1. Meaning of Accounting
 Accounting an Art
 Recording , Classifying, Summarising
 In a Significant Manner
 In terms of money
 Transactions & Events
 Financial Character
 And Interpreting the result thereof
Primary Records & Secondary records
 Recording of transactions in Primary records such as Journal , Subsidiary Ledgers
etc
 Classifying & Summarising in Secondary Records = General Ledger
 Some Events are not recoded in the books .
Not measurable in monetary terms and absence of Financials Characteristics .
Procedure of Accounting
Recording ,Classifying , Summarising , Analysing , Interpreting & Communicating
 Recording : Basic function of Accounting and it is done in Primary Records for eg
Journal
 Classifying : Secondary Records @ General Ledger Level (Systematic Analysis of
recorded data to Group the transactions or entries of same nature at one place)
 Summarising : Preparation and presentation of classified data in manager which is useful
to the Users of Financial statements . This process leads to the preparation of
financial statements .( P&L , Balance Sheet , Cash flow Statements )
 Analysing : Classification of data given in the financials statements based on the nature
(For Eg . Operational hip Income , Operational Expenses, General Administrate
Expenses , Current Assets , Current Liabilities , Fixed Assets , Intangible Assets etc )
 Interpreting : Explaining the meaning and significance of the relationship as established
by the Analysis of the data.
 Communicating : Transmission of Summarised , analysed and Interpreted date to the
end Users of Financial Statements .

2. Accounting Cycle
Recording of Transactions in the Original Book of Entry
Posting to Ledger
Preparation of TB
Preparation of Final Accounts
Objectives of Accounting
 Systematic Recording of transactions ion (Book Keeping , Journal , Ledger & TB 0
 Ascertainment of Results of the recorded transactions (P& L)
 Ascertainment of financial position of the Company (Balance Sheet )
 Provide information to the Users for rational decision making (Financial Reports
including Cash flow )
 To know the solvency position (Liquidity / Solvency Position )
(P& L reflecting operational results as on date & Balance Sheet reflecting the
Financial Position as at a particular date . )

3. Functions of Accounting
 Measurement : Past Performance & Current financial position
 Forecasting : Forecasting future performance and financial position of the enterprise
using past data.
 Decision Making
 Comparison and evaluation
 Control
 Government Regulation and Taxation
Book Keeping Vs. Accounting
Sl No Book Keeping Accounting
1 Process of recording Transactions Summarising the recorded
transactions
2 Base for Accounting Language of Business
3 Financial Statements do not form part Financial Statements form
part
4 Managerial Decisions cannot Managerial Decisions
5 No Subfield Sub Field
6 Financial Position cannot be ascertained Financial Position can be
ascertained
Subfields of Accounting
 Financial Accounting
 Management Accounting
 Cost Accounting
 Social Responsibility Accounting
 Human Resource Accounting

4. ACCOUNTING CONCEPTS ,PRICIPLES AND CONVENTIONS
Accounting is a Language of the business
GAAP: Generally Accepted Accounting Principles: GAAP is the back born of the Accounting
Information System
ACCUNTING CONCEPTS
Assumptions on the basis of which financial statements of a business entity re prepared.
ACCOUNTING PRINCIPLES
Accounting principles are a body of doctrines commonly associated with the theory and
procedures of accounting serving as an explanation of current practice and as a guide for
selection of conventions or procedures where alternatives exists.
 They should be based of real assumptions
 Simple , understandable and explanatory
 Followed consistently
 Able to predict future predictions
 Informational for the users.
ACCOUNTING CONVENTIONS
Accounting principles adopted by various organisations over a period of time .
CONCEPTS ,PRINCIPLES AND CONVENTIONS – OVERVIEW
 Business Entity Concept
 Money Measurement Concept
 Periodicity Concept
 Accrual Concept
 Matching Concept
 Going Concern Concept
 Cost Concept
 Realisation Concept
 Dual Aspect Concept
 Conservatism
 Consistency
 Materiality