ACCOUNTING | meaning , definition , types and methods

ACCOUNTING :

Accounting is the process of recording financial transactions pertaining to a business. The accounting process includes summarizing, analyzing and reporting

In simple , the process or work of keeping financial accounts.

Definnitio : " Accounting is the process of recording financial transactions pertaining to a business. The accounting process includes summarizing, analyzing and reporting these transactions to oversight agencies, regulators and tax collection entities ".

Types of accounting :

Financial accounting - Financial accounting is the process of recording, summarizing and reporting a company's business transactions through financial statements. These statements are: the income statement, the balance sheet, the cash flow statement and the statement of retained earnings.

Cost accounting - Cost accounting is a form of managerial accounting that aims to capture a company's total cost of production by assessing the variable costs of each step of production as well as fixed costs, such as a lease expense.

Management accounting - Management accounting helps managers within a company make decisions. Also known as cost accounting, management accounting is the process of identifying, analyzing, interpreting and communicating information to managers to help achieve business goals.

Purpose of accounting :

RECORDING TRANSACTIONS. The primary role of accounting is to maintain a systematic, accurate and complete record of all financial transactions of a business.

BUDGETING AND PLANNING.

DECISION MAKING.

BUSINESS PERFORMANCE.

FINANCIAL POSITION.

LIQUIDITY.

FINANCING.

CONTROL.

Here are a few basic advantages of accounting

Maintenance of permanent Business records. Basically business will have a huge number of transactions. ...
A systematic order. ...
Decision making. ...
Valuation of business. ...
Helps in Raising loans. ...
Evidence in court. ...
Complying with law. ...
Preparation of Financial statements.

Here few disadvantages of Accounting

Expresses Accounting information in terms of money.
Accounting information is based on estimates.
Accounting information may be biased.
Recording of Fixed assets at the original cost.
Manipulation of Accounts.
Money as a measurement unit changes in value.

The two main accounting methods are cash accounting and accrual accounting.

Cash accounting records revenues and expenses when they are received and paid.
Accrual accounting records revenues and expenses when they occur.

Objectives of Accounting

To maintain a systematic record of business transactions.
To ascertain profit and loss.
To determine the financial position.
To provide information to various users.
To assist the management.
(1) Identifying financial transactions and events.
(2) Measuring the transactions.

STATUS OF ACCOUNTING STANDARDS ISSUED BY ICAI FOR NON-CORPORATES

Accounting Standard (AS)	Title of the AS	Mandatory for periods commencing on or after	Levels of Enterprises to whom applicable, Remarks	Refer Note No.
AS 1	Disclosure of Accounting Policies	1-4-1991 for companies, 1-4-1993 for others	I, II and III
AS 2	Valuation of Inventories	1-Apr-99	I, II and III
AS 3	Cash Flow Statements	1-Apr-01	I	1
AS 4	Contingencies and Events Occurring After the Balance Sheet Date	1-Apr-95	I, II and III	2
AS 5	Net Profit or Loss for the Period, Prior Period Items and Changes in Accounting Policies	1-Apr-96	I, II and III	3
AS 6	Depreciation Accounting	1-Apr-95	I, II and III	4
AS 7	Construction Contracts	For all contracts entered into during accounting periods on or after 1-4-2003	I, II and III	5a
AS 8	Accounting for Research and Development	1-4-1991 for companies, 1-4-1993 for others	I, II and III	4
AS 9	Revenue Recognition	1-4-1991 for companies, 1-4-1993 for others	I, II and III
AS 10	Accounting for Fixed Assets	1-4-1991 for companies, 1-4-1993 for others	I, II and III	6, 4
AS 11	The Effects of Changes in Foreign Exchange Rates	1-Apr-04	I, II and III	5b
AS 12	Accounting for Government Grants	1-Apr-94	I, II and III
AS 13	Accounting for Investments	1-Apr-95	I, II and III	7
AS 14	Accounting for Amalgamations	1-Apr-95	I, II and III	8
AS 15	Employees Benefits (Revised 2005)	1-Apr-06	I, II and III	9
AS 16	Borrowing Costs	1-Apr-00	I, II and III	6
AS 17	Segment Reporting	1-Apr-01	I	2
AS 18	Related Party Disclosures	1-Apr-01	I	1, 10
AS 19	Leases	For all assets leased for accounting periods commencing on or after 1-4-2001	I, II and III	1, 11a
AS 20	Earnings Per Share	1-Apr-01	I, II and III	1, 11b, 19
AS 21	Consolidated Financial Statements	1-Apr-01	I	12
AS 22	Accounting for Taxes on Income	1-Apr-01	I, II and III	13
AS 23	Accounting for Investments in Associates in Consolidated Financial Statements	1-Apr-02	I	14
AS 24	Discontinuing Operations	1-Apr-04	I	1
AS 24	Discontinuing Operations	1-Apr-05	II, III
AS 25	Interim Financial Reporting	1-Apr-02	I	11c, 15
AS 26	Intangible Assets	1-Apr-03	I	4, 16
		1-Apr-04	II, III
AS 27	Financial Reporting of Interests in Joint Ventures	1-Apr-02	I	14, 17
AS 28	Impairment of Assets	1-Apr-04	I	1, 18
		1-Apr-06	II
		1-Apr-08	III
AS 29	Provisions, Contingent Liabilities and Contingent Assets	1-Apr-04	I, II and III	1, 11d, 2
AS 30	Financial Instruments: Recognition and Measurement	1-Apr-12	I
AS 31	Financial Instruments: Presentation	1-Apr-12	I
AS 32	Financial Instruments: Disclosures	1-Apr-12

These basic accounting concepts are as follows:

Accruals concept. Revenue is recognized when earned, and expenses are recognized when assets are consumed.
Conservatism concept.
Consistency concept.
Economic entity concept.
Going concern concept.
Matching concept.
Materiality concept

" thus these are the some basic knowledge of accounting including the concept and the techniques "