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Accounting

Fundamentals
Course Learning Outcomes

• On successful completion of the course you should be able to:

• Explain accounting process, concepts, principles & conventions


• Estimate individual items of financial statements
• Summarize financial statements
• Apply ratio analysis on financial statements
• Identify ethical issues in accounting
Book Keeping is an art of recording the financial transactions in

a simple manner.

Accounting is the art of recording , classifying and summarizing

in a significant manner and in terms of money , transactions and

events which are , in part atleast , of financial character and

interpreting the results thereof.


Objectives of Accountancy

Recording monetary transactions.


Ascertaining the earnings of a company.
Ascertaining the financial status of a company.
Meeting the statutory requirements.
Helping in taking financial decisions.
Helping outsiders to know the functioning and financial
soundness of the company.
THE ACCOUNTING PROCESS

Identifying of Transactions

Recording in Journals

Classifying : Posting in Ledgers

Summarizing : Preparing Final Accounts

Interpretation & Analysis


PROCESSING
INPUTS
 Accounting Principles
 Business Transactions (e.g.
purchases sales, receipts  Accounting Standards
and payments etc.)
 Management Estimates
 External events (e.g. fire,
 Laws and Regulations (e.g.
changes in tax laws etc.)
Companies Act and Income Tax Act)

 Transaction Processing
Conventions
USERS
 Accounting Records
 Shareholders

 Managers
OUTPUT
 Suppliers
 Profit and Loss Account
 Creditors
 Balance Sheet
 Employees
 Cash Flow Statement
 Government
 Explanatory Notes
 Regulators
 Management Commentary
 Investors
 Special Reports and
 Security Analysts Analysis

 Rating Agencies  Tax Returns

 Academicians &  Regulatory Filings


Researchers
USERS OF FINANCIAL STATEMENTS

Internal Users External Users

Management Others
Group Shareholders
BOD Employees
Partners
Managers
Financing Group Public Group

Investors Govt. Agencies


Creditors Academicians
Suppliers Researchers
CLASSIFICATION OF ACCOUNTING

Accounting

Financial Cost Management


Accounting Accounting Accounting
Thank You