This ppt has been prepared keeping in mind to give basic idea on ACCOUNTING. This is meant for CLASS - XI COMMERCE students who are doing education on +2 Commerce under CBSE / ICSE / State board in different states.

2. TOPIC-
INTRODUCTION TO ACCOUNTING
1.FEATURES OF ACCOUNTING
2. OBJECTIVES OF ACCOUNTING
3. ADVANTAGES OF ACCOUNTING
4.LIMITATIONS OF ACCOUNTING
5.BOOK-KEEPING V/S ACCOUNTING
6.BRANCHES OF ACCOUNTING
7. USER’S OF ACCOUNTING INFORMATION

3. INTRODUCTION TO
ACCOUNTING

4. Accounting is, an art of recording,
classifying and summarising 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.

5. FEATURES OF ACCOUNTING
 Business or Economic Transaction.
 Transaction measurable in terms of money.
 Recording of Business Transaction.
 Classification of Business Transaction.
 Art of Summarising the Business
Transaction.
 Interpreting and Communicating the
results.

6. OBJECTIVES OF ACCOUNTING
 Systematic record of Business transaction.
 Calculation of Profit or Loss.
 To ascertain the Financial Position.
 Provide information to Interested Users.
 Helps managers to take decision.
 Fulfillment to the Law.

7. ADVANTAGES OF
ACCOUNTING

8. 1. Provide information about
financial performance
Accounting provides factual
information about financial
performance during a given period
of time
Like, profit earned or loss incurred
over a period and financial position
at a particular point of time.

9. 2. Provide assistance to
management
Accounting helps management in
business planning, decision making
and in exercising control.
For this, it provides financial
information in the form of reports.

10. 3. Facilitates comparative study
By keeping systematic records and
preparation of reports at regular
intervals, accounting helps in
making a comparison.

11. 4. Helps in settlement of tax liability
Systematic accounting records help
in settlement of various tax
liabilities. Such as – Income Tax,
GST etc.

12. 5. Helpful in raising loan
Banks and Financial Institutions
grant a loan to the firm on the basis
of appraisal of the financial
statement of the firm.

13. 6. Helpful in decision making
• Accounting provides useful
information to the management for
taking decisions.

14. Limitations of
Accounting

15. Accounting is not precise:
Accounting is not completely free from
personal bias or Judgment.
Accounting is done on historic
values of assets:
Accounting records assets at their
historical cost less depreciation. It does
not reflect their current market value.

16. Ignore the effect of price level
changes:
Accounting statements are prepared at
historical cost. So changes in the value of
money are ignored.
Ignore the qualitative information:
Accounting record only monetary
transactions. It ignores the qualitative
aspects

17. Affected by window dressing:
Window dressing means manipulation
in accounting to present a more
favourable position of the business
than the actual position.

18. Book-keeping
V/S
Accounting

19. Book-keeping:
Book-Keeping is a part of Accounting
and it is the process of identifying,
measuring, recording and classifying
the financial transactions.
Accounting
Accounting is a wider concept and
actually, it begins where Book Keeping
ends. It includes summarizing,
interpreting and communicating the
financial data to the users of financial
statements.

20. Book-keeping
It is a primary stage of accounting
Accounting
It is a second stage and begins where
book-keeping ends.

21. Book-keeping
This job is in routine and repetitive
in nature.
Accounting
This job is analytical in nature.

22. Book-keeping
The main aim is to maintain systematic
records of financial transactions.
Accounting
The main aim is to ascertain the
profitability and financial position of
the business.

23. Book-keeping
Book-keeping does not require special
skills. It is performed by Junior Staff.
Accounting
It requires specialized skill to analyze, so
it is performed by senior staff.

24. BRANCHES OF ACCOUNTING
There are three branches of Accounting :
 FINANCIAL ACCOUNTING : It concerned with
recording of financial transcaction and showing the
results of business operation.
 COST ACCOUNTING : It deals with accumulation
and ascertaining the cost of a product produced by the
business.
 MANAGEMENT ACCOUNTING : The manager
collects the financial and cost information and take
useful decision about the business for future.

25. USERS OF ACCOUNTING INFORMATION
 (A) Internal Users :
 (i) Management – For decision making purposes’
 (ii) Owners – Invest money and earns income from business.
 (iii) Employees – Interested for wages & salaries, bonus &
incentives etc.
( B) External Users :
(i) Investors – To know return on their investment.
(ii) Creditors – To judge the credit worthiness of the business.
(iii) Customers – To know the prices of product charged.
(iv) Banks – To ensure the recovery of loan given to business.
(v) Government – For policy decision & framing of law .
(vi) Research Institute – To make in depth analysis & research.

26. Thank You !!!