Download VTU (Visvesvaraya Technological University) MBA 1st Semester (First Semester) 17MBA13 Accounting for Managers AM Unit 1 Important Lecture Notes (MBA Study Material Notes)
Subject Code: 16MBA13
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I Semester MBA ? Accounting for Managers
Subject Code: 16MBA13
Introduction to Accounting
Unit I
FirstRanker.com - FirstRanker's Choice
I Semester MBA ? Accounting for Managers
Subject Code: 16MBA13
Introduction to Accounting
Unit I
Introduction
? Wherever money is involved, accounting is required to account for
it.
? Accounting is often called the language of business.
? The basic function of any language is to serve as a means of
communication.
? Accounting also serves this function.
Accounting helps answering questions like:
? Am I earning or losing money from my business?
? How much am I worth?
? Should I put more money in my business or sell it and go into
another business?
? How much is owed to me, and how much do I owe?
? How can I change the way I operate to make more profit?
FirstRanker.com - FirstRanker's Choice
I Semester MBA ? Accounting for Managers
Subject Code: 16MBA13
Introduction to Accounting
Unit I
Introduction
? Wherever money is involved, accounting is required to account for
it.
? Accounting is often called the language of business.
? The basic function of any language is to serve as a means of
communication.
? Accounting also serves this function.
Accounting helps answering questions like:
? Am I earning or losing money from my business?
? How much am I worth?
? Should I put more money in my business or sell it and go into
another business?
? How much is owed to me, and how much do I owe?
? How can I change the way I operate to make more profit?
Accountancy: refers?to?systematic?knowledge?of?accounting.?It?explains?
why?to?do,?and?how?to?do?of?various?aspects?of?accounting.
Accounting: refers?to?the?actual?process?of?preparing?and?presenting?the?
accounts.?Putting?the?academic?knowledge?of?accountancy?into?practice.
Book-keeping: is? a? part? of? accounting? and? is? concerned? with? record?
keeping? which? is? often? routine? and? clerical? in? nature.? The? difficulty? of?
remembering?vast?business?transactions?gave?rise?to?book?keeping.
Book-keeping? is? part? of? accounting? and? Accounting? is? a? part? of?
Accountancy.
? Basic? objective? of? Book-keeping? is? to? maintain? systematic? record? of?
financial?transactions.?
? Basic?objective?of?Accounting?is?to?ascertain?net?results?of?operations?
and?financial?position?and?to?communicate?information?to?the?interested?
parties.
??
?
FirstRanker.com - FirstRanker's Choice
I Semester MBA ? Accounting for Managers
Subject Code: 16MBA13
Introduction to Accounting
Unit I
Introduction
? Wherever money is involved, accounting is required to account for
it.
? Accounting is often called the language of business.
? The basic function of any language is to serve as a means of
communication.
? Accounting also serves this function.
Accounting helps answering questions like:
? Am I earning or losing money from my business?
? How much am I worth?
? Should I put more money in my business or sell it and go into
another business?
? How much is owed to me, and how much do I owe?
? How can I change the way I operate to make more profit?
Accountancy: refers?to?systematic?knowledge?of?accounting.?It?explains?
why?to?do,?and?how?to?do?of?various?aspects?of?accounting.
Accounting: refers?to?the?actual?process?of?preparing?and?presenting?the?
accounts.?Putting?the?academic?knowledge?of?accountancy?into?practice.
Book-keeping: is? a? part? of? accounting? and? is? concerned? with? record?
keeping? which? is? often? routine? and? clerical? in? nature.? The? difficulty? of?
remembering?vast?business?transactions?gave?rise?to?book?keeping.
Book-keeping? is? part? of? accounting? and? Accounting? is? a? part? of?
Accountancy.
? Basic? objective? of? Book-keeping? is? to? maintain? systematic? record? of?
financial?transactions.?
? Basic?objective?of?Accounting?is?to?ascertain?net?results?of?operations?
and?financial?position?and?to?communicate?information?to?the?interested?
parties.
??
?
Accounting
Is the process of recording, classifying, summarising, analysing, and
interpreting, the financial transactions and communicating the results
to the persons interested in such information.
Involves:
? Recording
? Classifying
? Summarising
? Analysing
? Interpreting
? Communicating
FirstRanker.com - FirstRanker's Choice
I Semester MBA ? Accounting for Managers
Subject Code: 16MBA13
Introduction to Accounting
Unit I
Introduction
? Wherever money is involved, accounting is required to account for
it.
