Roll Number Class Subject Teacher

: : : :

2153 M.B.A 1st (Evening) Financial Accounting Yasir Hassan

National University Of Modern Languages

Definition: Financial Accounting is the art of recording, classifying, measuring, the economic activities and interpreting the results. 1. Accounting Accounting Accounting is the art of interpreting, measuring, and communicating the result of economic activities.
Accounting has often been called the language of Business, such term as Assets, Liabilities, Net Income, Cash Flow and Earning per share but a few examples of technical accounting terms widely used the business world. Accounting is the system of recording, verifying, and reporting of the value of assets, liabilities, income, and expenses in the books of account (ledger) to which debit and credit entries are chronologically posted to record changes in value. Lenders, managers, investors, tax authorities and other decision makers to make resource allocation decisions between and within companies, organizations, and public agencies primarily use such financial information. Accounting has been defined by the AICPA as " The art of recording, classifying, and summarizing in a significant manner and in terms of money, transactions and events which are, in part at least, of financial character, and interpreting the results thereof." Financial accounting is one branch of accounting and historically has involved processes by which financial information about a business is recorded, classified, summarized, interpreted, and communicated; for public companies, this information is generally publicly-accessible. By contrast management accounting information is used within an organization and is usually confidential and accessible only to a small group, mostly decision-makers. Open-book Accounting aims to improve accounting transparency. Tax Accounting is the accounting needed to comply with jurisdictional tax regulations. Accounting scholarship is the academic discipline, which studies the theory of accountancy. At the root of all accounting is book keeping. A bookkeeper keeps tracks of all of the funds that a business handles, including money paid to the business, money paid out, and assets that the business holds. The bookkeeper's goal is to keep the ledgers of the company balanced so that anyone can assess, at a glance, the financial state of the company. Records handled by a bookkeeper include payroll, company ledgers, bank statements, and paperwork pertaining to real estate and investments.

2. Book Keeping

Book Keeping
Bookkeeping is a part of Accounting. It is merely a mechanical aspect of recording, classifying and summarizing transaction. Therefore, keeping the books of accounts is always the theme in bookkeeping. The finer aspect of interpreting all these data into information for management to act upon is excluded. Bookkeeping is the recording of the value of assets, liabilities, income, and expenses in the daybooks, journals, and ledgers, which debit and credit entries are chronologically posted to record changes in value. Bookkeeping is often mistaken for accounting, which is the system of recording, verifying, and reporting such information. Practitioners of accounting are called accountants. Bookkeeping, commonly referred to as keeping the books, is the process of keeping full, accurate, up-to-date business records. Proper bookkeeping can help businesses effectively manage cash flow, stay abreast of profits and losses, and develop plans for the future based on financial trends. Furthermore, accurate bookkeeping is required by both federal and local tax agencies. Bookkeeping involves making a record of the monies received by a business as well as the monies paid out. It encompasses money a company owes to vendors, employees, tax agencies, contractors and any other individual or entity. Likewise, accurate records of amounts owed to a company by outside individuals and organizations are also recorded in a company's books. Though necessary and beneficial to business owners, the task of bookkeeping can be very time consuming. With no exceptions, every monetary amount that is paid or received must be recorded. Additionally, accuracy is of the utmost importance, making keeping the books in a rushed manner a very bad idea. As business owners are often lacking in time, many choose to hire bookkeepers to keep company records well maintained.