Introduction to Accounting

Asst. Prof. Rasika Naik

Introduction
• Define the term ‘Accounting’
• Branches of Accounting.
• Objectives of Accounting
• Advantages of Accounting
• Limitations of Accounting
Accounting
• Accounting has rightly been termed as the language of the business.
The basic function of a language is to serve as a means of
communication.
• Definition
• “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 at least, of financial character and interpreting the
results thereof”:
Branches of Accounting

Branches of
Accounting

Financial Cost Management

Accounting Accounting Accounting
Branches of Accounting
• There are three branches of accounting :
• i) Financial Accounting : Financial Accounting is concerned with recording
financial transactions, summarizing and interpreting them and
communicating the results to users. It shows the profit or loss of a particular
period & the position of the business on a particular date.
• ii) Cost Accounting :It helps in finding out the cost of production of a
product manufactured or services rendered and helps the management in
decision making.
• iii) Management Accounting : Management Accounting is concerned with
generating accounting information relating to funds, costs, profits etc. as it
enables the management in decision making.
Objectives of Accounting
• To keep systematic records
• To ascertain the operational profit or loss
• To ascertain the financial position of the business
• To facilitate rational decision making
• Protect Business Properties
• Ascertain Financial Position of the business
• Determination of Tax Liability
Advantages of Accounting
• Replaces memory
• Meets the information requirements
• Assists the management in many other ways
• Facilitates a comparative study
• Acts as reliable evidence
• Tax matters
• Ascertaining value of business
Limitation of Accounting
• Financial accounting permits alternative treatment
• Financial accounting is influenced by personal judgments
• Financial accounting ignores non-monetary information
• Financial accounting does not provide timely information
Basis of Book-Keeping Accounting
distinction
i) Objective The objective of Book- Accounting aims at maintaining
keeping is to maintain , business records, calculation of
records of business business income, and depiction of
transaction. financial Position and communication
of business results.

ii) Function The function of Book- The function of Accounting is

keeping to record business recording, classifying, summarizing
transactions. interpreting the business transactions
and communicating the results.
iii) Scope Book –Keeping has limited It has wider scope.
scope.
Basis of Book- Keeping Accounting
distinction
iv) Level of For, it elementary In Accounting, advance
knowledge knowledge of accounting and in depth
required rules is enough. understanding is required
v) Basis of For recording business Book keeping serves the
recording transactions, vouchers basis for accounting
and other supporting information.
documents are prepared
vi) Stage It is primary stage. It is final stage.
vii) Level of Lower level mainly Higher level mainly
person engaged account clerks. qualified accountants.
 Thank you
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