? Accounting is often called the language of business.
? The basic function of any language is to serve as a means of
communication.
? Accounting also serves this function.
Accounting helps answering questions like:
? Am I earning or losing money from my business?
? How much am I worth?
? Should I put more money in my business or sell it and go into
another business?
? How much is owed to me, and how much do I owe?
? How can I change the way I operate to make more profit?
Accountancy: refers?to?systematic?knowledge?of?accounting.?It?explains?
why?to?do,?and?how?to?do?of?various?aspects?of?accounting.
Accounting: refers?to?the?actual?process?of?preparing?and?presenting?the?
accounts.?Putting?the?academic?knowledge?of?accountancy?into?practice.
Book-keeping: is? a? part? of? accounting? and? is? concerned? with? record?
keeping? which? is? often? routine? and? clerical? in? nature.? The? difficulty? of?
remembering?vast?business?transactions?gave?rise?to?book?keeping.
Book-keeping? is? part? of? accounting? and? Accounting? is? a? part? of?
Accountancy.
? Basic? objective? of? Book-keeping? is? to? maintain? systematic? record? of?
financial?transactions.?
? Basic?objective?of?Accounting?is?to?ascertain?net?results?of?operations?
and?financial?position?and?to?communicate?information?to?the?interested?
parties.
??
?
Accounting
Is the process of recording, classifying, summarising, analysing, and
interpreting, the financial transactions and communicating the results
to the persons interested in such information.
Involves:
? Recording
? Classifying
? Summarising
? Analysing
? Interpreting
? Communicating
FirstRanker.com - FirstRanker's Choice
I Semester MBA ? Accounting for Managers
Subject Code: 16MBA13
Introduction to Accounting
Unit I
Introduction
? Wherever money is involved, accounting is required to account for
it.
? Accounting is often called the language of business.
? The basic function of any language is to serve as a means of
communication.
? Accounting also serves this function.
Accounting helps answering questions like:
? Am I earning or losing money from my business?
? How much am I worth?
? Should I put more money in my business or sell it and go into
another business?
? How much is owed to me, and how much do I owe?
? How can I change the way I operate to make more profit?
Accountancy: refers?to?systematic?knowledge?of?accounting.?It?explains?
why?to?do,?and?how?to?do?of?various?aspects?of?accounting.
Accounting: refers?to?the?actual?process?of?preparing?and?presenting?the?
accounts.?Putting?the?academic?knowledge?of?accountancy?into?practice.
Book-keeping: is? a? part? of? accounting? and? is? concerned? with? record?
keeping? which? is? often? routine? and? clerical? in? nature.? The? difficulty? of?
remembering?vast?business?transactions?gave?rise?to?book?keeping.
Book-keeping? is? part? of? accounting? and? Accounting? is? a? part? of?
Accountancy.
? Basic? objective? of? Book-keeping? is? to? maintain? systematic? record? of?
financial?transactions.?
? Basic?objective?of?Accounting?is?to?ascertain?net?results?of?operations?
and?financial?position?and?to?communicate?information?to?the?interested?
parties.
??
?
Accounting
Is the process of recording, classifying, summarising, analysing, and
interpreting, the financial transactions and communicating the results
to the persons interested in such information.
Involves:
? Recording
? Classifying
? Summarising
? Analysing
? Interpreting
? Communicating
FirstRanker.com - FirstRanker's Choice
I Semester MBA ? Accounting for Managers
Subject Code: 16MBA13
Introduction to Accounting
Unit I
Introduction
? Wherever money is involved, accounting is required to account for
it.
? Accounting is often called the language of business.
? The basic function of any language is to serve as a means of
communication.
? Accounting also serves this function.
Accounting helps answering questions like:
? Am I earning or losing money from my business?
? How much am I worth?
? Should I put more money in my business or sell it and go into
another business?
? How much is owed to me, and how much do I owe?
? How can I change the way I operate to make more profit?
Accountancy: refers?to?systematic?knowledge?of?accounting.?It?explains?
why?to?do,?and?how?to?do?of?various?aspects?of?accounting.
Accounting: refers?to?the?actual?process?of?preparing?and?presenting?the?
accounts.?Putting?the?academic?knowledge?of?accountancy?into?practice.
Book-keeping: is? a? part? of? accounting? and? is? concerned? with? record?
keeping? which? is? often? routine? and? clerical? in? nature.? The? difficulty? of?
remembering?vast?business?transactions?gave?rise?to?book?keeping.
