principle of Accounting
PRINCIPLES OF ACCOUNTING(POA)/ACCOUNTING FOR MANAGERS(AFM)
Basic Accounting Concepts & Terminologies
ACCOUNTING- DEFINITION
Accounting means the various technical activities performed by accountants, including financial accounting, bookkeeping and management accounting.
Accounting is considered to be as old as money. However in 1494 Lucas Fra Pacoili, an Italian Merchant is universally regarded as the father of modern system of accounting or double entry system of accounting.
Accounting has been referred as “The Language of Business” because of its role in maintaining and processing all relevant financial information that an entity requires for its managing a reporting purposes.
According to American Institute of Certified Accountants (AICPA):-
“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 results thereof.”
OBJECTIVES OF ACCOUNTING
The following are the objectives of accounting:-
1) To record the business transaction in a systematic manner.
2) To determine the gross profit and net profit by a firm during a specific year/period...
3) To know the financial position of a firm at the end of the financial year or period.
4) To facilitate management control.
5) To assess the taxable income and the sales tax liability.
6) To provide requisite information to different parties i.e. Owners, creditors, employee’s management, government, investor’s financial institutions and bank etc.
FUNCTIONS OF ACCOUNTING
The various functions of accounting are as follows:-
1) Recording
2) Classifying
3) Summarizing
4) Interpreting
5) Information System/Interpreting the results.
SYSTEM OF ACCOUNTING
The following are the basic system of recording business transactions:-
1) Cash Basis Accounting
2) Mercantile or Accrual system /Credit Basis
3) Mixed system
BRANCHES OF ACCOUNTING
The various branches
Basic Accounting Concepts & Terminologies
ACCOUNTING- DEFINITION
Accounting means the various technical activities performed by accountants, including financial accounting, bookkeeping and management accounting.
Accounting is considered to be as old as money. However in 1494 Lucas Fra Pacoili, an Italian Merchant is universally regarded as the father of modern system of accounting or double entry system of accounting.
Accounting has been referred as “The Language of Business” because of its role in maintaining and processing all relevant financial information that an entity requires for its managing a reporting purposes.
According to American Institute of Certified Accountants (AICPA):-
“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 results thereof.”
OBJECTIVES OF ACCOUNTING
The following are the objectives of accounting:-
1) To record the business transaction in a systematic manner.
2) To determine the gross profit and net profit by a firm during a specific year/period...
3) To know the financial position of a firm at the end of the financial year or period.
4) To facilitate management control.
5) To assess the taxable income and the sales tax liability.
6) To provide requisite information to different parties i.e. Owners, creditors, employee’s management, government, investor’s financial institutions and bank etc.
FUNCTIONS OF ACCOUNTING
The various functions of accounting are as follows:-
1) Recording
2) Classifying
3) Summarizing
4) Interpreting
5) Information System/Interpreting the results.
SYSTEM OF ACCOUNTING
The following are the basic system of recording business transactions:-
1) Cash Basis Accounting
2) Mercantile or Accrual system /Credit Basis
3) Mixed system
BRANCHES OF ACCOUNTING
The various branches