, investors, employees,
management and government.
2. Cost accounting:
It record classify the transaction to no current budgeted cost. The objectives of cost
accounting is to find out cost of goods produced and service rendered to the business.
3. Management accounting:
It present accounting information in such a way to create policy and day-to-day
operations for the purpose of planning, controlling and decision making.
Limitation of accounting:
• Permits alternative treatments.
• Influenced by personal judgement.
• Ignore the importance of non-monetary items.
• Doesn’t provide timely information.
• Manipulation of accounting data.
Qualitative characteristics of accounting information?
Qualitative characteristics of accounting information are as follows:
➢ Reliability
➢ Relevance
➢ Understandability
➢ Comparabilit
Reliability:
Reliability consist of faithfulness, completeness, & free from bais. Financial statements
ensure reliable when it consist.
• Faithful presentation of information.
• Neutrality
• Completeness
Relevance:
Relevance means related information, which influence economic decision, helps to
evaluate past, present, & future events.
Understandability:
Accounting information should be present in such a way, which can be easily
understood by users.
Comparability:
Financial information should be provided in such a way, which can be compared with
different firms & with their different periods.
Accounting cycle:
An accounting cycle is a complete sequence beginning with the recording of transaction
& ending with the preparation of the final accounts.
Book-keeping Accounting
1. It is a basis of It starts after
accounting. book-keeping.
2. It is done by It is done by
junior staff. senior staff.
3. It covers It covers
journalising & preparation of
posting. final accounts.