Book-keeping? is? part? of? accounting? and? Accounting? is? a? part? of?
Accountancy.
? Basic? objective? of? Book-keeping? is? to? maintain? systematic? record? of?
financial?transactions.?
? Basic?objective?of?Accounting?is?to?ascertain?net?results?of?operations?
and?financial?position?and?to?communicate?information?to?the?interested?
parties.
??
?
Accounting
Is the process of recording, classifying, summarising, analysing, and
interpreting, the financial transactions and communicating the results
to the persons interested in such information.
Involves:
? Recording
? Classifying
? Summarising
? Analysing
? Interpreting
? Communicating
Need for Accounting
? Keeping systematic record.
? Ascertain the results of the operation.
? Ascertain the financial position of the business.
? Portray the liquidity position.
? To protect the business properties.
? To communicate the information to the users.
? To facilitate rational decision making.
? To satisfy the requirements of law.
FirstRanker.com - FirstRanker's Choice
I Semester MBA ? Accounting for Managers
Subject Code: 16MBA13
Introduction to Accounting
Unit I
Introduction
? Wherever money is involved, accounting is required to account for
it.
? Accounting is often called the language of business.
? The basic function of any language is to serve as a means of
communication.
? Accounting also serves this function.
Accounting helps answering questions like:
? Am I earning or losing money from my business?
? How much am I worth?
? Should I put more money in my business or sell it and go into
another business?
? How much is owed to me, and how much do I owe?
? How can I change the way I operate to make more profit?
Accountancy: refers?to?systematic?knowledge?of?accounting.?It?explains?
why?to?do,?and?how?to?do?of?various?aspects?of?accounting.
Accounting: refers?to?the?actual?process?of?preparing?and?presenting?the?
accounts.?Putting?the?academic?knowledge?of?accountancy?into?practice.
Book-keeping: is? a? part? of? accounting? and? is? concerned? with? record?
keeping? which? is? often? routine? and? clerical? in? nature.? The? difficulty? of?
remembering?vast?business?transactions?gave?rise?to?book?keeping.
Book-keeping? is? part? of? accounting? and? Accounting? is? a? part? of?
Accountancy.
? Basic? objective? of? Book-keeping? is? to? maintain? systematic? record? of?
financial?transactions.?
? Basic?objective?of?Accounting?is?to?ascertain?net?results?of?operations?
and?financial?position?and?to?communicate?information?to?the?interested?
parties.
??
?
Accounting
Is the process of recording, classifying, summarising, analysing, and
interpreting, the financial transactions and communicating the results
to the persons interested in such information.
Involves:
? Recording
? Classifying
? Summarising
? Analysing
? Interpreting
? Communicating
Need for Accounting
? Keeping systematic record.
? Ascertain the results of the operation.
? Ascertain the financial position of the business.
? Portray the liquidity position.
? To protect the business properties.
? To communicate the information to the users.
? To facilitate rational decision making.
? To satisfy the requirements of law.
Types of Accounting
Financial Accounting
? The accounting system is concerned only with the
financial state of affairs and financial results of
operations.
? It is the original form of accounting.
? It is mainly concerned with the preparation of
financial statements for the use of outsiders like
creditors, debenture holders, investors and financial
institutions.
FirstRanker.com - FirstRanker's Choice
I Semester MBA ? Accounting for Managers
Subject Code: 16MBA13
Introduction to Accounting
Unit I
Introduction
? Wherever money is involved, accounting is required to account for
it.
? Accounting is often called the language of business.
? The basic function of any language is to serve as a means of
communication.
? Accounting also serves this function.
Accounting helps answering questions like:
? Am I earning or losing money from my business?
? How much am I worth?
? Should I put more money in my business or sell it and go into
another business?
? How much is owed to me, and how much do I owe?
? How can I change the way I operate to make more profit?
Accountancy: refers?to?systematic?knowledge?of?accounting.?It?explains?
why?to?do,?and?how?to?do?of?various?aspects?of?accounting.
Accounting: refers?to?the?actual?process?of?preparing?and?presenting?the?
accounts.?Putting?the?academic?knowledge?of?accountancy?into?practice.
Book-keeping: is? a? part? of? accounting? and? is? concerned? with? record?
keeping? which? is? often? routine? and? clerical? in? nature.? The? difficulty? of?
remembering?vast?business?transactions?gave?rise?to?book?keeping.
