An Introduction To Basic Accounting Principles

Business is an economical activity, and in business lot of“give and take exist” which is termed as “Transaction”.Basically, exchange of goods, services and money betweenthe two parties is called transaction. It is very vital to keepall the records in a very systematic way or in a wellmanner. The process of recording all the businesstransaction is called “Book-Keeping”.

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Types of Accounting

• Financial

• Management

• Tax

• Forensic

• Project

• Social

Accounting is a vast and dynamic profession and is constantly adapting itself tothe specific and varying needs of its users. Over the past few decades,accounting outsourcing companies has branched out into different types ofaccounting to cater for the diversity of needs of its users.

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Financial Accounting

The process of recording, summarizing and reporting the myriadof transactions from a business, so as to provide an accuratepicture of its financial position and performance. The primaryobjective of financial accounting is the preparation of financialstatements - including the balance sheet, income statement andcash flow statement - that encapsulates the company's operatingperformance over a particular period, and financial position at aspecific point in time.

Management AccountingManagement accounting (also known as managerial or costaccounting) is different from financial accounting, in that itproduces reports for a company’s internal stakeholders, asopposed to external stakeholders. The result ofmanagement accounting is periodic reports for e.g. thecompany’s department managers, chief executive officer,etc.

Tax Accounting

Tax accounting is a specialized field of accounting whereaccountants focus on the preparation of tax returns as wellas tax planning for future taxable years.

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Forensic Accounting

Forensic Accounting is the use of accounting, auditing andinvestigative techniques in cases of litigation or disputes.Forensic accountants act as expert witnesses in courts oflaw in civil and criminal disputes that require anassessment of the financial effects of a loss or the detectionof a financial fraud

Project AccountingProject accounting differs from standard accounting in that it isdesigned to monitor the financial progress of a project rather thanthe overall progress of organizational elements. With ProjectAccounting, financial reports are specifically created to track theproject process. Utilizing Project Accounting provides ProjectManagers with the ability to accurately assess and monitor projectbudgets and ensure that the project is proceeding on budget.Project managers can quickly address any cost overruns andrevise budgets if necessary.

Social Accounting

Social accounting is a type of accounting that a businessperforms to place a value on the influence its operationshave on society. It requires that enterprises look closely atall that it does and what kind of impact its activities haveon people, places, and the environment

Basic accounting overview

• Source Documents

• Debits and credits

• Journals

• General ledger

• Trial Balance

• Financial Statements

If you are not familiar with the basics of general ledger accountsand double-entry accounting, the following overview will give youthe bare basics

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Functions of Accounting

• Keeping record of your all business transactions in a systematic manner.

• Protecting and recording all business properties.

• Communicating with all the business parties who are interested in or want to connected with your business.

• Meeting legal requirements.

From the standard accounting definition, the main functions of accounting can be summarized as:

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Branches of Accounting.

• Financial Accounting :- It is basically prepared to identify profitability and financial position of an organization for a specific time period.

• Cost Accounting :- This type of accounting is for recording costs. This is the systematic procedure for identify the unit cost of the product.

• Management Accounting :- This type of accounting system is basically for presentation of accounting information to the higher management for making effective decision.

Objectives of Accounting Outsourcing

• The main aim of accounting outsourcing is to provide suitable information with an aim of safeguarding the interest of business and its proprietors.

• To maintain the record of each and every activity occurred in the business.

• To find out the financial position of the business as a whole.

• To ensure that our accounts are prepared according to the standard level and some concept.

• To fulfill the requirements of the Companies Act, Income Tax Act, etc.

The objectives of accounting outsourcing are to permanently record allbusiness transactions and to show the effect of each transaction and thecombined effect of all such transactions for a given period.

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For Accounts Outsource – Rohit Jain