defines accounting principles as " a general law or rule adopted or professed as a guide to action; a settled ground or basis of conduct or practice."
Introduction of Accounting Principles :
The main objectives of accounting to provide information about the financial performance of a business firm to its various interested groups such as owners, investors, creditors, customers, suppliers. Employees, etc, so that they can make important financial decisions. Thus, it is necessary that the language and terminology of accounting must be standardized, so that there may be uniformity in presenting accounting information.
Introduction of Generally Accepted Accounting Principles: These widely accepted accounting principles that are generally recognized by almost all the persons
Introduction of Generally Accepted Accounting Principles: These widely accepted accounting principles that are generally recognized by almost all the persons associated with accounting along with representation of accepted accounting practices are known as " Generally Accepted Accounting Principles".
Accounting information must have some qualitative Characteristics. It has four main qualitative Characteristics of Accounting Information: i. Reliability.
Two fundamental characteristics of financial statements are their truth and fairness. An auditor of the enterprise has to make a statement give a true and fair view. Besides the above two fundamental characteristics, there are other qualitative characteristics accounting information or features of accounting information.
Users of accounting information refer to those persons or organizations that focus on the information generated by the accounting system respective purposes.
Users of accounting refer to those persons or organizations that focus on the information generated by the accounting system of an entity for their respective purposes. The users of accounting information can be broadly classified into two sets of users viz. Internal and External.
Relationship with accounting and other disciplines. Accounting helps to other disciplines. such as Accounting and other disciplines bookkeeping and accounting,
Relationship with accounting and other disciplines. Accounting helps to other disciplines. such as Accounting and other disciplines bookkeeping and accounting, accounting and management, accounting and economics, etc
1.Book-Keeping and Accounting:
Book-Keeping is the primary recording of the day-to=day transactions of a business or concern and their subsequent recording or posting of the Ledger Accounting. The recordings are made in a systematic and orderly manner. Thus it is mainly confined to record keeping.
Eric L.Kohler defined it as " the process of analyzing, classifying and recording transactions in accordance with a preconceived plan, for the purpose of (a) providing a means by which an enterprise may be conducted in an orderly fashion, and (b) establishing a basis for recording and reporting the financial affairs of the enterprise and the results of the operation.
Accounting begins where book-keeping ends, bookkeeping, and accounting are complementary to each other difference between accounting and bookkeeping.
Accounting begins where book-keeping ends, bookkeeping, and accounting are complementary to each other difference between accounting and bookkeeping. Such difference between Accounting and Bookkeeping, i. scope, ii. objective, etc.
Difference between Accounting and Bookkeeping :
1. Scope:
Bookkeeping: Bookkeeping is concerned with, a. Identifying the transactions of financial nature, b. Measuring the identified transactions in terms of money, c. Recording the measured transactions, and d. Classifying them into ledger.
Accounting: Accounting is concerned with, a Summarising the classified transactions, b. Analysing and interpreting the summarised results, and c. Communicating the results to parties interested in them.
2. Stage :
Bookkeeping: Book-keeping is the primary stage.
Accounting: It is the second stage. Accounting begins where book-keeping ends.
3. Objective:
Bookkeeping: The main objective of Book-keeping is to maintain systematic records of transactions of financial nature.
Accounting: Its main objective is to ascertain the net results and financial position of the business and to communicate them to interested parties.
4. Nature of Job:
Bookkeeping: The Book-Keeping function is routine and clerical in nature.
Accounting: The Accounting function is analytical in nature.
Bookkeeping can as such be defined" as an art and science of recording business transactions in a systematic and chronological order."
Meaning Of Bookkeeping:
Bookkeeping is that branch of knowledge that tells us how to keep a record of the financial transaction. Book-keeping is a part of accounting that is concerned with the recording of financial transactions and events in the books of accounts.
Definitions of Bookkeeping:
"Book-keeping is the science of recording transactions in money or money's worth in such a manner that at any subsequent day the nature and effect of each transaction, and the combined effect of all the transactions, may be clearly understood so that the accounts prepared at any time from the records thus kept may show the owner of the book his true financial position."
There are many functions and advantages of accounting, you all know, but there some limitations of accounting. Such as, I. Accounting is not Fully Exact.
There are many functions and advantages of accounting, you all know, but there some limitations of accounting. Today I will say the limitations of accounting. Such as limitations of accounting I. Accounting is not Fully Exact. ii.Unrealistic Information.
overview of Limitations of Accounting:
(i) It can express financial results in monetary terms only but has no tool to gauge other important aspects like human resource utilization, management efficiency, quality control, etc.
(ii) It makes a dogmatic approach to explain financial situations with some rigid ideas and concepts. In the changing scenario of socio-economic aspects, the results exhibited by accounting fails to reach the optimum level.
Accounting is now required in every case and accounting provides us with benefits. Such as, advantages of accounting, i.decision making, ii. replaces memory,
Financial performance during the accounting period,i.e, profit and loss also the financial position at the end of the accounting period is known through accounting.
Accounting provides meaningful information of financial activities of the business to internal and external stakeholders in the form of financial statements.
Although 'Accounting' has been defined by the different scholarly ways, its nature of accounting is essentially described. Conceptually, accounting is an art.
Although ‘Accounting’ has been defined by the different scholarly ways, its nature of accounting is essentially described. Conceptually, accounting is an art of recording, classifying summarizing, and interpreting the financial result.
There are three main branches of accounting. Accounting activities are very big, so accounting has been divided into different parts.
It is the traditional form of accounting. this branches of accounting It is basically related to record-keeping needed for the finalization of Accounts.
The need for accounting can be understood best if we consider the Functions of accounting. 1. Stewardship Functions and 2. Managerial Function of Accounting.
The need for accounting can be understood best if we consider the functions of accounting.
Accounting is the process of identifying, measuring, and communicating economic information to permit informed judgments and decisions by users information.
The term accounting' has originated from the concept of 'counting'.The need of communicating information and presenting a clear picture of the financial transactions led to the emergence of Accounting.
American Institute of Certified Public Accountants (AICPA) formed the "Trueblood Committee" for ascertaining the objects of accounting.
American Institute of Certified Public Accountants (AICPA) formed the “Trueblood Committee” for ascertaining the objects of accounting. On the basis of the recommendations of this committee, the Financial Accounting Standards Board (FASB) of AICPA issued a Memorandum in 1974, accounting for which the objective of accounting may be classified as (A)Primary Objective and (B) Secondary Objective.