Book-keeping? is? part? of? accounting? and? Accounting? is? a? part? of?
Accountancy.
? Basic? objective? of? Book-keeping? is? to? maintain? systematic? record? of?
financial?transactions.?
? Basic?objective?of?Accounting?is?to?ascertain?net?results?of?operations?
and?financial?position?and?to?communicate?information?to?the?interested?
parties.
??
?
Accounting
Is the process of recording, classifying, summarising, analysing, and
interpreting, the financial transactions and communicating the results
to the persons interested in such information.
Involves:
? Recording
? Classifying
? Summarising
? Analysing
? Interpreting
? Communicating
Need for Accounting
? Keeping systematic record.
? Ascertain the results of the operation.
? Ascertain the financial position of the business.
? Portray the liquidity position.
? To protect the business properties.
? To communicate the information to the users.
? To facilitate rational decision making.
? To satisfy the requirements of law.
Types of Accounting
Financial Accounting
? The accounting system is concerned only with the
financial state of affairs and financial results of
operations.
? It is the original form of accounting.
? It is mainly concerned with the preparation of
financial statements for the use of outsiders like
creditors, debenture holders, investors and financial
institutions.
Cost Accounting
?In view of the limitations of financial accounting in
respect of information relating to the cost of individual
products, cost accounting was developed.
?It is that branch of accounting which is concerned with the
accumulation and assignment of historical costs to units of
product and department, primarily for the purpose of
valuation of stock and measurement of profits.
?Cost accounting seeks to ascertain the cost of unit
produced and sold or the services rendered by the
business unit with a view to exercising control over these
costs to assess profitability and efficiency of the enterprise.
?It involves an estimation of future costs to be incurred
based on the data provided by the financial accounting.
FirstRanker.com - FirstRanker's Choice
I Semester MBA ? Accounting for Managers
Subject Code: 16MBA13
Introduction to Accounting
Unit I
Introduction
? Wherever money is involved, accounting is required to account for
it.
? Accounting is often called the language of business.
? The basic function of any language is to serve as a means of
communication.
? Accounting also serves this function.
Accounting helps answering questions like:
? Am I earning or losing money from my business?
? How much am I worth?
? Should I put more money in my business or sell it and go into
another business?
? How much is owed to me, and how much do I owe?
? How can I change the way I operate to make more profit?
Accountancy: refers?to?systematic?knowledge?of?accounting.?It?explains?
why?to?do,?and?how?to?do?of?various?aspects?of?accounting.
Accounting: refers?to?the?actual?process?of?preparing?and?presenting?the?
accounts.?Putting?the?academic?knowledge?of?accountancy?into?practice.
Book-keeping: is? a? part? of? accounting? and? is? concerned? with? record?
keeping? which? is? often? routine? and? clerical? in? nature.? The? difficulty? of?
remembering?vast?business?transactions?gave?rise?to?book?keeping.
Book-keeping? is? part? of? accounting? and? Accounting? is? a? part? of?
Accountancy.
? Basic? objective? of? Book-keeping? is? to? maintain? systematic? record? of?
financial?transactions.?
? Basic?objective?of?Accounting?is?to?ascertain?net?results?of?operations?
and?financial?position?and?to?communicate?information?to?the?interested?
parties.
??
?
Accounting
Is the process of recording, classifying, summarising, analysing, and
interpreting, the financial transactions and communicating the results
to the persons interested in such information.
Involves:
? Recording
? Classifying
? Summarising
? Analysing
? Interpreting
? Communicating
Need for Accounting
? Keeping systematic record.
? Ascertain the results of the operation.
? Ascertain the financial position of the business.
? Portray the liquidity position.
? To protect the business properties.
? To communicate the information to the users.
? To facilitate rational decision making.
? To satisfy the requirements of law.
Types of Accounting
Financial Accounting
? The accounting system is concerned only with the
financial state of affairs and financial results of
operations.
? It is the original form of accounting.
? It is mainly concerned with the preparation of
financial statements for the use of outsiders like
creditors, debenture holders, investors and financial
institutions.
Cost Accounting
?In view of the limitations of financial accounting in
respect of information relating to the cost of individual
products, cost accounting was developed.
?It is that branch of accounting which is concerned with the
accumulation and assignment of historical costs to units of
product and department, primarily for the purpose of
valuation of stock and measurement of profits.
?Cost accounting seeks to ascertain the cost of unit
produced and sold or the services rendered by the
business unit with a view to exercising control over these
costs to assess profitability and efficiency of the enterprise.
