20-12-2012, 12:24 PM
Basics of Accounting and Finance
Basics of Accounting.ppt (Size: 263 KB / Downloads: 108)
What is Accounting?
Identifying a business transaction
Preparation of Business Documents.
Recording of the transaction in the book of first entry (Journal)
Sales or Purchase Module
Relevance with the banking operations
Posting in the ledger (Automatic in Software)
Preparation of Trial Balance (System Generated)
Preparation of Profit and Loss Account and Balance Sheet
Important terms in accounting
Debtors
Creditors
Assets
Liabilities
Income
Expenses
Account
Important accounting concepts
Dual Entity
Money Measurement Concept
Accounting Period Concept
Going Concern Concept
Conservatism Concept (Provisioning for NPA in Banks)
Accrual Concept ( Accrual of interest income and expenses in Banks)
Consistency Concept
Matching Concept
Process of Accounting
Types of business transactions
Cash and credit
Double Entry Principle in Accountancy
Debit and credit effect
Implications
Basic Categories of Accounts
Personal, Real and Nominal
Finalization of accounts
Refers to the preparation of Profit and Loss Account and the Balance sheet as per the legislative famework.
Adjusting entries are to be passed.
The revised trial balance is generated.
Financial statements are prepared.
Relevance of Accrual Concept, Matching Concept, Accounting Period Concept, Conservatism Concept at the time of finalization.
Ratio Analysis
Accounting ratios is an expression showing the relationship between two figures of financial statement. Accounting ratios may be expressed in terms of fractions like 1/2 ,1/3 or rates like two times, three times or percentage like 10%, 20%, etc. Many times absolute figures do not help to understand the position of the concern & the final account & financial statements prepared there from may not reveal enough information which will help in decision making. Therefore ratio analysis is employed as a tool to analyse financial position & make logical inferences out of the same.
There are three types of ratio:-
1) Balance Sheet ratios.
2) Revenue Statement ratios.
3) Combined ratios.