Essential Accounting Level II By Sivakumar Ganesan B. Sc, ACA, ICWA, PMP, PDIM Global Technology Services LLc, UAE Emai.


123 views
Uploaded on:
Category: Travel / Places
Description
2. Motivation. What is AccountingMode of Learning AccountingAccounting and Finance - DifferenceAccounting Concepts/ConventionsAccounting EventsRules of AccountingPreparation of Financial StatementsA Simple Case Study . 3. . Bookkeeping is characterized as the specialty of Recording, Classifying and Summarizing exchanges in fiscal terms (in Money terms) for the planning of Financial Statements.
Transcripts
Slide 1

Fundamental Accounting Level II By Sivakumar Ganesan B. Sc, ACA, ICWA, PMP, PDIM Global Technology Services LLc, UAE Email:sivakumar3009@gmail.com

Slide 2

Agenda What is Accounting Mode of Learning Accounting and Finance - Difference Accounting Concepts/Conventions Accounting Events Rules of Accounting Preparation of Financial Statements A Simple Case Study

Slide 3

Vision Enterprises Financial Statement at December 31, 1997 JOURNAL Vision Enterprises Financial Statement at December 31, 1997 Assets Cash Account Receivable Land Total Assets Liability Account Payable Notes Payable Total Liability Stockholder\'s Equity Contributed Capital Retained Earnings Total Stockholder\'s Equity $4,456 $5,714 $ 981 - $11,151 ====== $3,830 $ 416 - $4,246 ====== $2,365 $ 367 - $2,732 ====== Vision Enterprises Financial Statement at December 31, 1997 Assets Cash Account Receivable Land Total Assets Liability Account Payable Notes Payable Total Liability Stockholder\'s Equity Contributed Capital Retained Earnings Total Stockholder\'s Equity $4,456 $5,714 $ 981 - $11,151 ====== $3,830 $ 416 - $4,246 ====== $2,365 $ 367 - $2,732 ====== Assets Cash Account Receivable Land Total Assets Liability Account Payable Notes Payable Total Liability Stockholder\'s Equity Contributed Capital Retained Earnings Total Stockholder\'s Equity $4,456 $5,714 $ 981 - $11,151 ====== $3,830 $ 416 - $4,246 ====== $2,365 $ 367 - $2,732 ====== PAYMENT ? What is Accounting is characterized as the specialty of Recording, Classifying and Summarizing exchanges in fiscal terms (in Money terms) for the planning of Financial Statements

Slide 4

What is Accounting is the craft of recording, ordering and Summarizing monetary exchanges in the Preparation of Financial Statements Recording alludes to making Journal section for each budgetary exchange with Debit and Credit sums. Ordering alludes to Classifying each of the Debit/Credit Transaction to Capital or Revenue and Asset, Liability, Revenue or Expense Summarizing alludes to Grouping the Transactions of Asset, Liability, Revenue and Expenses and setting up the Financial Statements (Trading, Profit and Loss Account and Balance Sheet) if there should be an occurrence of Trading, Manufacturing and Customer Service arranged Organization, the total of all salary and costs is alluded to as Profit and Loss account Social Service situated Organization like Schools, Hospitals and Government Organizations, Banks it is alluded to as Income and Expenditure account . Note:- Trial Balance is not a Financial Statement. It is just a synopsis of all Debit and Credit Transactions.

Slide 5

Mode of Learning Accounting Change your outlook that bookkeeping implies just Debit and Credit Do not indiscriminately learn Accounting Rules and apply the standards of Debit and Credit The Best approach to Learn Accounting is Learn the Accounting Concepts Understand the Accounting Conventions Classify the Accounting Event Apply the Accounting Rules Record, Classify and Summarize the Journal You are Confused. Am I right? Try not to end up frenzy and push ahead, you will comprehend

Slide 6

Mode of Learning Accounting Learn Accounting Concepts (Ten Fundamental Accounting Concepts) Understand Accounting Conventions (Three noteworthy traditions) Classify the Accounting Events (Capital, Revenue, Deferred Revenue Expenditure) Apply the Accounting Rules (Personal, Real and Nominal Rules) Record the Transaction as a Journal (Entering the Debit and Credit Side of Transaction) Classify the Transaction (Asset, Liability, Revenue or Expense) Summarize the Transaction (Prepare Trial Balance, Trading, P&L and Balance Sheet)

Slide 7

Finance and Accounting - Difference

Slide 8

Accounting Concepts/Conventions (US GAAP/UK GAAP/IFRS/SOX) The Concepts and traditions of bookkeeping are produced by IASC (International Accounting Standards Committee) which is responsible for discharging International Accounting Standards (IAS) The IASC Decides the favored Accounting rehearses worldwide and empowers the overall acknowledgment There are 41 International Accounting Standards Now IFRS (International Financial Reporting Standards) and SOX (Sarbanes Oxley) Act acquire significance which came up from US GAAP and UK GAAP

Slide 9

Difference amongst Concepts and Conventions The Accounting Concepts/Principles developed out of the Practice and Procedures took after by various nations and later on set up by the International Statutory Accounting Bodies like The Institute of Chartered Accountants of India, The Institute of Chartered Accountants of England and Wales and so on to wind up distinctly an Accounting Principle statutorily should be taken after while setting up the Financial Statements. In nutshell this has developed out of standard Practice took after by a few nations while setting up the Trading, Profit and Loss Account and Balance Sheet. The Accounting Conventions/Practices are essentially suspicions and anticipated that would be taken after while setting up the Financial Statements.