?It involves an estimation of future costs to be incurred
based on the data provided by the financial accounting.
Management Accounting
?It is the presentation of accounting information in such a
way as to assist management in the creation of policy and
the day-to-day operation.
?It covers all arrangements and combinations or
adjustments of the traditional information to provide the
Chief Executive with the information from which he can
control the business e.g. Information about funds, costs,
profits etc.
?Management accounting is not only confined to the area
of cost accounting but also covers other areas (such as
capital expenditure decisions, capital structure decisions,
and dividend decisions) as well.
FirstRanker.com - FirstRanker's Choice
I Semester MBA ? Accounting for Managers
Subject Code: 16MBA13
Introduction to Accounting
Unit I
Introduction
? Wherever money is involved, accounting is required to account for
it.
? Accounting is often called the language of business.
? The basic function of any language is to serve as a means of
communication.
? Accounting also serves this function.
Accounting helps answering questions like:
? Am I earning or losing money from my business?
? How much am I worth?
? Should I put more money in my business or sell it and go into
another business?
? How much is owed to me, and how much do I owe?
? How can I change the way I operate to make more profit?
Accountancy: refers?to?systematic?knowledge?of?accounting.?It?explains?
why?to?do,?and?how?to?do?of?various?aspects?of?accounting.
Accounting: refers?to?the?actual?process?of?preparing?and?presenting?the?
accounts.?Putting?the?academic?knowledge?of?accountancy?into?practice.
Book-keeping: is? a? part? of? accounting? and? is? concerned? with? record?
keeping? which? is? often? routine? and? clerical? in? nature.? The? difficulty? of?
remembering?vast?business?transactions?gave?rise?to?book?keeping.
Book-keeping? is? part? of? accounting? and? Accounting? is? a? part? of?
Accountancy.
? Basic? objective? of? Book-keeping? is? to? maintain? systematic? record? of?
financial?transactions.?
? Basic?objective?of?Accounting?is?to?ascertain?net?results?of?operations?
and?financial?position?and?to?communicate?information?to?the?interested?
parties.
??
?
Accounting
Is the process of recording, classifying, summarising, analysing, and
interpreting, the financial transactions and communicating the results
to the persons interested in such information.
Involves:
? Recording
? Classifying
? Summarising
? Analysing
? Interpreting
? Communicating
Need for Accounting
? Keeping systematic record.
? Ascertain the results of the operation.
? Ascertain the financial position of the business.
? Portray the liquidity position.
? To protect the business properties.
? To communicate the information to the users.
? To facilitate rational decision making.
? To satisfy the requirements of law.
Types of Accounting
Financial Accounting
? The accounting system is concerned only with the
financial state of affairs and financial results of
operations.
? It is the original form of accounting.
? It is mainly concerned with the preparation of
financial statements for the use of outsiders like
creditors, debenture holders, investors and financial
institutions.
Cost Accounting
?In view of the limitations of financial accounting in
respect of information relating to the cost of individual
products, cost accounting was developed.
?It is that branch of accounting which is concerned with the
accumulation and assignment of historical costs to units of
product and department, primarily for the purpose of
valuation of stock and measurement of profits.
?Cost accounting seeks to ascertain the cost of unit
produced and sold or the services rendered by the
business unit with a view to exercising control over these
costs to assess profitability and efficiency of the enterprise.
?It involves an estimation of future costs to be incurred
based on the data provided by the financial accounting.
Management Accounting
?It is the presentation of accounting information in such a
way as to assist management in the creation of policy and
the day-to-day operation.
?It covers all arrangements and combinations or
adjustments of the traditional information to provide the
Chief Executive with the information from which he can
control the business e.g. Information about funds, costs,
profits etc.
?Management accounting is not only confined to the area
of cost accounting but also covers other areas (such as
capital expenditure decisions, capital structure decisions,
and dividend decisions) as well.
FirstRanker.com - FirstRanker's Choice
I Semester MBA ? Accounting for Managers
Subject Code: 16MBA13
Introduction to Accounting
Unit I
Introduction
? Wherever money is involved, accounting is required to account for
it.
? Accounting is often called the language of business.
? The basic function of any language is to serve as a means of
communication.
? Accounting also serves this function.
Accounting helps answering questions like:
? Am I earning or losing money from my business?
? How much am I worth?
? Should I put more money in my business or sell it and go into
another business?
