FUNDAMENTALS

AND
APPLICATIONS OF ACCOUNTING
STUDENT NAME ~ ABHINAV MISHRA

CLASS ~ 11C

SUBJECT ~ ACCOUNTS
 CERTIFICATE

This is to certify that “Abhinav Mishra” student

of class 11th C has successfully completed their
“Accounts” Project on “Fundamentals And
Applications of Accounting” under the guidance
of “Harsh Sir”
 ACKNOWLEDGEMENT

I would like to express my special thanks of gratitude

to my accounts teacher “harsh sir”
as well as our principal who gave me the golden
opportunity to do this wonderful project on the topic
“Fundamentals and Applications of Accounting”
 TABLE OF CONTENTS
1. Introduction
2. Meaning of Accounting and Accountancy
3. Characteristics of Accounting
4. Objectives of Accounting
5. Role of Accounting in Business
6. Accounting Process
7. Branches of Accounting
8. Difference between Bookkeeping, Accounting, and Accountancy
9. Users of Accounting Information
10. Definition of Basic Accounting Terms
11. Conclusion
12. Bibliography
 INTRODUCTION
This project aims to provide a thorough understanding of
accounting and its various aspects. It delves into the
meaning of accounting and accountancy, highlights the
characteristics of accounting, explores its objectives, and
examines its crucial role in business. The project also
discusses the accounting process, different branches of
accounting, and the distinctions between bookkeeping,
accounting, and accountancy. Furthermore, it identifies
the users of accounting information and explains their
roles through the use of a flowchart. Lastly, the project
provides definitions for 20 key accounting terms,
MEANING OF ACCOUNTING AND ACCOUNTANCY

Accounting is a systematic process of identifying,

measuring, recording, classifying, summarizing,
analyzing and interpreting financial transactions and
communicating it to its users.

AND
Accountancy is a systematic knowledge of accounting.
It is an educating process whereby various aspects of
accounting are explained along with the reason.
CHARACTERISTICS OF ACCOUNTING

Identification of Financial Transactions and Events

Measuring the Identified Transactions

Recording

Classifying

Summarizing

Analyzing and interpreting

communicating
 Identifying of Financial Transactions and Events

Accounting records only those transactions and events

which can be measured in terms of money.

Measuring the Idenified

Transactions
Financial Transactions and events are measured in
terms of money. An event which cannot be measured in
money is not recorded.

Recording

Accounting is an art of recording business transactions

in the books of account. Recording is the process of
recording business transactions of financial character.
 Classifying

Classification is the process of grouping transactions or

entries of one nature at one place.

Summarizing

Summarizing involves presenting the classified data in a

manner which is understandable.

Analysis and Interpretation

Analysis is concerned with the establishment of

relationship between the various items taken from profit
and loss and balance sheet or both.

Communicating

Accounting function involves communicating the financial

information to its users
 OBJECTIVES OF ACCOUNTING
Maintaining Accounting Records

The objective of accounting is to record financial transactions

and events of the organization in the books of account in a
systematic manner following the principles of accountancy.

Determining Profit or Loss

Another objective of accounting is to determine whether

during the accounting period, the firm has earned profit or
loss.

Determining Financial Position

Another objective of accounting is to determine financial

position i.e. value of assets on one side and liabilities on the
other side. Financial position of the business is relevant for
the users of financial statements as in the income statement.
 Facilitating Management

The management often requires financial information for

decision making, effective control etc. Accounting provides
financial information to assist the management.

Providing Accounting Information

Yet another objective of accounting is to provide accounting

information to users, both internal and external. Who analyse
the according to their requirements.

Protecting Buisness Assets

Another objective of accounting is to have records of assets owned

by the business. Accounting maintains record of assets owned by
business which enables the management to exercise control and
protect them
ROLE OF ACCOUNTING
IN
BUSINESS
 Maintenance of Systematic Records

The primary role of accounting is to maintain systematic

records of all financial transactions of business

Assitance to Management

Accounting assists the management by making available

financial information for effective functioning and rational
decision making

Facilitates Comparative Study

A systematic record of financial transaction enables

comparison of one year’s results with those of other years and
identifies reasons leading to change, if any.
 Evidence in Court

Accounting records are often accepted by court as good

evidence in any kind of court trial against the firm.

others

It facilitates raising loans, sale of business by ascertaining the

proper purchase price, settlement of tax liabilities and proper
accounting records obviates the necessity to remember
business transactions.
 PROCESS OF ACCOUNTING
Financial Transactions
and Events
Communicating
to users

Analysis and 1.Cash book

interpretation 2.Purchases book
3.Sales book
4.Purchases return book
5.Sales return book
Summarising
6.Bills Payable book Recording
1. Trial Balance
7.Bills Receivable book
2. Trading and Profit &
8.Journal Proper
Loss account
3. Balance Sheet

