Dear Teachers,
These slides have been prepared based on the NCERT syllabus to support you in teaching Plus One and Plus Two Accountancy and Computerised Accounting.
Please review and verify the content before using it in your classrooms. If you find any errors or have feedback, please let me know.
Mujeeb Rahiman C
HSST Commerce
GHSS Pattikkad
Malappuram Dt.
✉️ mujeebchemmala@gmail.com
9995983075 �
ACCOUNTANCY
1. Introduction to Accounting
2. Theory Base of Accounting
3. Recording of Transactions - I
4. Recording of Transactions - II
5. Bank Reconciliation Statement
6. Trial Balance and Rectification of Errors
7. Depreciation, Provisions and Reserves
8. Financial Statements - I
9. Financial Statements - II
Chapter - 1
Introduction to Accounting
Need for Accounting
Need for Accounting
In order to attain such informations, it is essential to keep a complete and systematic record of each and every business transactions during the year.
The foundational architecture of modern accounting emerged in 1494 when Italian Mathematician Luca Pacioli published the first comprehensive book detailing double-entry bookkeeping. Although Pacioli did not invent the system, his work successfully popularized it and introduced the enduring Italian-derived term
Definition of Accounting
In 1941, The American Institute of Certified Public Accountants (AICPA) had defined accounting as the art of recording, classifying, and summarising in a significant manner and in terms of money, transactions and events which are, in part at least, of financial character, and interpreting the results thereof’.
Economic Events
Accounting Process
Communicating
Decision Making
Economic Events
An economic event is a business activity that can be measured in money.
For example, purchase of machinery, installing and keeping it ready for manufacturing is an event which comprises number of financial transactions such as buying a machine, transportation of machine, site preparation for installation of a machine, expenditure incurred on its installation and trial runs.
Economic Events
External Event
External Event
Internal Event
Internal Event
Transactions and events
If an event involves transactions between an outsider and an organisation, these are known as External Events.
eg. Sale of goods to the customers.
Purchase of materials from suppliers.
An Internal Event is an economic event that occurs entirely between the internal wings of an enterprise.
eg. Supply of raw material or components by the stores department to the manufacturing department, Payment of wages to the employees etc.
Identification
It involves observing activities and identifying transactions of financial character.
For example, the changes in managerial policies or
appointment of personnel are important but none of these are recorded in books of account. However, when a company makes a sale or purchase, whether on cash or credit, or pays salary it is recorded in books of account.
Measurement
It means quantification of business transactions into financial terms by using monetary unit (rupees and paise). If an event cannot be quantified in monetary terms, it is not considered for recording in financial accounts. eg. Appointment of manager etc..
Recording
Once the economic events are identified and measured in financial terms, these are recorded in books of account in monetary terms and in a chronological order.
Communication
The information is regularly communicated through accounting reports. These reports provide information that are useful to a variety of users to take necessary decisions. Reports can be daily, weekly, monthly, or quarterly, depending upon the needs of the users.
Organisation
Organisation refers to a enterprise, whether for profit or not-for-profit motive.
eg. Sole-proprietorship, partnership firm, cooperative society, company, schools, municipal corporation etc.
Users of ACCOUNTING information
OR
Interested Users of Information
Accounting is a means by which necessary financial information about business enterprise is communicated and is also called the language of business. Many users need financial information in order to make important decisions.
Internal Users
Chief Executive
Financial Officer
Plant Manager
External Users
Lenders / Creditors
Investors
Government and
Regulatory Agencies
Internal Users
Internal users include:
Chief Executive Financial Officer
Vice President Plant Managers
Store Managers Line Supervisors
Business Unit Managers etc.
External Users
External users include:
Present and potential Investors (shareholders)
Creditors (Banks and other Lenders)
Tax Authorities Regulatory Agencies
Labour Unions Trade Associations
Stock Exchange Customers
Securities Exchange Board of India etc.
Financial
Accounting
Cost
Accounting
Management
Accounting
Financial
Accounting
The main purpose of this branch of accounting is to ascertain the profit or loss and to present the financial position of the business.
Cost
Accounting
The main purpose of this branch of accounting is to ascertain the total cost of production of goods produced and services rendered by a business.
Management
Accounting
The main purpose of this branch of accounting is to present the accounting information in such a way as to assist the management in planning and controlling the operations of the business.
It uses various techniques like budgetary control, cash flow statement, ratio analysis etc..
ACCOUNTING INFORMATION
Qualitative characteristics of
1. Reliability – വിശ്വസനീയത
The information must be factual and verifiable. The accounting information is said to have verifiability if such information can be verified from source documents such as cash receipts, purchase invoices, sales invoices, agreements etc.
2.Relevance – പ്രസക്തി
To be relevant, information must be available in time and must influence the decisions of users.
For example, the information required by bankers will not be necessarily be the same as required by Government.
3.Understandability – ഗ്രാഹ്യശേഷി
Accounting information should be presented in such a simple and logical manner that they are understood easily by their users such as owners, employees, management etc.
4.Comparability – താരതമ്യ ക്ഷമത
It is important that the users of the financial reports are able to compare various aspects of an entity over different time period and with other entities.
Objectives ACCOUNTING
1. Maintenance of Records of Business Transactions
Loss of
memory
2. Calculation of Profit and Loss
3. Depiction of Financial Position
4. Providing Accounting Information to its Users
Objectives of ACCOUNTING
1. Maintenance of Records of Business Transactions
2. Calculation of Profit and Loss
3. Depiction of Financial Position
4. Providing Accounting Information to its Users
Roles of Accounting
MUJEEB RAHIMAN C
HSST COMMERCE
GHSS PATTIKKAD
MALAPPURAM DT