? How much is owed to me, and how much do I owe?
? How can I change the way I operate to make more profit?
Accountancy: refers?to?systematic?knowledge?of?accounting.?It?explains?
why?to?do,?and?how?to?do?of?various?aspects?of?accounting.
Accounting: refers?to?the?actual?process?of?preparing?and?presenting?the?
accounts.?Putting?the?academic?knowledge?of?accountancy?into?practice.
Book-keeping: is? a? part? of? accounting? and? is? concerned? with? record?
keeping? which? is? often? routine? and? clerical? in? nature.? The? difficulty? of?
remembering?vast?business?transactions?gave?rise?to?book?keeping.
Book-keeping? is? part? of? accounting? and? Accounting? is? a? part? of?
Accountancy.
? Basic? objective? of? Book-keeping? is? to? maintain? systematic? record? of?
financial?transactions.?
? Basic?objective?of?Accounting?is?to?ascertain?net?results?of?operations?
and?financial?position?and?to?communicate?information?to?the?interested?
parties.
??
?
Accounting
Is the process of recording, classifying, summarising, analysing, and
interpreting, the financial transactions and communicating the results
to the persons interested in such information.
Involves:
? Recording
? Classifying
? Summarising
? Analysing
? Interpreting
? Communicating
Need for Accounting
? Keeping systematic record.
? Ascertain the results of the operation.
? Ascertain the financial position of the business.
? Portray the liquidity position.
? To protect the business properties.
? To communicate the information to the users.
? To facilitate rational decision making.
? To satisfy the requirements of law.
Types of Accounting
Financial Accounting
? The accounting system is concerned only with the
financial state of affairs and financial results of
operations.
? It is the original form of accounting.
? It is mainly concerned with the preparation of
financial statements for the use of outsiders like
creditors, debenture holders, investors and financial
institutions.
Cost Accounting
?In view of the limitations of financial accounting in
respect of information relating to the cost of individual
products, cost accounting was developed.
?It is that branch of accounting which is concerned with the
accumulation and assignment of historical costs to units of
product and department, primarily for the purpose of
valuation of stock and measurement of profits.
?Cost accounting seeks to ascertain the cost of unit
produced and sold or the services rendered by the
business unit with a view to exercising control over these
costs to assess profitability and efficiency of the enterprise.
?It involves an estimation of future costs to be incurred
based on the data provided by the financial accounting.
Management Accounting
?It is the presentation of accounting information in such a
way as to assist management in the creation of policy and
the day-to-day operation.
?It covers all arrangements and combinations or
adjustments of the traditional information to provide the
Chief Executive with the information from which he can
control the business e.g. Information about funds, costs,
profits etc.
?Management accounting is not only confined to the area
of cost accounting but also covers other areas (such as
capital expenditure decisions, capital structure decisions,
and dividend decisions) as well.
FirstRanker.com - FirstRanker's Choice
I Semester MBA ? Accounting for Managers
Subject Code: 16MBA13
Introduction to Accounting
Unit I
Introduction
? Wherever money is involved, accounting is required to account for
it.
? Accounting is often called the language of business.
? The basic function of any language is to serve as a means of
communication.
? Accounting also serves this function.
Accounting helps answering questions like:
? Am I earning or losing money from my business?
? How much am I worth?
? Should I put more money in my business or sell it and go into
another business?
? How much is owed to me, and how much do I owe?
? How can I change the way I operate to make more profit?
Accountancy: refers?to?systematic?knowledge?of?accounting.?It?explains?
why?to?do,?and?how?to?do?of?various?aspects?of?accounting.
Accounting: refers?to?the?actual?process?of?preparing?and?presenting?the?
accounts.?Putting?the?academic?knowledge?of?accountancy?into?practice.
Book-keeping: is? a? part? of? accounting? and? is? concerned? with? record?
keeping? which? is? often? routine? and? clerical? in? nature.? The? difficulty? of?
remembering?vast?business?transactions?gave?rise?to?book?keeping.
Book-keeping? is? part? of? accounting? and? Accounting? is? a? part? of?
Accountancy.
? Basic? objective? of? Book-keeping? is? to? maintain? systematic? record? of?
financial?transactions.?
? Basic?objective?of?Accounting?is?to?ascertain?net?results?of?operations?
and?financial?position?and?to?communicate?information?to?the?interested?
parties.
??
?
Accounting
Is the process of recording, classifying, summarising, analysing, and
interpreting, the financial transactions and communicating the results
to the persons interested in such information.
