Accounting

-

 


In 1941, The American Institute of Certified Public Accountants (AICPA) had defined accounting as 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 financial character, and interpreting the results thereof’.

Branches of Accounting

The economic development and technological advancements have resulted in an increase in the scale of operations and the advent of the company form of business
organisation. This has made the management function more and more complex and increased the importance of accounting information. This gave rise to special branches of accounting. These are briefly explained below :

Financial accounting 
The purpose of this branch of accounting is to keep a record of all financial transactions so that:
  • the profit earned or loss sustained by the business during an accounting period can be worked out,
  • the financial position of the business as at the end of the accounting period can be ascertained, and
  • the financial information required by the management and other interested parties can be provided.

Cost Accounting
The purpose of cost accounting is to analyse the expenditure so as to ascertain the cost of various products manufactured by the firm and fix the prices. It also helps in controlling the costs and providing necessary costing information to management for decision-making.

Management Accounting
The purpose of management accounting is to assist the management in taking rational policy decisions and to evaluate the impact of its decisons and actions.

Comments

Post a Comment

Popular posts from this blog

Understanding students’ difficulties in learning the types of partners in partnerships

-
  Littisha Shaji Abstract Action research enables educators to identify, analyze, and resolve specific challenges in teaching and learning. This study investigates the difficulty among students in comprehending the types of partners in partnerships, a crucial concept in commerce education. Conducted during a teaching practice with plus-one students studying business studies, the research identifies causes such as unclear definitions, overlaps in concepts, and lack of relatable examples. The study further evaluates the effectiveness of various remedial measures, emphasizing techniques like simplified definitions, case studies, and tabular comparisons. Recommendations focus on adopting interactive and practical teaching methods to enhance understanding. Keywords Action research, commerce education, partnerships, teaching strategies, student engagement, learning difficulties, active partner, sleeping or dormant partner, secret partner, nominal  p artner, Partner by estoppel, Part...
Read more

Basic Accounting Terms

-
Image
  Entity Entity means a reality that has a definite individual existence. Business entity means a specifically identifiable business enterprise like Super Bazaar, Hire Jewellers, ITC Limited, etc. An accounting system is always devised for a specific business entity (also called accounting entity). 2. Transaction An event involving some value between two or more entities. It can be a purchase of goods, receipt of money, payment to a creditor, incurring expenses, etc. It can be a cash transaction or a credit transaction. 3. Assets Assets are economic resources of an enterprise that can be usefully expressed in monetary terms. Assets are items of value used by the business in its operations. For example, Super Bazar owns a fleet of trucks, which is used by it for delivering foodstuffs; the trucks, thus, provide economic benefit to the enterprise. This item will be shown on the asset side of the balance sheet of Super Bazaar. Assets can be broadly classified into two types: current an...
Read more

Users of Accounting

-
Image
 Accounting is a means by which necessary financial information about business enterprise is communicated and is also called the language of business. Many users need financial information in order to make important decisions. These users can be divided into two broad categories: internal users and external users. Internal users include: Chief Executive, Financial Officer,Vice President, Business Unit Managers, Plant Managers, Store Managers, Line Supervisors, etc. External users include: present and potential Investors( shareholders), Creditors (Banks and other Financial Institutions, Debenture holders and other Lenders), Tax Authorities, Regulatory Agencies (Department of Company Affairs, Registrar of Companies, Securities Exchange Board of India, Labour Unions, Trade Associations, Stock Exchange and Customers, etc. Since the primary function of accounting is to provide useful information for decision-making, it is a means to an end, with the end being the decision that is helped...
Read more