8 inflation accounting this system of accounting

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8. Inflation Accounting: This system of accounting regularly records all items in financial statements at their current values. 9. Human resources accounting: The importance of human resources in a company's earning process and total assets is reported in this kind of accounting. 1.5 INTEXT QUESTIONS 1. Why accounting is called the language of business? 2. What are the functions of accounting? 3. Accounting as a social science can be viewed as an information system. Examine. 4. Distinguish between Public accounting and private accounting. 1.6 SUMMARY Accounting is rightly called the "language of business". It is as old as money itself. It is concerned with the collecting, recording, evaluating and communicating the results of business transactions. Initially meant to meet the needs of a relatively few owners, it gradually expanded its function to a public role of meeting the needs of a variety of interested parties. Broadly speaking all citizens are affected by accounting in some way. Accounting as an information system possesses all the three features of a system. Accounting is also viewed as a profession with accountants engaging in private and public accounting. As in many other areas, of human activity a number of specialized fields in accounting also have evolved as a result of rapid changes in business and social needs. 1.7 TERMINAL EXERCISES 1. Accounting does not record non-financial transactions because of: a. Accrual concept
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14 b. Cost concept c. Continuity concept d. Money measurement concept Correct Answer: d 2. Which of these are is not a fundamental accounting assumption? a. Going concern b. Consistency c. Conservatism d. Accrual Correct Answer: c 3. Fixed assets and current assets are categorized as per concept of: a. Separate entity b. Going concern c. Consistency d. Time period Correct Answer: b 1.8 SUPPLEMENTARY MATERIAL 1. 2. 1.9 ASSIGNMENT 1. Is accounting a staff function or line function? Explain with reasons. 2. Give an account of the various branches of accounting. 3. "Accounting is a service function' Discuss this statement in the context of a modern manufacturing business. 4. Distinguish between Financial Accounting and Management Accounting. 1.10 SUGGESTED READINGS 1. Antony and Reece: 'Accounting Principles', Richard D. Irwin, Inc. Home wood, Illinois. 2. Fess/Warren: 'Financial Accounting’, South Western Publishing Company, Ohio. 3. M.C. Shukla& T.S. Grewal: Advanced Accounts, S. Chand& Company New Delhi. 1.11 LEARNING ACTIVITIES 1. There are no externally imosed generally accepted accounting principles for management accounting .” 2. In the light of the above statement, discuss giving illustration the nature and scope of management accounting. 1.12 KEYWORDS Concepts, conventions, accounting standards, business entity, dual aspects, realisation
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15 LESSON 2 ACCOUNTING RECORDS AND SYSTEMS 2.1 INTRODUCTION During the accounting period the accountant records transactions as and when they occur. At the end of each accounting period the accountant summarises the
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