Involves:
? Recording
? Classifying
? Summarising
? Analysing
? Interpreting
? Communicating
Need for Accounting
? Keeping systematic record.
? Ascertain the results of the operation.
? Ascertain the financial position of the business.
? Portray the liquidity position.
? To protect the business properties.
? To communicate the information to the users.
? To facilitate rational decision making.
? To satisfy the requirements of law.
Types of Accounting
Financial Accounting
? The accounting system is concerned only with the
financial state of affairs and financial results of
operations.
? It is the original form of accounting.
? It is mainly concerned with the preparation of
financial statements for the use of outsiders like
creditors, debenture holders, investors and financial
institutions.
Cost Accounting
?In view of the limitations of financial accounting in
respect of information relating to the cost of individual
products, cost accounting was developed.
?It is that branch of accounting which is concerned with the
accumulation and assignment of historical costs to units of
product and department, primarily for the purpose of
valuation of stock and measurement of profits.
?Cost accounting seeks to ascertain the cost of unit
produced and sold or the services rendered by the
business unit with a view to exercising control over these
costs to assess profitability and efficiency of the enterprise.
?It involves an estimation of future costs to be incurred
based on the data provided by the financial accounting.
Management Accounting
?It is the presentation of accounting information in such a
way as to assist management in the creation of policy and
the day-to-day operation.
?It covers all arrangements and combinations or
adjustments of the traditional information to provide the
Chief Executive with the information from which he can
control the business e.g. Information about funds, costs,
profits etc.
?Management accounting is not only confined to the area
of cost accounting but also covers other areas (such as
capital expenditure decisions, capital structure decisions,
and dividend decisions) as well.
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I Semester MBA ? Accounting for Managers
Subject Code: 16MBA13
Introduction to Accounting
Unit I
Introduction
? Wherever money is involved, accounting is required to account for
it.
? Accounting is often called the language of business.
? The basic function of any language is to serve as a means of
communication.
? Accounting also serves this function.
Accounting helps answering questions like:
? Am I earning or losing money from my business?
? How much am I worth?
? Should I put more money in my business or sell it and go into
another business?
? How much is owed to me, and how much do I owe?
? How can I change the way I operate to make more profit?
Accountancy: refers?to?systematic?knowledge?of?accounting.?It?explains?
why?to?do,?and?how?to?do?of?various?aspects?of?accounting.
Accounting: refers?to?the?actual?process?of?preparing?and?presenting?the?
accounts.?Putting?the?academic?knowledge?of?accountancy?into?practice.
Book-keeping: is? a? part? of? accounting? and? is? concerned? with? record?
keeping? which? is? often? routine? and? clerical? in? nature.? The? difficulty? of?
remembering?vast?business?transactions?gave?rise?to?book?keeping.
Book-keeping? is? part? of? accounting? and? Accounting? is? a? part? of?
Accountancy.
? Basic? objective? of? Book-keeping? is? to? maintain? systematic? record? of?
financial?transactions.?
? Basic?objective?of?Accounting?is?to?ascertain?net?results?of?operations?
and?financial?position?and?to?communicate?information?to?the?interested?
parties.
??
?
Accounting
Is the process of recording, classifying, summarising, analysing, and
interpreting, the financial transactions and communicating the results
to the persons interested in such information.
Involves:
? Recording
? Classifying
? Summarising
? Analysing
? Interpreting
? Communicating
Need for Accounting
? Keeping systematic record.
? Ascertain the results of the operation.
? Ascertain the financial position of the business.
? Portray the liquidity position.
? To protect the business properties.
? To communicate the information to the users.
? To facilitate rational decision making.
? To satisfy the requirements of law.
Types of Accounting
Financial Accounting
? The accounting system is concerned only with the
financial state of affairs and financial results of
operations.
? It is the original form of accounting.
? It is mainly concerned with the preparation of
financial statements for the use of outsiders like
creditors, debenture holders, investors and financial
institutions.
Cost Accounting
?In view of the limitations of financial accounting in
respect of information relating to the cost of individual
products, cost accounting was developed.
?It is that branch of accounting which is concerned with the
accumulation and assignment of historical costs to units of
product and department, primarily for the purpose of
valuation of stock and measurement of profits.
?Cost accounting seeks to ascertain the cost of unit
produced and sold or the services rendered by the
business unit with a view to exercising control over these
costs to assess profitability and efficiency of the enterprise.
