What is Accounting Study Material?
"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 a financial character and interpreting the results thereof."
Attributes of Accounting
The above definition brings out the following as Attributes of Accounting
- Events and transactions of a Financial Nature are recorded while the events of a non-financial nature are not recorded.
- The record should reflect the Importance of Transactions so recorded both individually and collectively, which includes summarization, thereby making it amendable to analyze.
- The users of the financial statements should be able to obtain the Message Encompassed in such financial statements, and it is the knowledge of accountancy which enables the user to understand the contents of the financial statements.
Accounting is best known as the Language of business and communicates the results of the business. As the accepted lingua franca in addition to being the medium of communication it also satisfies the role of understanding the existing as well as potential additions to the available literature. To communicate the necessary, vital and relevant information, the requirements of the prospective users are identified and a systematic process is adhered to resulting in the formation of the “Financial Statements”.
They are primarily
- Income Statement
- Balance Sheet
- Cash Flow Statements
The major purposes of these statements basically are
- Providing information which in turns becomes the basis for exercising decisions and actions by the potential users,
- Reflecting the financial progress and present health of the business
- Aiding in the formulation of policies and procedures for the smooth and efficient conduct of the business.
- Enabling the accounting to discharge their obligations and stewardship functions effectively.
Objectives of Accountancy
- It is a means of recording the monetary transactions and events
- It is required to ascertain the earnings of the company, which is achieved by preparation of the Income Statement.
- It is required to identify the obligations (liabilities) and the resources (assets) of the organization.
- Accounting records are required to be maintained statutorily by certain government and regulatory bodies.
- Accounting records are also required by the accounting for taking the financial decisions
- Generally investors and certain lenders also require the preparation of the financial statements.
Areas of Accountancy
- Accounting Basics: This will introduce you to the basics of accounting including everything from accounting equationto its components, financial statements to Income statements and the Cash flow.
- Accounting Information System: Accounting Information System is considered as a collection of data and processing procedures that helps in creating the required information for certain users.
- Auditing: Auditing is a very important part of accounting. Previously, audits were used only for gaining information about financial systems and the financial records of a company or a business. However, recently auditing also includes non-financial subjects like security, safety, information systems performance, and environmental concerns.
- Balance Sheet Demystified: In financial accounting, balance sheet is a summary of financial balances in which assets liabilities and ownership equity are listed with a specific date. Get into the detailed analysis of a balance sheet in this section.
- Bookkeeping: Bookkeeping is the practice of recording the transaction and accounts of a business. Bookkeeping is considered as the smallest part of accounting. It involves recording each and every transaction that took place in a day, which is eventually tallied at the end of the day and at the end of the month.
- Cost Accounting: Cost accounting provides information about costs, which the management accountant uses to plan, control and make decisions.
- Decision Making: In accounting, decision-making can be defined as choosing one course of action from several alternatives. If there are no alternatives present, then no decision is required. Best decision is said to be the one that involves the most revenue or the least amount of cost.
- FIFO Accounting: First in First out method is an asset management and valuation method in which assets acquired or manufactured first are sold or disposed of first. FIFO accounting method is used by all entities that are maintaining stock.
- Financial Accounting: Financial accounting is concerned with recording, classifying, summarizing and analyzing financial transactions and preparing financial statements relating to the business.
- Time Value of Money: The value of money in the present is worth more than the same value at a future date due to the potential earning capacity of money, which is termed as time value of money.
Think something is missing? We have a lot more to offer. Following are the areas of study under accounting that are covered under homework help with us. As any question on any of the following topics!
If you need more help in accountingClick here