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FINANCIAL ACCOUNTING-I F-103 REPORT ON APPLICATION OF ACCOUNTING IN BUSINESSES

DEPARTMENT OF FINANCE UNIVERSITY OF DHAKA

DATE OF SUBMISSION: 28th April, 2009

REPORT ON APPLICATION OF ACCOUNTING IN BUSINESSES


FINANCIAL ACCOUNTING-I F-103 Submitted To Dr. H. M. Mosarof Hossain Associate Professor Department of Finance Faculty of Business Administration University of Dhaka Submitted By Members of Group-17 Section-B 15th Batch Department of Finance

Names

Roll No 15-162 15-164 15-166 15-168 15-170

Letter of Transmittal
Dr. H. M. Mosarof Hossain Associate Professor Department of Finance University of Dhaka Subject: Submission of report on Application of accounting in businesses Dear Madam, Here is the report on application of accounting in businesses, an analysis of how accounting is applied in different organizations. We the five members of our group were supposed to prepare this report as a compulsory part of our course F-103. The topic that you have given us is really an important & interesting fact for the finance students with the textual studies acquiring practical orientation of the application of accounting in different organizations. As you go through the report you will see that we have tried to collect as much information as possible, through analysis the application of accounting. Undoubtedly, we have learned a lot. We believe this report provides complete and clear information of the application of accounting in different organizations which will ultimately help us to enhance our knowledge about corporate world. We have employed our best efforts in preparing this report and have the pleasure to submit it within the deadline. The preparation of this report has rendered us valuable experience about the application of accounting and we would like to thank you for giving us the opportunity to gather this valuable experience. We deeply regret for any inconvenience located in this report and we shall always be available for any clarification required.

Sincerely yours, All the group members of SL NO 01 02 03 04 05 NAME 15-162 15-164 15-166 15-168 15-170 ID NO

Table of contents

Executive Summary
The students of business administration under the Department of Finance of the University of Dhaka have to submit a report on the study of their every course to make a relationship of the text study to real world. This report is application of accounting in businesses. . In the business world, accounting is one discipline of study that all people, regardless of job position, should have some knowledge of. Its concepts can be applied to all job specialties, its importance has been promoted in recent years, and it is useful in peoples everyday lives. First, an accounting education is important because it can be applied in all job specialties. Secretaries must use accounting skills to manage the company check book and orders, auditors have to study financial statements to evaluate the accuracy and integrity of the business, and executives need to judge the success of their business using accounting statements from the past and present. These are just a few of the many possible positions where an understanding of accounting is necessary. Another reason all business students should have some background in accounting is because in recent years, people in the business world have been held more accountable for their financial practices. Since the Enron and WorldCom crisis when independent auditor Arthur Anderson failed to report illegal accounting practices, the SEC has been monitoring public corporations more closely. Thus, companies require some basic knowledge of accounting to avoid any future misstatements unintentionally occurring. Additionally, it is vital that everyone, not just business students, acquire an understanding of accounting for personal benefit. People use accounting in their daily lives when they study financial statements to make investment decisions, assess interest rates to pay off their house mortgages, and calculate rates for car payments. In the business world, accounting is utilized in much greater depth, but each individual encounters some activities in his/her everyday life that requires knowledge of accounting principles. Accounting is the most basic framework of business. Without an accounting education, students would be unprepared for the real world.

Introduction: Definition of Accounting:


Accounting is a service activity that provides useful information to people who make rational investment, credit, and similar decisions to help them make better decisions. Basically, accounting is an information system that identifies transactions, summarizes, classifies, and analyzes transactions. Accounting analyze and interpret financial information, prepare financial statements, conduct audits, design accounting systems, prepare special business and financial studies, prepare forecasts and budgets, and provide tax services. Accounting is defined by American Accounting Association - one of the prominent accounting authorities discussed as: The process of identifying, measuring, and communicating economic information to permit informed judgments and decisions by the users of the information This information is preliminarily financial and generally stated in money terms. Accounting, then, is fundamentally a measurement and communication process used to report on the activity of profit-seeking business organizations and not for-profit organization. Specifically, the accounting process consists of the following groups of functions: 1. Accounting observe many events and identify and measure in financial terms (dollars) those events considered evidence of economic activity. The purchase and sale of goods and services are examples of economic activities. 2. Next, the economic events are recorded, classified into meaningful groups, and summarized for conciseness.

3. Accountants report on business activity by preparing financial statements and special reports. Accountants are often asked to interpret these statements and reports for various groups such as management and creditors. Interpretation may involve determining how the business is performing compared to prior years and other similar businesses.

Importance of Accounting:
A proper accounting system is essential to any business whether big or small in order to manage its daily functions and keeps the business running successfully. For any successful business, the main obligation is to maximize profits, minimize any loss and at the same time maintain its position as a responsible entity within the society. An effective accounting system incorporates different functions such as marketing, finance, managing human resource, administration that are present in todays modern business corporations or enterprises. The accounting systems in these corporations have to be effective and efficient to check every transaction that takes place. Each business transaction and financial record keeping task must be accurately maintained to avoid mismanagement which as a result might bring losses to the business. With majority of businesses today aiming at making huge profits, they tend to proceed with limited human and financial resources; any kind of extra burden can affect the business performance and strain its financial resources. Accounting is one area which gets affected easily and quick solution will be needed to tackle such a problem without straining the resources of the business. There are many solutions out there to tackle accounting problems of any magnitude, but as far as efficiency and cost effectiveness is concerned, every business organization should outsource all their accounting work. Accounting outsourcing is the perfect recipe for any organization as it can solve all accounting hassle at ease and can provide any kind of business with the most efficient accounting system. With accounting outsourcing, a business can cut down its expenditure and save time in order to keep pace with the ever-increasing burden of accounting work. This will in return help the business get maximum profits from limited resources. In additional accounting outsourcing are essential for every business organization which enables them to focus on key business issues. Accounting outsourcing provides businesses with custom made, personalized and modified accounting solutions that help that business in accomplishing every essential task with low operational cost. Today there are thousands of firms with highly qualified professionals that provide accounting services and understand the needs of clients and meet their demands.

Any business entrepreneur that is not getting the required output from his/her accounting system, then accounting outsourcing will be a perfect solution. This will eventually help him to get huge benefits from his employed resources. In fact, with these services the business owner doesn't have to worry about precision of his accounting statements. Accounting is a vital element of business. It records the way a business has grown and, after analyzing figures, suggests the way it should go in the future. Furtunes are gambled on the advice of accountants.

Conclusion:
We live in an information agea time of communication and immediate access to data, news, facts, and commentary. Information affects how we live, whom we associate with, and the opportunities we have. To fully benefit from the available information, we need knowledge of the information system. An information system consists of the collecting, processing, and reporting of information to decision makers. Providing information about what businesses own, what they owe, and how they perform is an important aim of accounting. Accounting is an information and measurement system that identifies, records, and communicates relevant, reliable, and comparable information about an organizations business activities. A proper accounting system is essential to any business whether big or small in order to manage its daily functions and keep the business running successfully. For any successful business, the main obligation is to maximize profits, minimize any loss and at the same time maintain its position as a responsible entity within the society.