Amity School of Business FINANCIAL ACCOUNTING

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Amity School of BusinessFINANCIAL ACCOUNTING
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Module I

• Introduction to Accounting

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Introduction to Accounting

• Meaning
• Nature
• Functions
• Branches
• Accounting Equation
• Accounting Concepts
• GAAP
• Difference between GAAP US GAAP

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What is Accounting?

• Accounting is defined as
• The art of recording, classifying summarizing
  in a significant manner and in terms of money,
  transactions and events, which are in part at
  least, of a financial character and interpreting
  the results thereof.
• Accounting is often called the language of
  business
• People who perform accounting procedures speak
  the language of debits and credits.
• The process of accounting provides useful
  information that describe specific things about a
  companys financial position.

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What is Accounting?
Three Activities
The accounting process includes the bookkeeping
function.
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DIFFERENCE BETWEEN ACCOUNTANY AND BOOKKEEPING.
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Accounting and Book-Keeping

• Book keeping is merely recording the business
  transactions in books and ledgers. It is part of
  Accounting. It is often routine and clerical in
  nature
• Accounting is a wider concept Compilation of
  accounts in such a way that one is in a position
  to understand state of affairs of business
• ACCOUNTING BEGINS WHERE BOOK-KEEPING ENDS

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Financial Accounting

• Financial accounting - focuses on the specific
  needs of decision makers external to the
  organization, such as stockholders, suppliers,
  banks, and government agencies

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Users of Financial Information
Internal Users
External Users
Investors
Government
Community
Board of Directors Management Employees
Suppliers
Customers
Creditors
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BRANCHES OF ACCOUNTING

• Financial Accounting
• Management Accounting
• Cost Accounting
• Social responsibility Accounting
• Human Resource Accounting

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BRANCHES OF ACCOUNTING

• Financial Accounting? It includes Book keeping
  and the preparation of Financial Statements.
• Management Accounting? It is a system to
  assemble and furnish the useful material and
  summarized accounting information to the
  management.
• Cost Accounting? It deals with the cost of
  production and its various constituents.
• Social responsibility Accounting? It is the
  study of social effects in addition with the
  economic effects.
• Human Resource Accounting? is the process of
  identifying and measuring data about human
  resource and communicating this information to
  interested parties.

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Objectives of Accounting

• To maintain systematic records
• To ascertain the operational profit or loss
• To ascertain financial position
• To satisfy requirements of law, Govt. other
  interested parties
• To facilitate rational futuristic decision
  making
• To Provide remedial measures devices for the
  deviations of the actual from the budgeted
  performance

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Functions Of Accounting

• Performance measurement
• Forecasting
• Government Regulation and Taxation
• Evaluation and Control
• Decision Making
• Fixing Responsibility

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Significance of Accounting
Accounting
Identifies
Records
Communicates
Relevant
Reliable
to help users make better decisions.
Comparable
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LIMITATIONS OF ACCOUNTING

• Danger of window dressing
• Ignorance about the present value of business
• Influenced by personal judgments
• Ignores important non-monetary information
• Does not provide timely information