INDIAN ACCOUNTING BASICS EBOOK
Check our section of free e-books and guides on Accounting now! Financial Statements, Accounts from Incomplete Records, Basics of Cooperative Auditing, Qualities and Duties . Author(s): Institute of Cost and Works Accountants of India. Usually, accounting is understood as the Language of Business. However . prescribed code of conduct like the Chartered Accountants in India and. Certified Public .. propositions, assumptions, underlying principles, fundamentals. STUDY NOTES. INTERMEDIATE: PAPER - 5. FINANCIAL. ACCOUNTING. The Institute of Cost Accountants of India. CMA Bhawan, 12, Sudder Street, Kolkata.
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Accountants of India and prior permission from the Institute is Acquire basic concepts of Cost & Management Accounting relevant for managerial decision. THE INSTITUTE OF COMPANY SECRETARIES OF INDIA. TIMING OF . Ashish K. Bhattacharyya Essentials of Financial Accounting; PHI Learning Pvt. Ltd. These books are all percent free with PDF download. Accounting eBook you can use to learn financial modeling, valuation, and Excel-based analysis.
Accounting for business transactions cannot be accurate down to the last dollar; this is nonsense. The late Kenneth Boulding, a well-known economist, once quipped that accountants would rather be precisely wrong than approximately correct.
This is about as carried away as accountants get in their work — a double underline. Instead of a double underline for a bottom-line number, it may appear in bold. Some need to break across two lines of text.
Well, perhaps I get more pumped up about accounting than you. So, one question you may have is this: Do I really have to read every sentence in the book? To be honest, you can skip the paragraphs marked with the Technical Stuff icon. You can simply leapfrog over these sections without missing a beat. If you have time, you can return to these topics Introduction later. Also, the sidebars in the chapters are interesting, but not essential for understanding the topics at hand.
For instance, consider the income statement example in the previous section. You should understand that the bottom-line profit is the amount remaining after all expenses are deducted from sales revenue.
Foolish Assumptions Although I assume that you have a basic familiarity with the business world, I take nothing for granted regarding how much accounting you know. I have written this book with a wide audience in mind.
I could put others in the above list.
But I think you get the idea that many different people need to understand the basics of accounting. Perhaps someone who leads an isolated contemplative life and renounces all earthly possessions does not need to know anything about accounting.
How This Book Is Organized This book is divided into parts, and each part is further divided into chapters. The following sections describe what you can find in each part. Part I: Opening the Books on Accounting In Chapters 1 and 2, I introduce the three primary business financial statements gradually, one step at a time. Rather than throwing you in the deep end of the pool, hoping that you learn to swim before drowning in too many details, I make sure you first learn to float and then move on to some basic Introduction strokes.
The information for financial statements comes from the bookkeeping system of the entity. So, in Chapter 3, I offer a brief overview of bookkeeping and accounting systems. You could jump over this chapter, if you must. But I recommend at least a quick read.
In Chapter 7, I explain that businesses are not in a straitjacket when it comes to deciding which accounting methods to use for recording their revenue and expenses. They can select from two or more equally acceptable methods for recording certain revenues and expenses. The choice of accounting methods affects the values recorded for assets and liabilities. Part III: Accounting in Managing a Business To start a business and begin operations, its founders must first decide on which legal structure to use.
Chapter 8 explains the legal entities for carrying on business activities. Each has certain advantages and disadvantages, and each is treated differently under the income tax law.
Chapter 9 explains an extraordinarily important topic: designing an accounting report template that serves as a good profit model, one that focuses on the chief variables that drive profit and changes in profit. A hands-on profit model is essential for decision-making analysis.
A manager depends on the profit model to determine the effects of changes in sales prices, sales volume, product costs, and the other fundamental factors that drive profit. In Chapter 10, I discuss accounting-based planning and control techniques, through the lens of budgeting. Managers in manufacturing businesses should be wary of how product costs are determined, as Chapter 11 explains. The chapter also explains other economic and accounting cost concepts relevant to business managers.
