Stats

Topics: Generally Accepted Accounting Principles, Balance sheet, Double-entry bookkeeping system Pages: 13 (3515 words) Published: August 26, 2013
Master of Business Administration- MBA Semester 1
MB0041 – Financial and Management Accounting - 4 Credits
(Book ID: B 1624)
Assignment- 60 marks
Q1. Accounting is one of the oldest, structured management information system. Give the meaning of accounting and book keeping? Explain the objectives of accounting? (Meaning of accounting 2 marks ; Meaning of book keeping 3 marks; objectives ofaccounting 5 marks) 10 marks Answer.

Accounting- Accounting is defined as "the art of recording, classifying and summarizing in terms of money transactions and events of financial character and interpreting the results thereof." Accounting is the analysis and interpretation of book-keeping records. It includes not only the maintenance of accounting records but also the preparation of financial and economic information which involves the measurement of transactions and other events relating to the entity. In simple words we can say that-

* Accounting is an art
* Of recording, classifying and summarizing
* In terms of money
* transactions and events of financial nature and
* Interpreting the results thereof.
Book keeping- Bookkeeping provides the information from which accounts are prepared but is a distinct process, preliminary to accounting. Bookkeeping is the recording, on a day-today basis of the financial transactions and information pertaining to a business. It is concerned with ensuring that records of those individual financial transactions are accurate, up-to-date and comprehensive. Accuracy is therefore vital to the process.  Each transaction, whether it is a question of purchase or sale, or change of loans, has to be recorded in the books. Double-entry bookkeeping-The double entry system of bookkeeping is based upon the fact that every transaction has two parts and that this will therefore affect two ledger accounts. Bookkeeping in e-economic-In the e-economic Online Accounting system you can book your sales invoices, customer receipts, supplier payments etc. online and automatically reconcile transactions by import of your bank statements. Objectives of accounting-

The broad objects of Accounting may be briefly stated follows: 1. To furnish information regarding Purchases and Sales, both Cash and Credit. 2. To find out the net profit or net loss or surplus or deficit for any particular period. 3. To find out the total capital on a particular date.

4. To maintain the cash accounts through the Cash Book and to find out the Cash balance on any particular day. 5. To detect any defalcations and to check the frauds and misappropriations of money. 6. To detect the various errors and to rectify those through entries in the journal proper. 7. To confirm about the arithmetical accuracy of the books of accounts. 8. to help the management by supplying accounting ratios, reports and relevant data. 9. To calculate the cost of productions.

10. To maintain various other Journals for recording day-to –day non –cash transactions. 11. To maintain various Ledger Accounts to find out the exact amounts of incomes and expenses or gain and losses or receivables and payables. 12. To find out the positions of assets on a particular date. 13. To find out the position of liabilities on a particular date. 14. To help the management formulate policies for controlling cost, preparation of quotation for competitive supply etc. Q2. Explain GAAP and write down the relationship between accounting principles, accounting concepts, and accounting conventions. Explain all the five accounting concepts with an example. (Meaning of GAAP 2 marks; Relationship between accounting principles , accounting concepts, and accounting conventions 3 marks ; Explanation of five accounting concepts with examples 5 marks ) 10 marks Answer.

GAAP- GAAP are a combination of authoritative standards (set by policy boards) and simply the commonly accepted ways of recording and reporting accounting information. The...
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