Introduction What is accounting? To communicate – language is compulsory Accounting is language of business Accounting talk everything about business entity Class 11th Suppose Accounts Introduction of accounting Suppose Mr. A started a business and did the transaction. 1)Identification of financial transaction and events (Business Transaction) (I) Example- Good purchased is business transaction whereas Electricity bill payment is not business transaction because it is for personal use. 2) Measuring the identified transaction (Money value) If Mr A bought 3 Box of goods, He cannot write in book of accounts so it should measure in term of money? Here we need to identify the goods in the term of money value(INR 10,000). ×3) Recording in appropriate books. Like Mr A have purchased good in INR10,000. 4) Classification of transaction Goods- Purchase- 10, 15 Goods- Sale – sale 12, 13, 17, Journal LEDGER So what we understand up to here 1) 2) 3) 4) So what we understand up to here 1) I - Identification 2) M- Measurement 3) R- Recording- Journal 4) C- Classification- Ledger Step 5- Summarising all the transactions. Total Purchase=80,000/ Total sales=60,000/ Trial Balance (ch13) Profit and Loss account (ch19)- Earning on business Balance sheet (ch-19)- Asset Steps 6 Analysis and Interpretation Total sales=60,000 Total purchase-80,000 Steps 7 Communicating to users Results- Profit and loss – Business communicate their information to their users. Users Process of Accounting /Characteristics/Attributes IMRCSAC Now we can go on Definition of accounting- Accounting is the art of recording , classifying and summarising in a significant manner and in terms of money; transaction and events which are in part at least financial character and interpreting the result there of. Branches of accounting Financial Accounting- Cost Accounting (CMA) Management Accounting Financial Accounting- Financial Accounting is branch of accounting which records the financial transaction and event summarises and interprets them before communicating the results to the users. It determines profit earned or loss incurred during an accounting period (1 month, 3 months, 1 year) and Financial position at the year end. In short – Financial accounting is confined to the preparation of financial statement, ie profit and loss account and the balance sheet for users of accounting information. Cost Accounting This is branch of accounting is concerned with ascertaining cost of products, operation, processes or activities. Its is that branch of accounting which deals with recording the costs with objective of ascertaining, reducing and controlling costs. Management Accounting Management accounting is the most recently developed branch of accounting. It is concerned with generating accounting information relating to funds, costs, profits etc. as it enables the management decision making.