Basics Of Accounting

Chapter 1

Presentation by Divyanshu Joshi

Roll No . 202221020
 Title:
Basics Of Accounting

Author:
Rajni Sofat, Preeti Hiro
About Publisher:
PHI Learning Private Ltd.

Copyright Date:
2010
Summary

● Accounting is about recording, classifying, analysing, interpreting and

summarizing of business transactions in terms of money.
● It has six attributes of -
○ Recording
○ Classifying
○ Summarizing
○ Financial Transactions
○ Analysis and interpretation
○ Communication
Objectives Of Accounting

● To maintain systematic record.

● To ascertain the -
○ Financial position of the business,
○ Operational P&L.
● To facilitate rational decision making.
● Knowledge of -
○ Debtors & creditors,
○ Purchase and sales,
○ Cash and bank balance,
○ Closing stock.
Bookkeeping Vs Accounting

Bookkeeping Accounting

1. Objective to help prepare books of accounts 1. Objective here is to rec, classify, summarize,
by recording transactions. analyze and interpret business transactions.
2. Done by a lower level management. 2. Higher Management work.
3. Concerned with recording, classifying and 3. Wide scope including bookkeeping and
summarizing. interpreting and analysis.
4. Does not show financial position of 4. Helps in understanding Financial position of
business. business.
5. Simpler in nature compared to accounting. 5. Bit complex and needs higher knowledge to
manage.
Users of Accounting

Users

Internal Users External User

Owners Creditors

Management Investors

Employees Government
Customers

Researchers

Foreigners
Others
Accounting Cycle

Recording

Analysis and
Classifying
Interpretation

Summarizing
Limitations Of Accounting

● Non-recording of non financial transactions.

● Estimates are not accurate.
● Price-level changes are ignored.
● Conflicting principles.
● Does not highlight departmental efficiency.
● Figures are not self explanatory.
● No suggestive approach.
● Subjective approach.
 My review

I learnt basics of what accounting is all about. And 2nd chapter

begin to explain the principles that are generally accepted for
accounting. I would recommend to anyone who has no idea of
Accounting and Bookkeeping.
THANKYOU