amity school of business financial accounting
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Amity School of Business FINANCIAL ACCOUNTING. Module I. Introduction to Accounting. Introduction to Accounting. Meaning Nature Functions Branches Accounting Equation Accounting Concepts GAAP Difference between GAAP & US GAAP. What is Accounting?. Accounting is defined as: - PowerPoint PPT PresentationTRANSCRIPT
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Amity School of Business
FINANCIAL 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 company’s financial position.
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Three Activities
What is Accounting?What is Accounting?
The accounting process includes the bookkeeping function.
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DIFFERENCE BETWEEN ACCOUNTANY AND
BOOKKEEPING.
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• 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
Accounting and Book-Keeping
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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
InvestorsCommunity
Board of DirectorsManagement
EmployeesSuppliers
Creditors
Customers
Government
Internal UsersExternal Users
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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
IdentifiesIdentifies
RecordsRecords
CommunicatesCommunicatesRelevantRelevant
ReliableReliable
ComparableComparable
AccountingAccounting is a
system that
information
that is
to help users make better decisions.
to help users make better decisions.
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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