Next I discuss how investors and lenders read financial statements see Chapter Business managers need more information than is included in an external financial report to investors and lenders. In Chapter 14, I survey the additional information that managers need.
I close this part of the book with a chapter that explains audits of financial statements by CPAs and the very serious problems of accounting and financial reporting fraud see Chapter If there were no Enrons in the world, things would be a lot simpler.
I hate to say it, but the next Enron is just waiting to happen. Chapter 16 reviews ten important ways business managers should use accounting information. Chapter 17 gives business investors handy tips for getting the most out of reading a financial report — tips on how to be efficient in reading a financial report and the key factors to focus on.
Glossary The accounting terminology in financial statements is a mixed bag. Sometimes it must seem like accountants are speaking a foreign language. I must admit that accountants use jargon more than they should. In some situations accountants resort to arcane terminology to be technically correct, much like lawyers use arcane terminology in filing lawsuits and drawing up contracts.
Where I use jargon in the book, I pause and clarify what the terms mean in plain English. Also, I present a helpful glossary at the end of the book that can assist you on your accounting safari. This glossary provides quick access to succinct definitions of key accounting and financial terms, with relevant commentary and an occasional editorial remark.
This is better than your average glossary. Introduction Icons Used in This Book This icon points out especially important ideas and accounting concepts that are particularly deserving of your attention. The material marked by this icon describes concepts that are the undergirding and building blocks of accounting — concepts that you should be very clear about and that clarify your understanding of accounting principles in general.
I use this icon sparingly; it refers to very specialized accounting stuff that is heavy going, which only a CPA could get really excited about. However, you may find these topics important enough to return to when you have the time. Feel free to skip over these points the first time through and stay with the main discussion. This icon calls your attention to useful advice on practical financial topics.
It saves you the cost of buying a yellow highlighter pen. This icon is like a caution sign that warns you about speed bumps and potholes on the accounting highway. Taking special note of this material can steer you around a financial road hazard and keep you from blowing a fiscal tire. In short — watch out!
You might start with Chapters 4, 5, and 6 which explain the three primary financial statements of businesses, and finish with Chapter 13 on reading a financial report.
You might jump right into Chapters 9 and 10, which explain the analysis of profit behavior and budgeting cash flows. The book is not like a five-course dinner in which you have to eat in the order the food is served to you. In this part, you find out why. Accounting is equally vital in managing the business affairs of not-forprofit and governmental entities.
From its accounting records, a business prepares its financial statements, its tax returns, and the reports to its managers. In financial reports to investors and lenders, a business must obey authoritative accounting and financial reporting standards.
If not, its financial reports would be misleading and possibly fraudulent, which could have dire consequences. Bookkeeping — the record-keeping part of accounting — must be done well to ensure that the financial information of a business is timely, complete, accurate, and reliable — especially the numbers reported in its financial statements and tax returns.
Wrong numbers in financial reports and tax returns can cause all sorts of trouble. A ccounting is all about financial information — capturing it, recording it, configuring it, analyzing it, and reporting it to persons who use it.
But I talk a lot about how accountants communicate information in financial statements, and I explain the valuation methods accountants use — ranging from measuring profit and loss to putting values on assets and liabilities of businesses.
As you go through life, you come face to face with accounting information more than you would ever imagine. Accounting information is presented on the assumption that you have a basic familiarity with the vocabulary of accounting and the accounting methods used to generate the information. In short, most of the accounting information you encounter is not transparent. The main reason for studying accounting is to learn its vocabulary and valuation methods, so you can make more intelligent use of the information.
The purpose of this book is to make you a knowledgeable spectator of the accounting game. Let me point out another reason you should know accounting basics — I call it the defensive reason. A lot of people out there in the cold, cruel financial world may take advantage of you, not necessarily by illegal means but by withholding key information and by diverting your attention from unfavorable aspects of certain financial decisions.
These unscrupulous characters treat you as a lamb waiting to be fleeced. Accounting Is Not Just for Accountants One main source of accounting information is in the form of financial statements that are packaged with other information in a financial report. Accountants keep the books and record the financial activities of an entity such as a business. From these detailed records the accountant prepares financial statements that summarize the results of the activities.
