INTRODUCTION

TO
ACCOUNTINN
G PART- 1
XI ACCOUNTANCY
SUNIL PANDA
COMMERCE CLASSES
 BUSINESS
The term business refers to an organization or enterprising
entity engaged in commercial, industrial, or professional
activities. The purpose of a business is to organize some sort of
economic production (of goods or services)
Aim is to earn, grow, social welfare, etc.
 FORMS OF BUSINESS

01 SOLE
PROPERIETORSHIP

02 PARTNERS
HIP

03 COMPANI
ES
SUNIL PANDA COMMERCE CLASSES
 BUSINES
ASSETS LIABILITIES S
Assets are Liability is a term in
economic accounting that is
resources of an used to describe
enterprise that any kind of
can be usefully financial
expressed in obligation that a
monetary terms. business has to
pay.
 ASSETS
An Assets is any resource
owned by the business
Asset may be Tangible and
Intangible.
Assets is anything which will
enable t he firm to get
economic benefit in
the future.
These are measurable in
terms of money e.g. land
and building, Plant and
 LIABILITIES
Liability is a term in
accounting that is used to
describe any kind of financial
obligation that a business
has to pay.
The Liability which is
Payable with in 12 Months is
Called Current Liability
And The liability which is
Payable
after 12 Months is called Non
current Liability
WHY WE NEED TO STUDY
ACCOUNTS ?
 FINANCIAL
STATEMENTS

PROFIT BALAN
& LOSS CE
A/C SHEE
T
 Meani
ng
Accounting is a systematic process of identifying,
measuring, recording, classifying, summarizing, Analysing
& interpreting and communicating the financial
information to its users

ACCOUNTING
 CHARATERISTICS OF
ACCOUNTING

Identifyi Measuri Recordi classifyi

ng ng ng ng

communicat Interpreti summaris

ing ng ing

Book keeping is the combination of Identifying, Measuring,

Recording, and Classifying
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you
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INTRODUCTION
TO
ACCOUNTINN
G PART- 2
XI ACCOUNTANCY
 Objectives of
Accounting
1. Maintaining Records:- The objective of accounting is to
record financial transaction in a systematic manner
2. Determine profit or loss:- The objective of accounting is to
determine the profits earned or loss incurred by a
business during a particular period
3. Determine financial position:- The objective of accounting
is to determine the financial position i.e. balance sheet
which records assets and liabilities of an enterprise.
4. Helps in management:- Accounting information is required
by management to take strategic decision
5. It protect business assets:- Objective of accounting is to
record the assets and liabilities which helps the
management to protect them
 Advantages of Advantages of
accounting
Accounting
1. Information about business:- Accounting helps to get
financial information to its users. Users can know about
the profit or loss and other information
e.g. Financial statement
2. Helps to management:- Accounting provide various
financial information to the management so that they can
take necessary decisions to run the business smoothly
3. Helps in comparison:- A systematic record helps a
businessmen to compare on year result with other year
4. Helps to take loan:- With the helps of financial statement
one can know the earning capacity of business and
repayment capacity of the business which helps to raise
loans.
 5.Evidence in court:- Systematic record of transaction is
often accepted by the court as good evidence
6.Computation of tax liability:- Financial statement helps
to know the tax liability of an enterprise
7.Helps in sale of business:- because accounting
maintaining record of each and every financial transaction
one can sell its business by doing valuation of assets and
liabilities
 Limitation of Limitations of
accounting Accounting
1. Accounting is not fully exact:- In accounting various
assumptions are made. Some estimates are also made for
ascertaining profit e.g. estimated life of assets
2. Ignore qualitative elements:- Accounting records only
monetary transaction only skills of human resources,
honest employees working with their full dedication are not
record
3. Personal bias:- Which method of accounting is adopted,
which method of depreciation is adopted, it leads to
personal biased among managers
 4.It ignores the effect of price level changes:- Accounting
statements are prepared at historical cost. We all know value
of money changes but accounting presume that value of
money remains stable due to this accounting information is
not showing correct results.
5.It may leads to window dressing:- window dressing
means manipulation of account of account in a way so as to
conceal vital facts and present the financial statement to
show a better position than what is actually is in this
situation users are not getting true and fair view of result of
operation
 Branches of
Accounting
FINANCIAL COST MANAGEMENT
ACCOUNTING ACCOUNTING ACC.
To Know the To reduce the Helps Managers to
financial Direct and indirect
performance of
take various
Cost.
the Business Managerial
Optimum
entity. utilisation of decisions.
Making Financial resources
Statements, To earn more, Cost
analysis and cutting is necessary
Interpretation of
financial
Performance,etc.

SUNIL PANDA COMMERCE CLASSES

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you
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INTRODUCTION
TO
ACCOUNTINN
G PART- 3
XI ACCOUNTANCY
 BOOK KEEPING
Book keeping is concerned
with
identifying financial
transactions and events;
measuring them in money
ter ms; recording them in the
books of a ccount and
classifying them.
It is a part of Accounting
 ACCOUNTING
Accounting is a systematic
process of identifying,
measuring, recording, cla
ssifying, summarizing,
Analysing & int erpreting and
communicating the fin ancial
information to its users.
It Includes Book keeping.
 ACCOUNTANCY
It is a Systematic
Knowledge of
Accounting.
Accounting is a Process
and Having the Knowledge
of that Process is called
Accountancy.
It includes Book
keeping and
Accounting
 Accounting is an Art and Science

Accounting is both an art as well as science it records,

classify and summarizing financial transaction which is
an art because in
accounting we use various principles hence we can call it
is a science also.

Accounting is an Art
and Science
USERS OF ACCOUNTING
INFORMATION

INTERNAL USERS

EXTERNAL USERS
INTERNAL
USERS

OWNERS

MANAGEMENT
EXTERNAL
USERS
BANKS & FINANCIAL INSTITUTIONS

EMPLOYEES & WORKERS

INVESTORS & POTENTIAL

INVESTORS
CREDITORS & CUSTOMERS

GOVERNMENT & TAX

AUTHORITIES
RESEARCHERS & ANALYSIST
 Difference between book keeping and accounting
Basis Book keeping Accounting
Scope Book keeping is concerned Accounting is concerned
with identifying financial with summarizing the
transactions and events; recorded transaction and
measuring them in money events, interpreting them
terms; recording them in the and communicating the
books of account and result thereof
classifying them.
Stage It is primary stage. It is the It is the secondary stage. It
basis for begins
accounting where book keeping ends
objectiv The objective of book keeping The objective of
e is to maintain systematic accounting is to ascertain
record of financial net result of operations
transactions. and financial position and
to communicate
Natur This job is routine in nature This job is analytical and
e of dynamic
job in nature
Perfor It being a routine It being a specialized
m work is performed function is performed by
ance by junior staff senior staff
Special Book keeping is Accounting requires special skills
skills mechanical in nature and and
thus does not require ability to analyse and interpret.
special skills
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