Introduction to financial accounting ( Simple understanding of financial accounting)
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Introduction to financial accounting. This presentation will help students to understand financial accounting in simple way , it covers basics of financial accounting process
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Introduction to financial accounting ( Simple understanding of financial accounting)
- 1. Introduction to financial accounting By. Dr. Sanjay P Sawant Dessai Associate Professor VVMs Shree Damodar College of Commerce and Economics Margao Goa sanjaydessai@gmail.com 06/07/13 sanjaydessai@gmail.com 1
- 2. What is Accounting • Accounting is ---Reporting • Reporting through ---Financial Statements Financial statements are • Profit and loss Account / Income statement • Balance Sheet • Cash Flow Statement 06/07/13 sanjaydessai@gmail.com 2
- 3. Financial Accounting Definition American Institute of certified public Accountant defines accounting as “Accounting is an art of recording, classifying and summarizing in a significant manner and in terms of money, transaction and events which are, in part at least, of a financial character and interpreting the results thereof ” 06/07/13 sanjaydessai@gmail.com 3
- 4. Accounting • Art • Record • Transaction/Event • Monetary terms (money) • Financial Character • Classification • Summary & • Interpretation of results 06/07/13 sanjaydessai@gmail.com 4
- 5. Items disclosed in financial statements • Assets • Liabilities • Incomes / Gains • Expenses / Losses • Equity (Capital) • (Personal, Real and Nominal Accounts ) 06/07/13 sanjaydessai@gmail.com 5
- 6. Types of Accounts • Personal Accounts - Assets and liabilities • Real Accounts – Assets • Nominal Accounts - Incomes and expenses 06/07/13 sanjaydessai@gmail.com 6
- 7. Process of Accounting (Preparation of financial statements) 1. Transaction / event 2. Documentary evidence / Voucher 3. Journal /Subsidiary books 4. Ledger 5. Balancing / Totaling 6. Trial balance 7. Financial statements 06/07/13 sanjaydessai@gmail.com 7
- 8. Journal /Subsidiary books- Primary Books 1. Purchase Book 2. Sales Book 3. Purchase Return 4. Sales Return 5. Cash book 6. Bills Receivable Book 7. Bills Payable Book 8. Journal Proper 06/07/13 sanjaydessai@gmail.com 8
- 9. Reporting financial information on following 1. Sales 2. Purchases 3. Expenses 4. Incomes 5. Profits 6. Losses 7. Capital 8. Liabilities 9. Assets 10. Reserves 11. Loans and advances 12. Investment 13. Debtors 14. Creditors 06/07/13 sanjaydessai@gmail.com 9
- 10. Parties interested in financial information 1. Owners /Investors 2. Management 3. Potential investors 4. Suppliers and other creditors 5. Lenders (banks a 6. Employees 7. Government and other agencies 8. Public 9. Customers 06/07/13 sanjaydessai@gmail.com 10