CONCEPTS OF ACCOUNTING

BY:
ATUL
3087/07
HARINDER 3095/07
NAVNEET
3133/07

ROOPALI
UMANG
YOGESH

3079/07
3081/07
3121/07

ACCOUNTING
Acc.

To R.N. Anthony Nearly every buisness

enterprise has accounting system. It is a means
of collecting, summarising, analysing &
reporting in monetary terms, informations
about buisness.

Acc.

To American Institute of Certified Public

Accountants Accounting is the art of recording,
classifying & summarising in a significant
manner and in terms of money, transactions &
events, which are, in part atleast, of a financial
character, & interpreting the results thereof.

OBJECTIVES OF ACCOUNTING
1.
2.
3.
4.

To keep systematic record of buisness

transactions.
To calculate profit or loss.
To ascertain the financial position of the
buisness.
To provide informattion to various
parties.

TYPES OF ACCOUNTING

FINANCIAL
ACCOUNTING

COST
ACCOUNTING

MANANGEMENT
ACCOUNTING

1.

Financial Accounting :- The main

purpose of this branch of accounting is
to record the buisness transactions in a
systematic manner, to ascertain the
profit or loss of the accounting period
by preparing a profit & loss account
and to present the financial position of
the buisness by preparing a balance
sheet.

FUNCTIONS OF
FINANCIAL ACCOUNTING
Recording

of Information.
Classification of Data.
Making of Summaries.
Dealing with Financial Information.
Interpreting Financial Information.

2. Cost Accounting :- The main purpose

of cost accounting is to ascertain the
total cost & per unit cost of goods
produced & services rendered by a
buisness. It also estimates the cost in
advance & helps the management in
exercising strict control over cost.

FUNCTIONS OF
COST ACCOUNTING
Analysis

and Ascertainment of costs.

Presentation of costs for reduction and

control.

Planning and Decision Making.

As an aid to Management.

3. Mangement Accounting :- The main

purpose of management accounting is
to present the accounting information in
such a way as to assist the
management in planning & controlloing
the operations of a buisness. The
techniques used include Ratio analysis,
Budgetary Control, Fund Flow
statement, Cash Flow Statement etc.

FUNCTIONS OF
MANAGEMENT ACCOUNTING
Planning and Forecasting.
Modification of data such that it is useful
for
the management.
Financial Analysis and Interpretation.
Use of Qualitative Information.
Coordinating .
Supplying information to various levels of
management.

Rules of Double Entry

System
We can divide the accounts into three
types :
Personal Accounts
2. Real Accounts
3. Nominal Accounts
1.

 Personal

Accounts : Accounts those are

related to any name, firm, company &
organisation.
(1) Natural Personal Accounts
Eg. Ram Account, Mohan Account
(2) Artificial Personal accounts
Eg. Reliance Account, SBI Account
According to the rule : Debit the receiver &
Credit the giver.

Real Accounts : Accounts those are related

to properties or assests.
Eg. Cash Account, Purchase Account
According to the rule : Debit what comes in &
Credit what goes out.

 Nominal

Accounts : Accounts which

are related to incomes & expenditures.
Eg. Salary Account, Rent Account
According to the rule : Debit all
expenditures and Losses & Credit all
incomes and profits.

DUAL ASPECTS OF
ACCOUNTING

ASSESTS = EQUITIES
i.e. ASSESTS = CAPITAL + LIABILITIES

Where :Assests : Assests are valuable resources owned by a

buisness which are acquired at a measurable money
cost.
Prof R.N. Anthony
Capital : Capital is the amount invested by the proprietor
in a buisness enterprise.
Liabilities : Liablities are the amounts which firm owes to
outsiders (excepting the amount owed to proprietors)
Liablities are debts, they are amount owed to Creditors-Finney & Miller