FINANCIAL ACCOUNTING REFLECTION NOTE

What is Accounting? 
It summarises monetary transactions that identify and examine the information and
aids optimal decision-making.
Various financial statements:
 Profit and Loss statement  to analyze profit and loss
 Balance sheet  to identify Assets and Liabilities.
 Cashflow statement  to give accounting information like transactions and events
      
Journal Entry  Only transactions that was recorded in a business.

Ledger Posting  Account-wise summary recording for the year.

Trial Balance Statement that provides the stats of initial assets, liabilities, equity, incomes
& expenses details.

Forms of Business Organizations:

o Sole Proprietorship
 Single owner responsible for all assets and liabilities
 Assets were at risk
o Partnership
 Joint ownership with people ranging from 2-100
 Follow 1932, the partnership act for legal support
o Limited Liabilities Partnership
 Follows LLP Act 2008, India
 No Assets were at risk
o Joint-stock Company
 Follows Companies Act-2013
 No limit on # Shareholders
 Governed by Board of Directors

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Financial statements record every business transaction involved during a financial year from
April 1 and ends on March 31.

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Assets: Anything that adds futuristic monetary benefits or economic value or can provide
you money later.

Assets are of two types:

1. Non-Current Assets (Long-Lived):

If assets exist for more than 1-year, the asset will be considered a non-current asset.

Various Non-current Assets are

i. Goodwill (Intangible assets)

ii. Capital work in progress (Construction-WIP)
iii. Property plant, Equipment (Industry)
iv. Tax Assets, Others (benefits in future= Income Tax – Companies Tax)
v. Financial Assets (Bonds, Shares, Financial Cash)
vi. Other Intangible Assets
2. Current Assets (Short-lived):

Various Current Assets are

i. Financial Assets (Investments, Receivables, Cash, bank balance).

ii. Current Assets, Inventory (Raw material, WIP, finished goods, store, and spare parts)
iii. Current tax Assets TDS+ Advance tax.

Liabilities: Any claim must be paid against the assets to the supplier, bank, or other loans
provided by a business entity.

Liabilities are of two types:

1. Non-Current Liabilities:
 Financial lease, Tax Liabilities, Financial borrowing, and others.
 Provisions (Expected outflow of money in future).
2. Current Liabilities:
 Financial liabilities (borrowing and Trade payables), provisions, Current Tax
liabilities, and others.