Guest lecture 1

Financial Accounting Process

Presented by.
ANITHA R
Assistant Professor
Department of Commerce
St. Anne’s Degree College for Women
 Accounting
Meaning:
Accounting is a process of identifying, measuring, recording, summarising and
reporting economic information to decision makers in the form of financial
statements.
• Identifying the business transactions
• Measuring: money value
• Recording and classification: journal and ledger
• Summarising: final accounts
 Financial Accounting

• It is one of the branches of Accounting.

• It deals with cash/fund inflows and outflows of
business.
• It’s focus is on reporting to external parties.
Accounting Process/ Cycle
 Identification and source Document

• Identification of business transactions

• Source documents that are evident for taking
place of the transactions
 Journal/ subsidiary books
• The first stage of the accounting process 
• Journal is the primary book of keeping accounts. 
• The book wherein the transactions are recorded in a
chronological order of dates after 
determining the debit account and credit account of transac
tions
 with explanation is called journal.
 Ledger

• A ledger is a book containing accounts in which

the classified and summarized information from
the journals is posted as debits and credits.
• It is also called the second book of entry.
 Trial balance
• A trial balance is a bookkeeping worksheet in which the balance of
all ledgers are compiled into debit and credit account column totals
that are equal.
• A company prepares a trial balance periodically, usually at the end
of every reporting period.
• The general purpose of producing a trial balance is to ensure the
entries in a company's bookkeeping system are mathematically
correct.
Financial statements/ Final Accounts/ Final
Report
• Final accounts gives an idea about the financial
performance and financial position of a business to its
management, owners, and other interested parties.
• The preparation of a final accounting is the last stage of
Accounting cycle