GST Plus - Get Daily updates,support, whatsapp Group & reply to GST Notices etc.!! Call : 011-411-70713 !!

ICICI

Share on Facebook

Share on Twitter

Share on LinkedIn

Share on Email

Share More


Accounting – An Introduction

Meaning and Scope of Accounting

Transaction is used to mean ‘a business, performance of an act, an agreement’ while event is used to mean ‘a happening, as a consequence of transaction(s), a result.’

Meaning of Accounting

Accounting is simply an art of record keeping. The process of accounting starts by first identifying the events and transactions which are of financial character and then be recorded in the books of account.

The Accounting Principles Board (APB) of American Institute of Certified Public Accountants (AICPA) enumerated the functions of accounting.

Objectives of Accounting

Book-Keeping

Book-keeping is an activity concerned with the recording of financial data relating to business operations in a significant and orderly manner.

Objective of Book-keeping: Complete Recording of Transactions

Distinction between Book-Keeping and Accounting

Sr. No. Book-Keeping Accounting
1 It is a process concerned with recording of transactions. It is a process concerned with summarising of the recorded transactions.
2 It constitutes as a base for accounting. It is considered as a language of the business.
3 Financial statements do not form part of this process. Financial statements are prepared in this process on the basis of book-keeping records.
4 Managerial decisions cannot be taken with the help of these records. Management takes decisions on the basis of these records.
5 There is no sub-field of book- keeping. It has several sub-fields like financial accounting, management accounting etc.
6 Financial position of the business cannot be ascertained through book-keeping records. Financial position of the business is ascertained on the basis of the accounting reports.

Accounting Concepts, Principles and Conventions

Accounting Concepts

Accounting concepts define the assumptions on the basis of which financial statements of a business entity are prepared. These accounting concepts lay the foundation on the basis of which the accounting principles are formulated.

Accounting Principles

“Accounting principles are a body of doctrines commonly associated with the theory and procedures of accounting serving as an explanation of current practices and as a guide for selection of conventions or procedures where alternatives exist.”

Accounting Conventions

Accounting conventions emerge out of accounting practices, commonly known as accounting principles, adopted by various organizations over a period of time.

To read the full article: Click here

"Loved reading this piece by CA Arpita Tulsyan?
Join CAclubindia's network for Daily Articles, News Updates, Forum Threads, Judgments, Courses for CA/CS/CMA, Professional Courses and MUCH MORE!"




Tags :



Category Students, Other Articles by - CA Arpita Tulsyan 



Comments


update