Basics of Accounting

ACCOUNTING Accounting  is a process of identifying ,recording, summarizing, and reporting economic information to decision makers in the form of financial statements. Features :- Accounting   helps in decision making by showing where  and when money has been spent , by evaluating performance, and by showing the implications of choosing one plan instead of another. Who Uses the Accounting information ? (i)   Individuals (ii)  Businesses (iii) Investors and creditors (iv) Government regulatory agencies (v)  Non- Profit Organizations (vi) Taxing authorities  How and where they use accounting information? .  Investors, Creditors, Regulators, customer and competitors are the external users.  . Owners, managers and employees are the internal users. Accounting Period An accounting period is a span of time covered by a set of financial statements. This period defines the time range over which business tr...

GENERALLY ACCEPTED ACCOUNTING PRINCIPLES AND BASIC CONCEPTS  (GAAP) 1. If every accountant used his or her own rules for recording transactions, the financial statements would be useless in making comparisons. 2. Therefore, accountants have agreed to apply a common set of measurements principles (a common language) to record information for financial statements. Otherwise, decision makers could not use or compare financial statements.  GAAP :- The rules that govern accounting are called GAAP.           GAAP Overview  GAAP are the broad framework or the structure which is used to prepare financial statements of the companies. Like JAVA, C++ or HTML are used by software engineers to write computer programme, in the same manner accountants all over the world use a language- GAAP, to prepare financial statements. But there is one huge difference between Computer language and GAAP. Unlike a programmer who uses the same ...