ACCOUNTING?

Accounting is a language of business. The affairs and the results of the business are communicated to others through accounting information, which has to be systematically recorded and presented

Help you prepare a budget and keep on target.

Realize how much cash you have and if there is enough to pay bills.

Uncover places where costs can be cut.

HOW ACCOUNTING HELPS YOU?

TYPES OF ACCOUNTING

Financial accountingManagerial accounting

Branch of accounting associated with preparing reports for external users

i.e. the bank, shareholders

FINANCIAL ACCOUNTING

Accounting to guide management in making decisions about the business

i.e. break even analysis

MANAGERIAL ACCOUNTING

CLASSIFICATION OF ACCOUNTS

ACCOUNTS

PERSONALACCOUNTS

IMPERSONALACCOUNTS

REALACCOUNTS

NOMINALACCOUNTS

Accounts in the name of persons are known as personal accounts.

Eg: Babu A/C,

Babu & Co. A/C,

Outstanding Salaries A/C, etc.

PERSONAL ACCOUNTS

These are accounts of assets or properties. Assets may be tangible or intangible. Real accounts are impersonal which are tangible or intangible in nature.

Eg:- Cash a/c, Building a/c, etc are Real Accounts related to things which we can feel, see and touch.

Goodwill a/c, Patent a/c, etc Real Accounts which are of intangible in nature.

REAL ACCOUNTS

These accounts are impersonal, but invisible and intangible. Nominal accounts are related to those things which we can feel, but can not see and touch. All “expenses and losses” and all “incomes and gains” fall in this category.

Eg:- Salaries A/C, Rent A/C, Wages A/C, Interest Received A/C, Commission Received A/C, Discount A/C, etc.

NOMINAL ACCOUNTS

The Balance SheetThe Income StatementStatement of Cash Flows

FINANCIAL STATEMENTS

The balance sheet is an accountant’s snapshot of the firm’s accounting value on a particular date, as though the firm stood momentary still.

The balance sheet states what the firm owns and how it is financed.

Assets Liabilities + Stockholders’ equity

THE BALANCE SHEET

The income statement measures performance over a specific period of time, say, a year.

The accounting definition of income is: Revenue – Expenses is Income

THE INCOME STATEMENT

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STATEMENT OF CASH FLOWS

Sources of Funds

Assets

Liabilities and Stockholders’ Equity

Uses of Funds

Assets

Liabilities and Stockholders’ Equity