austin journal of accounting, audit and finance management
Post on 11-Apr-2017
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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
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