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Course Content Course Content Introduction to Accounting: Concept and necessity Introduction to Accounting: Concept and necessity of Accounting; An overview of Income Statement of Accounting; An overview of Income Statement and Balancesheet. and Balancesheet. Introduction and Meaning of GAAP; Concepts of Introduction and Meaning of GAAP; Concepts of Accounting; Impact of Accounting Concepts on Accounting; Impact of Accounting Concepts on Income statement and Balancesheet. Income statement and Balancesheet. Accounting Mechanics:Process leading to Accounting Mechanics:Process leading to preparation of Trial Balance and Financial preparation of Trial Balance and Financial Statements; Preparation of Financial Statements Statements; Preparation of Financial Statements with Adjustment entries. with Adjustment entries. Revenue Recognition and Measurement ;Capital and Revenue Recognition and Measurement ;Capital and Revenue Items:Treatment of R&DExpenses, Revenue Items:Treatment of R&DExpenses, Preproduction cost, Deferred Revenue Expenditure Preproduction cost, Deferred Revenue Expenditure etc. etc.

Finance Notes Ppt

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Page 1: Finance Notes Ppt

Course ContentCourse Content Introduction to Accounting: Concept and Introduction to Accounting: Concept and

necessity of Accounting; An overview of necessity of Accounting; An overview of Income Statement and Balancesheet.Income Statement and Balancesheet.

Introduction and Meaning of GAAP; Concepts Introduction and Meaning of GAAP; Concepts of Accounting; Impact of Accounting Concepts of Accounting; Impact of Accounting Concepts on Income statement and Balancesheet.on Income statement and Balancesheet.

Accounting Mechanics:Process leading to Accounting Mechanics:Process leading to preparation of Trial Balance and Financial preparation of Trial Balance and Financial Statements; Preparation of Financial Statements; Preparation of Financial Statements with Adjustment entries.Statements with Adjustment entries.

Revenue Recognition and Revenue Recognition and Measurement ;Capital and Revenue Measurement ;Capital and Revenue Items:Treatment of R&DExpenses, Items:Treatment of R&DExpenses, Preproduction cost, Deferred Revenue Preproduction cost, Deferred Revenue Expenditure etc.Expenditure etc.

Page 2: Finance Notes Ppt

For more Notes, Presentations, For more Notes, Presentations, Project Reports visit Project Reports visit

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Page 3: Finance Notes Ppt

Course ContentCourse Content Fixed Assets and Depreciation Fixed Assets and Depreciation

Accounting.Accounting. Evaluation and Accounting of Evaluation and Accounting of

Inventory.Inventory. Preparation and complete Preparation and complete

Understanding of Corporate Financial Understanding of Corporate Financial Statements;`T’form and Vertical Form Statements;`T’form and Vertical Form of Financial Statements.of Financial Statements.

Important Accounting Standards.Important Accounting Standards. Corporate Financial Reporting-Corporate Financial Reporting-

Analysis of Interpretation thereof with Analysis of Interpretation thereof with reference to Ratio Analysis, Fund reference to Ratio Analysis, Fund Flow, Cash Flow.Flow, Cash Flow.

Page 4: Finance Notes Ppt

Course ContentCourse Content

Inflation AccountingInflation Accounting Ethical issue in AccountingEthical issue in Accounting

Page 5: Finance Notes Ppt

Reference BooksReference Books

Financial Accounting for Managers-Financial Accounting for Managers-T.P.Ghosh.T.P.Ghosh.

Financial Accounting-Rerporting & Financial Accounting-Rerporting & Analysis-Stice &Diamond.Analysis-Stice &Diamond.

Financial Accounting-Financial Accounting-R.Narayanaswamy.R.Narayanaswamy.

Page 6: Finance Notes Ppt

Learning objectivesLearning objectives DefineDefine accounting, accounting, identify business identify business

goals and activities, and describe the goals and activities, and describe the role of accounting in making informed role of accounting in making informed decisions.decisions.

Identify the many users of accounting Identify the many users of accounting information in society.information in society.

