CONCEPTS OF ACCOUNTINGBY: ATUL 3087/07 ROOPALI 3079/07 HARINDER 3095/07 UMANG 3081/07 NAVNEET 3133/07 YOGESH 3121/07

ACCOUNTINGAcc. To R.N. Anthony Nearly every buisness enterprise has accounting system. It is a means of collecting, summarising, analysing & reporting in monetary terms, informations about buisness.

Acc. To American Institute of Certified Public Accountants Accounting is the art of recording, classifying & summarising in a significant manner and in terms of money, transactions & events, which are, in part atleast, of a financial character, & interpreting the results thereof.

OBJECTIVES OF ACCOUNTINGTo keep systematic record of buisness transactions.To calculate profit or loss.To ascertain the financial position of the buisness.To provide informattion to various parties.

TYPES OF ACCOUNTING

FINANCIALACCOUNTINGCOSTACCOUNTINGMANANGEMENTACCOUNTING

Financial Accounting :- The main purpose of this branch of accounting is to record the buisness transactions in a systematic manner, to ascertain the profit or loss of the accounting period by preparing a profit & loss account and to present the financial position of the buisness by preparing a balance sheet.

FUNCTIONS OF FINANCIAL ACCOUNTINGRecording of Information. Classification of Data. Making of Summaries. Dealing with Financial Information. Interpreting Financial Information.

2. Cost Accounting :- The main purpose of cost accounting is to ascertain the total cost & per unit cost of goods produced & services rendered by a buisness. It also estimates the cost in advance & helps the management in exercising strict control over cost.

FUNCTIONS OF COST ACCOUNTINGAnalysis and Ascertainment of costs.

Presentation of costs for reduction and control.

Planning and Decision Making.

As an aid to Management.

3. Mangement Accounting :- The main purpose of management accounting is to present the accounting information in such a way as to assist the management in planning & controlloing the operations of a buisness. The techniques used include Ratio analysis, Budgetary Control, Fund Flow statement, Cash Flow Statement etc.

FUNCTIONS OF MANAGEMENT ACCOUNTING Planning and Forecasting. Modification of data such that it is useful for

the management. Financial Analysis and Interpretation. Use of Qualitative Information. Coordinating . Supplying information to various levels of

management.

Rules of Double Entry SystemWe can divide the accounts into three types :

Personal AccountsReal AccountsNominal Accounts

Personal Accounts : Accounts those are related to any name, firm, company & organisation.

(1) Natural Personal AccountsEg. Ram Account, Mohan Account(2) Artificial Personal accountsEg. Reliance Account, SBI AccountAccording to the rule : Debit the receiver & Credit the giver.

Real Accounts : Accounts those are related

to properties or assests. Eg. Cash Account, Purchase AccountAccording to the rule : Debit what comes in & Credit what goes out.

Nominal Accounts : Accounts which are related to incomes & expenditures.

Eg. Salary Account, Rent AccountAccording to the rule : Debit all expenditures and Losses & Credit all incomes and profits.

DUAL ASPECTS OF ACCOUNTINGASSESTS = EQUITIESi.e. ASSESTS = CAPITAL + LIABILITIESWhere :-Assests : Assests are valuable resources owned by a buisness which are acquired at a measurable money cost. Prof R.N. AnthonyCapital : Capital is the amount invested by the proprietor in a buisness enterprise.

Liabilities : Liablities are the amounts which firm owes to outsiders (excepting the amount owed to proprietors) Liablities are debts, they are amount owed to Creditors- -Finney & Miller