Classifying (Posting into ledger)

 BRANCHES OF ACCOUNTING

Financial Accounting Cost Accounting Management Accounting

Deals with maintenance of

books of accounts to Deals with recording costs with Deals with providing necessary
determine financial position the objective of ascertaining, information to the management
and performance of the reducing and controlling costs for discharging their functions
business
 DIFFERENCE BETWEEN BOOK-KEEPING,
BOOK-KEEPING
1. It involves recording of
financial transactions and
events in asset of books as per
accounting policies. It is
application of accounting.
2. It is the primary stage of
accounting.
3. It is a part of accounting
because it involves recording
of transactions and events,
classifying them and preparing
financial statements.
ACCOUNTING
AND ACCOUNTANCY
ACCOUNTING
1. It is also application of
accountancy. But, after
completion of book-keeping
process.
2. It is the secondary stage
and starts where book keeping
ends.
3. It analyses the financial
statements made available by
the process of book-keeping.
ACCOUNTANCY
1. It includes theories, principles
and system of accountancy, i.e.,
why and how financial
transactions are recorded in the
book of accounts.
2. It is a complete process
which includes book keeping
as well as accounting
3. It involves teaching
methodology to record
transactions and analyzing the
financial statements prepared by
the process of book-keeping.
 USERS OF ACCOUNTING INFORMATION

INTERNAL EXTERNAL
USERS USERS

OWNERS MANAGEMENT INVESTORS CREDITORS

EMPLOYEES GOVERNMENT CUSTOMERS

PUBLIC
BASIC
ACCOUNTING
TERMS
1 Assets

Economic resources owned by a business that have

future value and can be measured in monetary terms.

2 Liabilities

The obligations or debts of a business that require future

payment or settlement.

3 Equity

The obligations or debts of a business that require future

payment or settlement.
4 Revenue

Income earned by a business from its primary

operations.

5 Expenses

Costs incurred by a business in generating revenue.

6 Drawings

The withdrawal of cash or other assets by the owner(s)

for personal use.
7 Capital

The initial investment made by the owner(s) to start a

business.

8 Purchase

Acquiring goods or services in exchange for payment.

9 Sale

Transfer of ownership of goods or services in exchange

for payment.
 4
10 Credit

An arrangement to buy goods or services now and pay

for them later.

5
11 Debit

An entry made on the left-hand side of an account to

increase assets, expenses, or draw on capital.

6
12 Creditors

Individuals or entities to whom a business owes money.

13 Debtors

Individuals or entities who owe money to a business.

14 Journal

A chronological record of financial transactions in the

order of their occurrence.

15 Ledger

A book that contains separate accounts for each

financial element (assets, liabilities, equity, revenues,
and expenses).
 4
16 Trial Balance

A statement that verifies the equality of debit and credit

balances in the ledger accounts.

5
17 Cash Book

A record of all cash transactions, including both cash

receipts and cash payments.

6
18 Bank Reconciliation Statement

A document that compares the bank statement balance

with the company's cash book balance to identify
discrepancies.
19 Financial Statements

Formal reports prepared by a business that provide

information about its financial performance, position, and
cash flows.

20 Rectification of Errors

The process of identifying and correcting mistakes or

inaccuracies in accounting records.
 CONCLUSION
In conclusion, this research project has provided a
comprehensive exploration of the fundamentals and
applications of accounting. We have gained a clear
understanding of the meaning of accounting and
accountancy, recognizing their significance in today's
business environment. The characteristics of accounting,
such as relevance, reliability, comparability, consistency,
and understandability, have been identified and
discussed, highlighting their importance in producing
high-quality financial information.

Lastly, the project has enriched our understanding of

accounting by defining 20 essential accounting terms,
ensuring a solid foundation of knowledge in the subject
matter.
 BIBLIOGRAPHY
VECTORS:
● Investment instagram stories template illustrated
● Investment banner template illustrated I
● Investment banner template illustrated II
● Investment web template illustrated III
● Investment web template illustrated IV
● Investment web template illustrated V
● Investment youtube cover template illustrated
● Hand drawn minimal background
● Linear flat circular diagram infographic
(from
freepik.com)
ICONS:
● Economy icon pack (from freepik.com)
PHOTOS:
● Teamwork meeting with business people
● Business people meeting at office working
● Portrait of a smiling young woman with her arm crossed
against blue background
● Front view smiley african woman wearing traditional acc
essories
● Smiley friends having their arms crossed
● Front view of smiley and friendly man (from
freepik.com)
CONTENT:
o Double Entry book keeping by TS Grewal
o Forums about accounting on reddit and Quora
o Non-profit template from slidesgo.com
 THANKS
FOR
READING