Slide 10

Accounting Concepts/Principles Business Entity Concept Money Measurement Concept Dual Aspect Concept Cost Concept Accounting Period Conservatism Realization Concept Matching Concept Materiality Concept Objectivity

Slide 11

Accounting Conventions/Practices Going Concern Consistency Accrual

Slide 12

Accounting Concepts Business Entity Concept Accounts can be kept just for Entities, which are not the same as the people who are related with these elements Ex. Sole Proprietary, Partnership firm, Company This is a standout amongst the most Important and key bookkeeping standard with which Double section arrangement of bookkeeping has advanced. Accounts should be kept up isolated from the Owners and suppliers of capital. On the off chance that you comprehend the straightforward rationale, then you know 30% of Accounting. Simply Recall Fundamentals of Accounting from Oracle Perspective Level I Example of Siva, Oracle and Bank. See Next Slide for More Examples. In the event that you can\'t comprehend this Concept Please Do not Proceed Further and attempt to comprehend by perusing again Level I and Level II Material

Slide 13

Types of Entities

Slide 14

Accounting Concepts Business Entity Concept Ex 1: You are running your own particular Textile Showroom as a Dealer in Cloth as a Sole Proprietor/Individual Owner of the Business. The whole capital sum for the Business is given by you. For this situation likewise with the end goal of bookkeeping you have to keep up Two arrangement of books. One arrangement of books with the end goal of Textile Business in which, Business owes you identical to the Capital Provided (Capital + Profit earned) or (Capital – Losses) In your own particular Books the measure of Capital contributed will be appeared as an Investment in Business as an Asset. This need not be kept up as a Normal Set of Books yet required to know the Cash Inflow and Cash Outflow from Income Tax Perspective. Ex 2: You are working for Oracle Corporation and Oracle has a Bank Account with Bank of America and You have Bank Account with Citi Bank and the compensation at end of consistently is exchanged from Bank of America to Citi Bank. What number of bookkeeping Entities required for this situation? On the off chance that your answer is 4, then you are correct (You, Oracle Corp, Bank of America, Citi Bank) Ex 3: You maintain your own Business in Software Consulting and your Friend has consented to give a Loan of 50000 USD which he goes and store straightforwardly into your Bank account - what number bookkeeping Entities required for this situation? On the off chance that you say 3, You are correct, it is just Three. (You, Your Friend and Bank)

Slide 15

Accounting Concepts Money Measurement Concept Record ought to be made just of that data which can be communicated in Monetary Terms (i.e.) Currency esteem (USD,GBP,INR) Ex 1. Sole Proprietor had 40 Tables & Chairs. This can\'t be recorded unless a Value of Furniture is known in money related value Ex 2. Exceptionally Famous Indian Example – Rama Killed Ravana. Will this be Accounted? – NO Ex 3 . My significant other Loves me so much – Can this be accounted? – A Big NO (Hahhah). This is Flaw in Financial Accounting as it does not comprehend the human qualities Ex 4 . My Father in Law gave his Personal Property to begin my Business. Can this be Accounted – Yes (If the Value of the Property is given)

Slide 16

Accounting Concepts Money Measurement Concept A Normal Doubt strikes a chord in the first and fourth case in past slide how to get the esteem. We ought not take the Purchase esteem, but rather we ought to take the Market an incentive on the date of exchanging the resources for Business. This is a special case to cost idea just if there should be an occurrence of exchange to another business Ex 5: Siva began his product counseling Business with his own particular Property (Cost Price 1 Million USD and Market Value 1.5 Million USD) and Furniture\'s cost 50000 worth Market Value 30000 USD -For this situation, You can record Siva Capital (1530000) and Building 1500000 and Furniture 30000 as Assets

Slide 17

Accounting Concepts Dual Aspect Concept The Value of the Assets possessed by the worry is equivalent to the cases on the ASSETS = LIABILITIES + OWNER\'S EQUITY OWNER\'S EQUITY = ASSETS – LIABILITIES LIABILITIES = ASSETS – OWNER\'S EQUITY Ex: If Owners Equity is 600000 and Liabilities are 400000, then Total Asset = 1000000

Slide 18

Accounting Concepts Cost Concept Assets are dependably appeared at their Cost and not at their present Market Value Ex 1. A Land Purchased for Rs.5 Lacs will be recorded just at Rs.5 Lacs despite the fact that Market esteem may b

Recommended
View more...