Financial statements are sent to people who have a stake in the outcomes of the activities. If you own stock in General Electric, for example, or you have money in a mutual fund, you receive regular financial reports. If you invest your hard-earned money in a private business or a real estate venture, or you save money in a credit union, you receive regular financial reports.
In summary, one important reason for studying accounting is to make sense of the financial statements in the financial reports you get. I guarantee that Warren Buffett knows accounting and how to read financial statements. Affecting both insiders and outsiders People who need to know accounting fall into two broad groups: insiders and outsiders. Business managers are insiders; they have the authority and responsibility to run a business.
They need a good understanding of accounting terms and the methods used to measure profit and put values on assets and liabilities.
Chapter 1: Accounting: The Language of Business, Investing, Finance, and Taxes Accounting information is indispensable for planning and controlling the financial performance and condition of the business.
Likewise, administrators of nonprofit and governmental entities need to understand the accounting terminology and measurement methods in their financial statements. The rest of us are outsiders. We are not privy to the day-to-day details of a business or organization. Therefore, we need to have a good grip on the financial statements included in the financial reports.
For all practical purposes, financial reports are the only source of financial information we get directly from a business or other organization. By the way, the employees of a business — even though they obviously have a stake in the success of the business — do not necessarily receive its financial reports.
Only the investors in the business and its lenders are entitled to receive the financial reports. Of course, a business could provide this information to those of its employees who are not shareowners, but generally speaking most businesses do not. The financial reports of public businesses are in the public domain, so their employees can easily secure a copy.
However, financial reports are not automatically mailed to all employees of a public business. In our personal financial lives, a little accounting knowledge is a big help for understanding investing in general, how investment performance is measured, and many other important financial topics. Keep in mind that this is not a book on bookkeeping and recordkeeping systems. I offer a brief explanation of procedures for capturing, processing, and storing accounting information in Chapter 3.
Even experienced bookkeepers and accountants should find some nuggets in that chapter. However, this book is directed to users of accounting information.
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I focus on the end products of accounting, particularly financial statements, and not how information is accumulated. Overcoming the stereotypes of accountants I recently saw a cartoon in which the young son of clowns is standing in a circus tent and is dressed as a clown, but he is holding a business briefcase.
He is telling his clown parents that he is running away to join a CPA firm. Why is this funny? As a CPA and accounting professor for more than 40 years, I have met and known a large number of accountants. Most accountants are not as gregarious as used-car sales people though some are.
Accountants certainly are more detail-oriented than your average person. The question is whether or not you as the business owner with limited knowledge want to do this job yourself or hire the services of a professional. If you have enthusiasm, patience, and time then your answer should be yes to doing it yourself to start with!
You might also be motivated by your desire to keep your costs down. Of course, this is just until your business grows and you find yourself running haggard trying to juggle all the different aspects - by which time outsourcing the work to a bookkeeper would be a fabulous idea!
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Are you a Bookkeeper? Delve deeper into this site by clicking on all the links and exploring. Are you a student? Are you currently studying this subject or business, finance or accounting? I am sure you will find this resource a helpful addition to your study material. Remember to Bookmark this site so you can easily return! What others say Matthew "I just want to say thank you for this incredible site!! I've yet to get a handle on my bookkeeping but for the first time ever, I'm actually feeling slightly comfortable about facing this task.
I hope to get a better handle on my personal budget as well as my business accounts!In constructing the seventeen chapters, the author have worked to guide you on a voyage through the world of business and financial reporting. Shivaji University, Kolhapur 99 Pages. Are you a student?
I focus on the end products of accounting, particularly financial statements, and not how information is accumulated.
Chapter 6 - Revenue Recognition Principle Revenue is something that is generated by the business in exchange for goods or services. A massive and inspiring collection of Accounting Books for you to checkout! The financial performance and viability of these entities has a direct bearing on your personal financial life and well-being.
Every recordkeeping system needs quality controls built into it, which are called internal controls or internal accounting controls. Sid Glandon NA Pages. Accountants keep the books and record the financial activities of an entity such as a business.
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