Accounting

Golden Rules
Accounting is the language of business.
-Warren Buffett

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What is Accounting?

Accounting is the process of recording,

01 classifying and summarizing financial
transactions.

It provides a clear picture of the financial

02 health of your organization and its
performance

In simple words, accounting refers to that process

where the financial transactions are recorded
03
systematically to keep a chronological record of the
event happenings.

The accounting process involves constant updating

04 of the transactions to reflect an accurate and
proper picture of the institution's financial
statements.

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Types of
Accounts
under
Accounting
System

Personal Account
A personal account is a general ledger account
related to the person, firms, and associations.

Real Account
A real account is a ledger account that
represents accounts of all assets possessed by
the organization. The real account appears in
the balance sheet and assesses the financial
position of the business.

Nominal Account
A nominal account is a ledger account that
relates to expenses, losses, incomes, and
gains. All of the nominal account adjustments
are made through the Trading and Profit and
Loss Account at the end of the accounting year.

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Golden Rules
of Accounting
Personal Account
Debit the receiver,
Credit the giver

Real Account
Debit what comes in,
Credit what goes out

Nominal Account
Debit all expenses and losses,
Credit all incomes and gains

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Basic
Functions
of
Accounting
Keeping financial records
Monitoring financial transactions
Making bill payments
Paying employee salaries
Keeping digital records
Writing financial reports
Maintaining fiscal history
Achieving business goals
Preparing budgets
Making financial projections
Auditing finances
Assessing financial resources
Reviewing performances
Complying with legal requirements
Preventing mismanagement
Ensuring vigilance against fraud

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Accounting
Principles
Accounting principles are rules and
guidelines that accountants and companies
have to follow when reporting their financial
statements.
These principles help in maintaining uniform
and consistent accounts for every
company.
The Indian Accounting Standard (Ind AS)
gives the accounting principles in India.
These accounting principles are known as
Generally Accepted Accounting Principles
(GAAP)

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Generally
Accepted
Accounting
Principles
In India, financial statements are prepared on
the basis of accounting standards issued by
the Institute of Chartered Accountants of
India (ICAI) and the law laid down in the
respective applicable acts (for example,
Schedule III to Companies Act, 2013 should be
compulsorily followed by all companies).
The ICAI also releases guidance notes from
time to time on various topics to help in the
accounting process and provide clarity.
While the basic accounting principles may not
directly form part of the accounting standards
and the related laws, they are assumed and
expected to be universally followed.

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 Accounting
Concepts

Accounting concepts are the basic rules,

assumptions, and conditions that define the
parameters and constraints within which
accounting operates.
In other words, accounting concepts are
generally accepted accounting principles,
which form the fundamental basis of
consistently preparing the universal form of
financial statements.

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Accounting
Convention

Accounting conventions are guidelines

used to help companies determine
how to record business transactions
not yet fully covered by accounting
standards.
They are generally accepted by
accounting bodies but are not legally
binding.
If an oversight organization sets forth a
guideline that addresses the same
topic as the accounting convention, the
accounting convention is no longer
applicable.
There are four widely recognized
accounting conventions: conservatism,
consistency, full disclosure, and
materiality.

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 Thank You

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