Explain the importance of business Explain the importance of business transactions, money measure, and transactions, money measure, and separate entity to accounting separate entity to accounting measurement.measurement.

Page 7: Finance Notes Ppt

Describe the corporate form of Describe the corporate form of business organization.business organization.

DefineDefine financial position, financial position, state the state the accounting equation, and show how accounting equation, and show how they are affected by simple they are affected by simple transactions.transactions.

Identify the four financial statements.Identify the four financial statements.

Page 8: Finance Notes Ppt

State the relationship of generally State the relationship of generally accepted accounting principles (GAAP) accepted accounting principles (GAAP) to financial statements and the to financial statements and the independent CPA’s report, and identify independent CPA’s report, and identify the organizations that influence GAAP.the organizations that influence GAAP.

Define Define ethicsethics and describe the ethical and describe the ethical responsibilities of accountantsresponsibilities of accountants

Prepare a trial balance and describe its Prepare a trial balance and describe its value and limitationsvalue and limitations

Page 9: Finance Notes Ppt

Explain, in simple terms, the Explain, in simple terms, the generally accepted ways of solving generally accepted ways of solving the measurement issues of the measurement issues of recognition, valuation, and recognition, valuation, and classification.classification.

Define Define double-entry systemdouble-entry system and and state the rules for double entrystate the rules for double entry

Page 10: Finance Notes Ppt

Accounting as an Accounting as an Information SystemInformation System

AccountingAccounting provides a vital service provides a vital service by supplying the information decision by supplying the information decision makers need to make makers need to make reasoned reasoned choices among alternative uses of choices among alternative uses of scarce resources in the conduct of scarce resources in the conduct of business and economic activities.business and economic activities.

Page 11: Finance Notes Ppt

Accounting is a link between Accounting is a link between business activities and decision business activities and decision makersmakers• Accounting measures business activities Accounting measures business activities

by recording data about them for future by recording data about them for future use.use.

• The data are stored until needed and The data are stored until needed and then processed to become useful then processed to become useful informationinformation

Page 12: Finance Notes Ppt

Business GoalsBusiness Goals

1. Profitability.1. Profitability. A business must take in enough money A business must take in enough money to pay all the costs of doing business, to pay all the costs of doing business, withwith enough left over as profit for the owners enough left over as profit for the owners to want to stay in business. to want to stay in business.

2. Liquidity.2. Liquidity. A business must have enough cash A business must have enough cash available to pay debts when they are due.available to pay debts when they are due.

Page 13: Finance Notes Ppt

Business Goals and Business Goals and ActivitiesActivities

Page 14: Finance Notes Ppt

Business ActivitiesBusiness Activities

1.1. Financing Activities.Financing Activities. Obtaining capital from owners and Obtaining capital from owners and

creditors.creditors. Repaying creditors and a return to owners.Repaying creditors and a return to owners.

2.2. Investing Activities.Investing Activities. Spending the capital it receives in ways Spending the capital it receives in ways

that are productive and will help the that are productive and will help the business achieve its objectives.business achieve its objectives.

Buying and selling assets to be used in the Buying and selling assets to be used in the business.business.

Page 15: Finance Notes Ppt

3.3. Operating Activities.Operating Activities. Selling of goods and services to Selling of goods and services to

customers.customers. Employing managers and workers, Employing managers and workers,

buying and producing goods and buying and producing goods and services, and paying taxesservices, and paying taxes

Page 16: Finance Notes Ppt

Financial and Management Financial and Management AccountingAccounting

Accounting’s role of assisting Accounting’s role of assisting decision makers by measuring, decision makers by measuring, processing, and communicating processing, and communicating information is usually divided into information is usually divided into two categories:two categories:1.1. Management accounting.Management accounting.2.2. Financial accounting.Financial accounting.

The two may be distinguished by the The two may be distinguished by the principal users of their informationprincipal users of their information

Page 17: Finance Notes Ppt

Management AccountingManagement Accounting

Is oriented toward the needs of Is oriented toward the needs of internal decision makers.internal decision makers.

