FINANCIAL ACCOUNTING

Course PGDM
SEM-I

BY
CA GUNJAN SHARMA
BUSINESS
An organization or economic system where goods and services
are exchanged for one another or for money
Business converts Input through a process into output
which is ultimately sold to customers
Can be privately owned ,public owned, not for profit and state owned
Purpose to generate resources Profit
In essence use cash to produce cash



What is Accounting
American Accounting Association Accounting is the
process of Identifying , measuring and communicating
economic information to permit informed judgements and
decisions by users of the information.


American Institute of Certified Public Accountants-
Accounting is the art of recording, classifying and
summarizing in terms of money , transactions and events
which are of financial character and interpreting the
results therof.
Need for Accounting
Result of Business Operations
Financial Position
Cash Generation
Predicting Future Profitability & Cash Flows
Internal Management Decisions
Determining Govt policies taxation, subsidy ,grants,etc.


Accounting
Art or science ?
Language of Business
Information System
Only Financial Transactions

Accounting as an Information System
Input
Transactions:
Sales
Purchases
Cash receipts
Cash payments

External Events
Output
Financial Statements
Statement of Profit & Loss
Balance Sheet
Cash Flow Statement
Statutory Compliances
Tax returns
SEBI, Stock Exchanges
Users of Accounting Information
Stakeholders
Lenders
Managers
Analysts
Investors
Suppliers
Employees & Trade Unions
Customers
Government
Regulators

Forms of Business Organization
Sole Proprietorship
Partnership
Limited Company
Private Company
Public Company
Limited Liability Partnership

Branches of Accounting
Financial Accounting
Cost Accounting
Management Accounting
Forensic Accounting
Human Resources Accounting