Accoutnig Basics......

Accounting:

Accounting is an art of identifying, recording, classifying, summarizing, analyzing and interpreting the financial transactions and communicating the results thereof

to the persons interested in such information.

Branches of Accounting:

· Financial Accounting

· Cost Accounting

· Management Accounting

· Inflation Accounting

· HR Accounting

Financial Accounting:

Financial Accounting is to ascertain the financial results of an organization during a specific period. It is concerned with record keeping directed towards the

preparation of Trail Balance and Financial Statements (Final Accounts).

Cost Accounting:

It is to analyze the expenditure to ascertain the cost of various products manufactured by the firm and for the future decision making. It is systematic

procedure for determining the unit cost of output produced (or) services rendered

by the organization.

Management Accounting:

It concerned with the internal reporting of information to management for:

A. planning & controlling operations

B. decision making

C. formulating long term plans

Inflation Accounting:

It is concerned with adjustment in the value of assets and profit in the light of Price level changes.

HR Accounting:

It is concerned with the process of identifying and measuring data about human

resources.

Functions of Accounting:

1) Classifying work

2) Recording work

3) Summarizing work

4) Interpretation/Analysis of Work

5) Reporting the Work

6) Preparation of Budget

7) Taxation work

8) Auditing

Basis of Accounting:

1) Cash basis:

In this system entries are made only when cash is received or paid.

2) Mercantile or Accrual Basis:

Irrespective of cash receipt or payment, transactions are recorded when they are

realised i.e. a transaction is recorded as it is earned or incurred regardless of whenactual payments are received or made.

3) Mixed Basis:

Incomes are recoded on cash basis and expenses are recorded on accrual basis.