Accounting Class 1[1]

Accounting Class 1[1] -...

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Traditional definition of Accounting : “ Accounting is an art of recording,  classifying and summarizing, in a significant manner and in terms of  money, transactions and events which are, in part at least, of a financial  character, and interpreting the results thereof” The above definition makes an impression that Accounting is an art of  record keeping . ( General Journal, Subsidiary Books, Ledger etc) However the above definition does not reflect properly the role of  accounting in the modern society. The scope of Accounting is wider at  present than that described above.
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Some thoughtful remarks on Accounting: A renowned accountant once observed that “ Accounting was born without notice and reared in neglect” Some say that “ Accounting was first practiced and then theorized ”. There are sufficient evidences exist to corroborate the fact that the art and practice of accounting, as a highly developed system, was in vogue in India even during the times of Vedas and Upanishads. A reference needs to be made to a pertinent observation made by Alexander Hamilton F.R.S, the noted Orientalist in the book review in “monthly review” 26 1798) page 129, he stated as under: “ We would remark that the Banias of India have been from time immemorial, in possession of the method of book-keeping by double entry and that…….” (Author’s note: Banias mean Businessmen ) The birth of double entry book-keeping is suggested to have been at the hands of a Franciscan Monk, Luca Fra Pacioli, an Italian Mathematician, who published a book in 1494, a philosophical and mathematical work, which included a treatise on book- keeping
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Accounting as an Information system : In the present world, Accounting is called the “language of business as it is used to serve as a means of communication among people in society. Information as regards financial position (assets minus liabilities), operating results (profit or loss), Cash flows and other information like financial information required by Banks, or when required by any investor etc. So Accounting provides information that is useful in making business and economic decisions for making reasoned choices among alternative uses of scarce resources in the conduct of business and economic activities. It is the principal means of communicating financial information to owners, lenders, managers, Government and its regulatory agencies .
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Importance of Accounting : - Assistance to Management - Records rather than memory - Comparison - Aid in legal matters - Help in taxation matters - Sale of a business
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Branches of Accounting : Financial Accounting
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This note was uploaded on 11/15/2011 for the course ACCOUNTS 231 taught by Professor Majidkhan during the Winter '11 term at IIPM.

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Accounting Class 1[1] -...

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