FUNDAMETALS OF ACCOUNTS

Prepared by
Krishnakumar A
 Introduction About Accounts
Before Evaluation of money, commodities of exchange for commodities

Business entities and other organisations carry on activities which

involve exchange of money or money’s worth or economic resources.

In 1494, Luca Pacioli on Italian developed double entry book keeping

Due to the industrial revolution in the 18Th and 19th Centuries,

Large scale business were carried on joint stock companies

In the 20th century the need for analysis of financial informention for

managerial decision making

 What is Accounts
 According to the American Institute of Certified Public Accountants.

“Accounting is the art of recording, classifying and summarising in a

significant manner and in terms of money, transactions and events which
are in part, at least of a financial character and interpreting the results
thereof ”.
 American Accounting Association

“the process of identifying, measuring, and communicating Economic

information to permit informed judgements and decisions by users of the
information”.
Accounting Cycle
 Objectives of Accounting
Measurement

Forecasting

Comparison

Decision making

Control

Assistance to government
Importance of Accounting
Systematic Records
Preparation of Balance sheet
Assessment of Progress
Aid to Decision Making
Satisfies legal requirement
Information to interested groups
Legal evidence
Computation of tax
Settlement of during ledger