Question

Attempt all the questions.

1. Define Accounting. Explain the accounting concepts which guide the accountant at the

recoding stage.

Answer 1

Targets of Accounting

The destinations of bookkeeping can be expressed as takes after :

To keep up efficient records: Accounting is utilized to keep up orderly record of every single money related exchange like buy and offer of products, money receipts and money installments, and so on. It is additionally utilized for recording different resources and liabilities of the business.

To learn net benefit or net loss of the business: A representative would be occupied with occasionally finding the net aftereffect of his business operations i.e., regardless of whether the business has earned benefit or caused some misfortune. A legitimate record of all, pay and costs help in setting up a Profit and Loss Account and find out the net consequence of business operations amid a specific period.

To find out the monetary position of the business: The agent is additionally inspired by determining the money related position of his business toward the finish of a specific period i.e., the amount it claims and the amount it owes to others. He might likewise want to realize what happened to his capital, regardless of whether it has expanded or diminished or stayed steady. An efficient record of advantages and liabilities encourages the arrangement of a position explanation called Balance Sheet which gives the important data. ”

To give bookkeeping data to invested individuals: Apart from proprietors there are different gatherings who are occupied with the bookkeeping data. These are: brokers, leasers, assess experts, forthcoming financial specialists and so on. They need such data to evaluate the benefit and the monetary soundness of the business. The bookkeeping data is conveyed to them as a yearly report.

Accounting, Accounting and Accountancy-

As per G.A. Lee, the bookkeeping framework has following two phases :

i) the making of routine records, in recommended frame and as per set tenets, of all occasions which influence the money related condition of the association; and

ii) the summarisation occasionally of the data contained in the records, its introduction in a noteworthy shape to invested individuals, and its elucidation as a guide to basic leadership by these gatherings.

Stage (i) is called Book-keeping and stage (ii) is called Accounting.

Accounting is in this manner a restricted term concerned fundamentally with the upkeep of the books of record and covers the initial four exercises recorded in the extent of bookkeeping viz., distinguishing the exchanges and occasions to be recorded, measuring them as far as cash, recording them in the books of prime passage, and posting them into record. Bookkeeping, then again, is worried about outlining the recorded information, translating the money related outcomes and imparting them to every single invested individual. As such, bookkeeping begins where accounting closes. Be that as it may, by and by, the bookkeepers additionally immediate and audit crafted by accountants and in this way the term bookkeeping is for the most part utilized as a part of a more extensive sense covering all the bookkeeping exercises, Thus, Book-keeping is viewed as a piece of Accounting.