Class notes

problem on natur of account 2 problems on nature ofaccount

  Introduction Double entry is the foundation or basic principle of accounting. It provides the very basis for recording business transactions into the book of accounts. Meaning : The system of making two or double entries of equal value in two different accounts on opposite sides in the books of each of the contracting parties is known as the double-entry system of accounting. The double entry system of accounting states that every financial transaction has equal and opposite effects in at least two different accounts. It is used to satisfy the accounting equation. Double-entry keeps the accounting equation in balance. ​ Assets = Liabilities + Equity ​ In the double-entry system, transactions are recorded in terms of debits and credits. The double-entry system of bookkeeping standardizes the accounting process and improves the accuracy of prepared financial statements, allowing for improved detection of errors. Types of Accounts A business transaction is a business ...

Meaning : Accounting standards are written policy documents covering the aspects of recognition, measurement, treatment, presentation and disclosure of accounting transactions in financial statements.  An accounting standard is an authoritative statement issued by ICAI (Institute of Chartered account of India), a professional body of accounting in our country. Objectives : 1. To bring uniformity in different accounting policies to eliminate non-comparability of financial statements for enhancing the reliability of financial statements.  2. To provide a set of standard accounting policies, valuation norms and disclosure requirements.  3. To improve the credibility of accounting data. 4. To enhance comparability of financial statements of both intra and inter enterprises for assessment of firms’ performance by the users of accounting. Benefits of Accounting Standards 1. Accounting standard helps to  eliminate  variations in accounting treatment to prepare fina...

Accounting principles To maintain uniformity and consistency in accounting records, certain rules or principles have been developed which are generally accepted by the accounting profession. These rules are called by different names such as principles, concepts, conventions, postulates, assumptions and modifying principles. One such accounting principle which is generally accepted is " GAAP ". Generally Accepted accounting principles (GAAP)  refers to the rules or guidelines adopted for recording and reporting business transactions, to bring uniformity in the preparation and the presentation of financial statements.  These principles are also referred to as concepts and conventions.  The accounting principles are classified into  1.Accounting concepts 2.Accounting Conventions Basic Accounting Concepts The important concepts have been listed as below: 1. the Business entity 2. Money measurement 3. Going concerned 4. Accounting period 5. Cost 6. Dual aspect (or Duality...

Module 1: INTRODUCTION TO FINANCIAL ACCOUNTING INTRODUCTION Accountants can now engage in exciting new development areas such as forensic accounting, e-commerce, financial planning, environmental accounting, and others, in addition to their traditional role as financial record keepers. It collects data and distributes economic information about the company to a wide range of users as an information system. Definition of Accounting :  Definition by the American Institute of Certified Public Accountants (The year 1961):  “Accounting is the art of recording,  classifying and 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 result thereof”. Definition by the American Accounting Association (the Year 1966):  “The process of identifying,  measuring and communicating economic information to permit informed judgments and decisions by the users of accountin...

EBIT-EPS Analysis (Part-I)