Q1. Accounting is among the oldest, organized management details system. Provide the meaning of accounting and book keeping? Explain the objectives of accounting?
A1. Accounting: Accounting is the research and model of book-keeping records. It provides not only the upkeep of accounting records although also the preparation of financial and economical information which involves the dimension of deals and other situations relating to the entity. Accounting is defined as " the art of recording, classifying and summarizing in terms of money deals and incidents of financial persona and interpretation the effects thereof. " " Accounting is a method of collecting, summarizing, analyzing and reporting in monetary terms, information about the business. " Meaning of publication keeping: Publication Keeping is the task of recording, classifying and summarising (upto trail balance) of economic transactions and events. It is just a part of accounting or is described as as the fundamental pillars of accounting. Seeing that in previously days, these financial transactions and occasions were written in the logn Bahi Catalogs, registers, replications hence these were known as book keeping. В
Now the proper execution of keeping gets changed by the advent of technology and these types of transactions and events are recorded and procesed through computers but still the subtance remain precisely the same and so about the key expression " Book Keeping. " OBJECTIVES:
To hold systematic documents: В Accounting is performed to keep a systematic record of economic transactions. In the absence of accounting there could have been excellent burden upon human memory space which in most all cases would have been impossible to bear.
To protect organization properties: В Accounting provides security to organization properties coming from unjustified and unwarranted us. This is likely on account of accounting supplying the info to the director or the operator. To ascertain the operational profit or reduction: В Accounting will help is determining the net revenue earned or loss endured on account of carrying the business. This really is done by keeping a proper record of revenues and bills of a particular period.
To ascertain the financial position of business: В The profit and loss bank account gives the quantity of income or loss made by the company during a particular period. Yet , it is not enough.
To help rational decision making: Accounting nowadays has used upon by itself the task of collection, research and credit reporting of information at the required parts of time to the necessary levels of expert in order to assist in rational decision making. Q2. Make clear GAAP and write down the relationship between accounting principles, accounting concepts, and accounting events. Explain each of the five accounting concepts with an example.
A2. GAAP: Generally AcceptedВ AccountingВ Principles (GAAP)В is a platform ofВ accountingВ standards, rules and procedures defined by the professional accounting industry, that can be adopted simply by nearly all public U. S. companies. GAAP are imposed on firms so that buyers have a baseline level of persistence in the financial statements they use when studying companies for investment uses. GAAP cover such things as earnings recognition, "balance sheet" item classification and spectacular share measurements. Companies are expected to follow GAAP rules when reporting their financial info via monetary statements. The concepts incorporate
GOING CONCERN CONCEPT: Giving the simple fact that a organization entity can be solvent and viable idea assumes the notion that the business unit will have a everlasting existence and definitely will not always be sold or liquidated. ENTERPRISE CONCEPT: Idea states that each business device not withstanding its legal existence can be treated another entity from the body or bodies that owe that, this implies that its existence is distinctive from its owner(s). MATCHING OR PERHAPS ACCURAL CONCEPT: This concept states that within an accounting period the gained income and the incurred price which attained...
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