Professional Documents
Culture Documents
An Orientation
Prof. Anil Kshatriya
Need for Accounting
Business is a set of Planned, Organized and
Coordinated activities
Proper recording of these activities
In a systematic manner
To enable the managers to establish control and take
decisions.
Because the owners need to be informed about the
progress of their business
Origin of Book-Keeping
Kautilya, a 4th century B.C. royal
advisor and scholar, recognized the
importance of accounting methods in
economic enterprises in Arthashastra.
Measurement
Recording Decision
Classifying Summarizing Making
Analysis Reporting
Identification Communication
Objective
Management Decision support system
Investors Knowledge of the financial position
Employees Information about wages/welfare benefits
Government Regulation and Taxation
Suppliers Solvency and credibility
Consumers Pricing and Branding
Branches of Accounting
Financial Accounting:
- Recording and Reporting
- Internal as well as External Information
- Chartered Accountants
Cost Accounting:
- Classification and Allocation of Costs
- Strictly Internal and Confidential
- Cost Accountants
Management Accounting:
- MIS for Strategic Decision Making
- Only for Top level Executives
- CIMA (London, UK)
Forms of Organizations
Ans: D
Financial Statements do not consider:
A. Assets expressed in monetary terms
B. Assets expressed in non-monetary terms
C. Liabilities expressed in monetary terms
D. Liabilities as well as Assets expressed in non-
monetary terms
Ans: D
Quick Test! on Accounting Equation
(Assets = Capital + Liabilities)
An entrepreneur starts a small retail outlet with
cash of 2,00,000 and registers his business as
Quick-kart
It purchases furniture of 5,000 for cash
It purchases goods of 50,000 for cash
It purchases goods of 20,000 on credit
It sells above goods worth Rs. 40,000 on credit
for 60,000. And remaining goods worth Rs.
30,000 for cash of Rs. 40,000.
It pays Rs. 5000 as rent and 10,000 as salary.
The Business Game
Instructions
1) Form groups with 6 students in a group.
2) Now you are a start-up. Name your company. Appoint CFO
among of your company. Decide the initial capital investment
in the firm.
3) Ask each team member to suggest two transactions. No
transaction should be repeated within a group. [E.g.
Purchased assets worth Rs. 1,00,000].
4) Take notes. All members must record all transactions and
write the accounting effect. Help CFO to consolidate all
equations and prepare Balance Sheet of the firm.
5) Any 3 groups will be called to present their companys
Balance Sheet.