Provides managers and employees Provides managers and employees with information regarding how they with information regarding how they have done in the past and what they have done in the past and what they can expect in the futurecan expect in the future

Page 18: Finance Notes Ppt

Financial AccountingFinancial Accounting

Is oriented toward the needs of Is oriented toward the needs of external decision makers.external decision makers.

Provides information in the form of Provides information in the form of financial statements so that external financial statements so that external decision makers can evaluate how decision makers can evaluate how well the business has achieved its well the business has achieved its goals.goals.

Page 19: Finance Notes Ppt

Financial statements report directly Financial statements report directly on the goals of profitability and on the goals of profitability and liquidity. liquidity. – Financial statements are used Financial statements are used

extensively both inside and outside a extensively both inside and outside a business to evaluate the business’s business to evaluate the business’s success.success.

Page 20: Finance Notes Ppt

Decision Makers: The Users Decision Makers: The Users of Accounting Informationof Accounting Information

Page 21: Finance Notes Ppt

ManagementManagement Requires financial information to carry out Requires financial information to carry out

its basic functions.its basic functions.

1. Financing the business.1. Financing the business.

2. Investing the resources of the business.2. Investing the resources of the business.

3. Producing goods and services.3. Producing goods and services.

4. Marketing goods and services.4. Marketing goods and services.

5. Managing employees.5. Managing employees.

6. Providing information to decision 6. Providing information to decision makers.makers.

Page 22: Finance Notes Ppt

Outside Users withOutside Users witha Direct Financial Interesta Direct Financial Interest

InvestorsInvestors CreditorsCreditors

Page 23: Finance Notes Ppt

People, Organizations, and People, Organizations, and Agencies with an Indirect Agencies with an Indirect

Financial InterestFinancial Interest Tax AuthoritiesTax Authorities Regulatory Agencies.Regulatory Agencies. Labor UnionsLabor Unions Customers.Customers. Economic PlannersEconomic Planners

Page 24: Finance Notes Ppt

An overview of Income An overview of Income statement and statement and BalancesheetBalancesheet

Income statement (statement of Income statement (statement of operations)operations)

A statement showing the revenues, A statement showing the revenues, expenses, and income (the expenses, and income (the difference between revenues and difference between revenues and expenses) of a corporation over expenses) of a corporation over some period of time.some period of time.

Page 25: Finance Notes Ppt

Balance sheetBalance sheet

Also called the statement of financial Also called the statement of financial condition, it is a summary of a condition, it is a summary of a company's assets, liabilities, and company's assets, liabilities, and owners' equity. owners' equity. The document distributed at the annual The document distributed at the annual meeting to shareholders of record who meeting to shareholders of record who wish to vote their shares in person. wish to vote their shares in person.

Page 26: Finance Notes Ppt

Preparation of Income Preparation of Income StatementStatement

The Income Statement normally shows The Income Statement normally shows whether the business is earning profits or whether the business is earning profits or sustaining losses. It communicates the sustaining losses. It communicates the financial performance of the business. The financial performance of the business. The structure of the income statement differs structure of the income statement differs with the nature of the business. The with the nature of the business. The business can either be a manufacturing, business can either be a manufacturing, merchandising/trading or service entity. merchandising/trading or service entity. Regardless of the structure, they however, Regardless of the structure, they however, communicate the same information.communicate the same information.

Page 27: Finance Notes Ppt

Factors to be considered in the Factors to be considered in the preparation of income statements preparation of income statements are:are:

Revenues/SalesRevenues/Sales This item carries the revenues/sales This item carries the revenues/sales generations of the company. Sales generations of the company. Sales consist of Cash Sales (cash is paid at consist of Cash Sales (cash is paid at the time of sale) or Credit Sales the time of sale) or Credit Sales (Cash paid later). (Cash paid later).

Page 28: Finance Notes Ppt

For more Notes, Presentations, For more Notes, Presentations, Project Reports visit Project Reports visit

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