BBA Study Material Financial Accounting Objective Notes
BBA Study Material Financial Accounting Objective Notes :- In this article you can find related to bookkeeping and bookkeeping question answer and study materials of latest version and other site link like as fundamental of management , principle of economics, business mathematics and all subject of bba all semester. B.b.a latest news all information link you can find . thanks to coming our site and get latest news related to business and BBA. If we talk about BBA then Bookkeeping and Accounting is one of the most important Topic. Bookkeeping is common to all semesters Here we are presenting BBA Bookkeeping and Accounting Study Material and Notes for all Semesters. BBA Bachelor of Business Administration in Bookkeeping and Accounting notes study material in this website cyberpoint9.com/testing most important chapter and Question paper BBA notes in this page more links to bba notes and study material and question paper mock paper. BBA in accounting and finance is an undergraduate commerce course. BBA study in bookkeeping and accounting, financial planning, economics, business organisation and other similar areas of operation in any business organisation. full BBA course three year degree course consists of Six semesters. the basic eligibility criterion for bba dgree is qualifying 10+2 or equivalent examination in any stream from a recognized board of the country.Bachelor of Business Administration (BBA) in Accounting programs combine the fundamentals of a business program with concentrated coursework in accounting. Find out what these programs entail and what students do after graduation.bba subject bookkeeping and accounting chapter wise notes study material, question paper, mock paper, sample paper, in this website study point to BBA notes. BBA Study Material Financial Accounting Objective Notes
Q.1. Define financial accounting. State its objective and Functions. How accounting is Different from bookkeeping ?
Differentiate between bookkeeping and accounting. (BBA 1st semester notes )
Ans. Financial Accounting : The primary objective of accounting is to ascertain profit and loss and to know about the financial position of the enterprise at the end of accounting period.
Accounting means an information system that provides useful accounting information to various parties and users to arrive at a rational decision. We can also say that accounting is nothing but a mean of communicating the result of business operation to various parties interested in or connected with the business via the owner, investor, government and other agericies.
Accounting is thus rightly called as the language of business :
Definition of Accounting (BBA Notes)
According to Smith and Ashborne, “Accounting is a means of measuring and reporting the result of economic activities.”
According to Bherman and Derbin, “Accounting may be defined as the identifying, measuring, Recording and communication of financial information.”
According to R.N Anthony, “Nearly every business enterprise has accounting system. It is a means of collecting, summarizing. Analyzing and reporting in monetary terms information about the business.”
Objectives of Accounting (BBA Study Material Financial Accounting)
- Maintaining Proper Record of Business : The main purpose of accounting is to identify business transactions of financial nature and enter them into books of accounts, Business transactions classified as assets, liabilities, capital, revenue and expenses accordingly passed through books. The Accounting records should be made properly and systematically, so that requisite information may be obtained at a glance from the books of accounts.
- Calculation of Profit and Loss : Accounting helps in calculation the profit and loss of business. Income statement are prepared with the help of trial balance. At the end of accounting period, we prepare trading accounts to calculate gross profit and loss. After that profit and loss account is prepared to calculate net profit or net loss. Accounting in this way is the source to evaluate the performance of the business in terms of profit.
- To Show the Financial Position : At the end of accounting period, we prepare position statement. The value of assets and liabilities are shown in the balance sheet also known as position statement.
The balance sheet is a statement of assets and liabilities of the business on a particular date. The assets sides of balance sheet show the position of various assets such as cash in hand, cash at bank, closing stock building furniture etc. The liabilities side shows creditors, B/R loans, outstanding etc. Balance Sheet is said to be a mirror, reflecting the true position of assets and liabilities on a particular date.
- To Communicate the Information to the Users : Accounting communicates information to internal user like the officers and staff of the firm and external users like owners, the creditor, the government etc. Accounting aims to meet the information needs of the decision makers and help them in rational decision-making.
Functions of Accounting (BBA 1st Semester Study Material)
- To Meet Legal Requirements : The provision of various laws like the income tax act, sales tax act, the companies act etc. require a business concern to maintain necessary records and submit certain financial statements or reports. Accounting satisfies the needs of these laws by maintaining proper records.
- To Secure the Properties of the Business : The Second important function of accounting is to protect the properties of the business. By maintaining proper records of various properties of the business and providing, update information of the various properties of the business to the management, accounting enables the management to Exercise proper control over the use of the properties of the business.
- To keep systematic Record of the Financial Activities : The first important function of accounting is to make a systematic record of the financial activities of the business In accounting business transactions are properly recorded, classified and summarized into financial statement like the profit and loss account and the balance sheet.
- To Analyse the Financial Result : Just as a language is used as a means to communication, so accounting communicates the financial result (i.e,. profit and loss) and other valuable, financial information to the various interested groups like the officer and the staff of firm, the owner. The creditor the employees of the firm, the government, and the consumer etc.
- To Prevent and Detect Errors and Frauds : Since, proper record is kept in a systematic manner so if any error or fraud takes place, it is easily detected.
Difference between Bookkeeping and Accounting
Bookkeeping is the part of accountancy. Accounting is concerned with the initial records, ledger accounts, trial balance and also with the preparation of financial statement to ascertain profit and loss of the business.
Difference between Bookkeeping and Accounting
(BBA Study Material Financial Accounting Objective Notes )
|Basis of Difference||Bookkeeping||Accounting|
|1. Object||The objective of bookkeeping is to prepare original book of accounting It is restricted to journal, subsidiary book and ledger account only.||The Object of accounting is to record, analyse and interpret the business transaction.
|2. Scope||It has limited scope and is concerned with the recording of business transaction.||It has wider scope as compared to bookkeeping.
|3. Level of works||Its is restricted to low level of work as clerical work is involved in it.||It is concerned with level. Medium level and top level management. Low level clerks prepare the accounts, medium level report it to top level to interpret it.|
|4. Special skills||It dose not require any special know-ledge and skills.||It requires special knowledge and skills.|
|5. Mutual dependence||Bookkeeping is only an art of recording transaction, so it has to depend upon accounting which makes it more meaningful and purposeful.||Accounting is based upon bookkeeping which is its initial and vital part. It depends upon the bookkeeping.|
Basic Principles of Accounting
In addition to the basic assumption, acco
- Revenue Recognition : In accounting terminology revenue is the amount received or receivable from sale of goods. The principles explain when we should assume some revenue to have been earned. It will enable us to identify the period for which the revenue has been According to the accounting period assumption revenue must be concerned with the specific accounting period. We can determine the revenue as realised on the Sales basis, cash basis and production basis.
- Historical Cost : Accounting to the historical cost principles, “All business transactions must be recorded in the books of accounts at their monetory cost of acquisition this principle is called historical, because the balance of assets and liabilities is carried forward from year to year at its acquisiation cost, irrespective of increase or decrease in the market value of assets”.
- Matching Concept (2004,06) :This is based on the accounting period concept. The principle objective of running a business is to earn profit. In order to determine the profit made by the business during a period, it is necessary that revenue of the period should be matched with the costs for the period. Thus the matching principle holds the expenses should be recognised in the same period as associated revenue.
- Verifiability— Objectivity and Evidence : This principles of verifiable of objectivity means that every business record must be based on supported by documentary evidence. We do not pass any entry or make any posting in subsidiary books unless there is a voucher used as documents for recording business transaction.
According to the principles of objectivity, accounting should be definite, Verifiable and free from manipulation and personal bias.