?It involves an estimation of future costs to be incurred
based on the data provided by the financial accounting.
Management Accounting
?It is the presentation of accounting information in such a
way as to assist management in the creation of policy and
the day-to-day operation.
?It covers all arrangements and combinations or
adjustments of the traditional information to provide the
Chief Executive with the information from which he can
control the business e.g. Information about funds, costs,
profits etc.
?Management accounting is not only confined to the area
of cost accounting but also covers other areas (such as
capital expenditure decisions, capital structure decisions,
and dividend decisions) as well.
FirstRanker.com - FirstRanker's Choice
I Semester MBA ? Accounting for Managers
Subject Code: 16MBA13
Introduction to Accounting
Unit I
Introduction
? Wherever money is involved, accounting is required to account for
it.
? Accounting is often called the language of business.
? The basic function of any language is to serve as a means of
communication.
? Accounting also serves this function.
Accounting helps answering questions like:
? Am I earning or losing money from my business?
? How much am I worth?
? Should I put more money in my business or sell it and go into
another business?
? How much is owed to me, and how much do I owe?
? How can I change the way I operate to make more profit?
Accountancy: refers?to?systematic?knowledge?of?accounting.?It?explains?
why?to?do,?and?how?to?do?of?various?aspects?of?accounting.
Accounting: refers?to?the?actual?process?of?preparing?and?presenting?the?
accounts.?Putting?the?academic?knowledge?of?accountancy?into?practice.
Book-keeping: is? a? part? of? accounting? and? is? concerned? with? record?
keeping? which? is? often? routine? and? clerical? in? nature.? The? difficulty? of?
remembering?vast?business?transactions?gave?rise?to?book?keeping.
Book-keeping? is? part? of? accounting? and? Accounting? is? a? part? of?
Accountancy.
? Basic? objective? of? Book-keeping? is? to? maintain? systematic? record? of?
financial?transactions.?
? Basic?objective?of?Accounting?is?to?ascertain?net?results?of?operations?
and?financial?position?and?to?communicate?information?to?the?interested?
parties.
??
?
Accounting
Is the process of recording, classifying, summarising, analysing, and
interpreting, the financial transactions and communicating the results
to the persons interested in such information.
Involves:
? Recording
? Classifying
? Summarising
? Analysing
? Interpreting
? Communicating
Need for Accounting
? Keeping systematic record.
? Ascertain the results of the operation.
? Ascertain the financial position of the business.
? Portray the liquidity position.
? To protect the business properties.
? To communicate the information to the users.
? To facilitate rational decision making.
? To satisfy the requirements of law.
Types of Accounting
Financial Accounting
? The accounting system is concerned only with the
financial state of affairs and financial results of
operations.
? It is the original form of accounting.
? It is mainly concerned with the preparation of
financial statements for the use of outsiders like
creditors, debenture holders, investors and financial
institutions.
Cost Accounting
?In view of the limitations of financial accounting in
respect of information relating to the cost of individual
products, cost accounting was developed.
?It is that branch of accounting which is concerned with the
accumulation and assignment of historical costs to units of
product and department, primarily for the purpose of
valuation of stock and measurement of profits.
?Cost accounting seeks to ascertain the cost of unit
produced and sold or the services rendered by the
business unit with a view to exercising control over these
costs to assess profitability and efficiency of the enterprise.
?It involves an estimation of future costs to be incurred
based on the data provided by the financial accounting.
Management Accounting
?It is the presentation of accounting information in such a
way as to assist management in the creation of policy and
the day-to-day operation.
?It covers all arrangements and combinations or
adjustments of the traditional information to provide the
Chief Executive with the information from which he can
control the business e.g. Information about funds, costs,
profits etc.
?Management accounting is not only confined to the area
of cost accounting but also covers other areas (such as
capital expenditure decisions, capital structure decisions,
and dividend decisions) as well.
Accounting Equation
? Resources = Sources of Finance
? Total Assets = Total Equities
? Assets = Internal Equity plus External Equity
? Assets = Capital plus Liabilities
? Capital = Assets ? Liabilities
How to develop an accounting Equation?
Step 1. Ascertain the variables (Assets ,Liabilities or Capital)
in a transaction.
Step 2. Find out the effect (increase or decrease) of a
transaction on the variables.
Step 3. Show the effect on the appropriate side of an equation
and ensure that the total of right hand side is equal to
the total of left hand side.
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This post was last modified on 18 February 2020