ACCOUNTING

-
AN INTRODUCTION
 Accounting

Accounting is an art of recording, classifying and

summarizing transactions

– In a systematic manner,
– In terms of money transactions and
– Events which are in part at least of financial
character and interpreting the results thereof.

Accounting - an Introduction 2
 Scope of Accounting

Accounting should be done in such a manner that

– The reader (investor, creditor, financer or bank) is

able to understand the purpose for which
accounts are being read & interpreted. i.e. the
results of business operations, financials & and
other relevant aspects

Accounting - an Introduction 3
 Difference Between
Accountancy and Bookkeeping

• Book keeping is merely recording the business

transactions in books and ledgers .
• Accountancy is wider concept i.e. compilation of
accounts in such a way that one is in a position to
understand state of affairs of business.
• It is in the interest of all that financial statements to
reflect true and fair view of state of affairs of a
business entity.

Accounting - an Introduction 4
 Purpose of Accountancy

• To keep a systematic record

• To ascertain the results of operations
• To ascertain financial position of business.
• To facilitate rational decision making
• To raise finance.
• To satisfy requirement of law and useful in many
respects.

Accounting - an Introduction 5
 BANKING ?
 “Acceptance of Deposits of money from public for the
purpose of lending or investment”
 Deposits are Accepted from
Individuals
Firms
 Also facilitates payments as part of country’s Payment
and Settlement systems.
 Banking business is an activity of accepting and
safeguarding money owned by other individuals and
entities, and then lending out this money in order to
earn a profit.  Conti…
Accounting - an Introduction 6
 BANKING ?
Banking business have widened and now various other
services are also offered by banks.
 
 Issuance of debit and credit cards,
 Providing safe custody of valuable items,
 Lockers,
 ATM services &
 Online transfer of funds across the country/ world.

Accounting - an Introduction 7
 Need of accounting to bankers

• The role and importance of the accounting information in

the bank activity is derived from the role and functions of
commercial banks themselves

• Banks are the great financial intermediaries in economy

• While exercising their main functions, banks generate

extremely useful accounting information, both for the
bank management and for the clientele

• These functions or operations are traditional for the banks

and confirmed by law, generates accounting information
Accounting - an Introduction 8
 Accounting standards

• An accounting standard is a guideline for financial

accounting such as how a firm prepares and presents
its business income, expenses, assets and liabilities,
and may be in accordance to standards set by the
International Accounting Standards Board

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 Disclosure

• Where P&L and B/S of the companies do not comply

with accounting standards such company should
disclose:
– The deviation from the accounting standards
– The reason for such deviation and
– Financial effect if any due to such deviation

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Any questions?

Accounting - an Introduction 11
 Questions

Q. What is accounting?
 Accounting is an art of recording, classifying and
summarizing transactions
Q. What is the purpose of accounting?
 To keep a systematic record
Q. What is banking?
 Acceptance of Deposits of money from public for the
purpose of lending or investment
Q. What do you understand accounting standards?
 An accounting standard is a guideline for financial
accounting
Q. When disclosure is required?
 When companies do not comply with accounting standards
Accounting - an Introduction 12
THANKS

SK Gupta
9871722234
guptasudhir1953@gmail.com