Monday, 4 January 2021

Discuss about contract

 The time period contract is described below area 2(h) of the Indian Contract Act, 1872 as“a settlement enforceable with the aid of law’.

The contract consists of two crucial elements:

(i) an agreement, and

(ii) its enforceability by way of law.

(i) Agreement The time period ‘agreement’ given in Section 2(e) of the Act is described as“every promise and each set of promises, forming the consideration for every other’.

To have perception into the definition of agreement, we want to recognize promise. Section two (b) defines a promise as

“when the character to whom the concept is made signifies his assent thereto, the thought is stated to be accepted. A proposal when accepted, will become a promise”

The following factors emerge from the above definition :

1. when the individual to whom the notion is made.

2. signifies his assent on that inspiration which is made to him three the thought will become commonly accepted notion turns into the promise dual consideration. Agreement = Offer/Proposal + Acceptance (ii) Enforceability via regulation An settlement to grow to be a contract should provide upward jostle to a prison obligation. which capacity a duly enforceable through the law. Thus from the above definitions, it can be concluded that Contract = Accepted proposal/Agreement + Enforceability with the aid of regulation

On elaborating the above two concepts, it is apparent that a contract contains a settlement which is a promise or a set of reciprocal promises, that a promise is the acceptance of a suggestion giving upward push to a binding contract. Further, area 2(h) requires a settlement to be necessary of being enforceable through regulation before it is referred to as ‘contract: Where events have made a binding contract, they created rights and tasks between themselves.

Example: A has the same opinion as B to promote vehicles for %2 lacs to B. Here A is below a responsibility to supply auto to B and B has the proper to get hold of the vehicle on the price of %2 lacs and additionally B is underneath a duty to pay rupees 2 lacs to A and A has a proper to acquire %2 lacs. So Law of Contract offers solely such prison duties which have resulted from agreements. Such obligation has to be contractual in nature. However, some duties are outdoor the purview of the regulation of contract.

Example: An duty to hold spouse and children, an order of the court docket of regulation, etc. These are reputation tasks and so out of the scope of the Contract Act.  

Essential of a valid contract

In phrases of Section 10 of the Act, “all agreements are contracts if they are made by means of the free consent of the events able to contract, for a lawful consideration and with a lawful object and are now not expressly declared to be void".Since area 10 is now not entire and exhaustive, so there are sure other sections that additionally consists of requirements for a settlement to be enforceable. Thus, in order to create a legitimate contract, the following factors must be present:

1. Two Parties: One can't contract with himself. A contract includes at least two parties one celebration making the provide and the different celebration accepting it. A contract may also be made by way of herbal people and by way of other people having felony existence e.g. companies, universities etc. It is critical to keep in mind that the identification of the parties is ascertainable.

Example: To represent a contract of sale, there should be two parties seller and buyer. The vendor and consumer have to be two distinctive persons, due to the fact an individual can't purchase his personal goods. In-State of Gujarat vs. Ramanlal S & Co. when on the dissolution of a partnership, the property of the company have been divided amongst the partners, the income tax officer desired to tax this transaction. It was once held that it was once now not a sale. The companions being a joint proprietor of this property can't be each purchaser and seller.

Parties have to intend to create felony obligations: There has to be an intention on the section of the events to create a criminal relationship between them. Social or home kind of agreements are no longer enforceable in the courtroom of regulation and for this reason they do no longer end result in contracts.

Example: A husband agreed to pay to his spouse sure quantity as protection each month whilst he used to be abroad. Husband failed to pay the promised amount. The wife sued him for the healing of the amount. Here in this case spouse should now not get better as it was once a social settlement and the events did now not intend to create any prison relations. (Balfour v. Balfour).

Other Formalities to be complied with in sure cases: In case of sure contracts, the contracts should be in writing, e.g. Contract of Insurance is no longer legitimate barring as a written contract. Further, in the case of certain contracts, registration of contract underneath the legal guidelines which is in pressure at the time, is fundamental for it to be valid, e.g. in the case of immovable property.

The certainty of meaning: The settlement needs to be sure and no longer indistinct or indefinite.

Example: A consents to promote to B a hundred heaps of oil. There is nothing positive in order to exhibit what variety of oil was once supposed for. According to Section 10 of the Indian Contract Act, 1872, the following are the necessary factors of a Valid Contract:

Offer and Acceptance or an agreement: An settlement is the first vital factor of a legitimate contract. According to Section 2(e) of the Indian Contract Act, 1872, “Every promise and each set of promises, forming consideration for every other is an agreement” and in accordance to Section 2(b) “A notion when accepted, turns into a promise”. A settlement is an effect of providing and acceptance.

Free Consent: Two or greater men and women are stated to consent when they agree upon the identical issue in the identical sense. This can additionally be understood as identification of minds in grasp the phrases viz consensus advert idem. Further, such consent should be free. Consent would be viewed as free consent if it is no longer induced by way of coercion, undue influence, fraud or, misrepresentation, or mistake. When consent to a settlement is precipitated via coercion, undue influence, fraud, or misrepresentation, the settlement is a contract voidable at the alternative of the birthday party whose consent was once so caused. When consent is vitiated through mistake, the contract turns void.

Example: A threatened to shoot B if he (B) does not lend him rupees 2000 and B agreed to it. Here the settlement is entered into below coercion and as a result voidable at the alternative of B.(Students may additionally observe that the phrases coercion, undue influence, fraud, misrepresentation, mistake are explained in the coming units) 

The potential of the parties: Capacity to contract skill the prison capability of a man or woman to enter into a valid contract. Section eleven of the Indian Contract Act specifies that each character is ready to contract who 

(a) Is of the age of majority in accordance with the regulation to which he Is situation and

(b) is of sound thinking and 

(c) is now not in any other case disqualified from contracting by way of any regulation to which he is subject. A character in a position to contract has to fulfill all the above three qualifications.

Qualification (a) refers to the age of the contracting character i.e. the man or woman coming into a contract has to be of 18 years of age. Persons under 18 years of age are viewed as minor, therefore, incompetent to contract.

Qualification (b) requires a character to be of sound thought i.e. he must be in his senses so that he knows the implications of the contract at the time of getting into a contract. A lunatic, an idiot, a drunken man or woman, or below the have an effect on of some intoxicant is now not supposed to be an individual of sound mind.

Qualification (c) requires that a character getting into a contract have to no longer be disqualified by way of his status, in coming into such contracts. Such folks are an alien enemy, overseas sovereigns, convicts, etc. They are disqualified except they fulfill sure formalities required with the aid of the law. Contracts entered via men and women now not in a position to contract are no longer valid.

Consideration: It is referred to as quid seasoned quo’ i.e. ‘something in return’ A treasured consideration in the feel of regulation may additionally consist both in some right, interest, profit, or advantage accruing to one party, or some forbearance, detriment, loss or duty given, suffered or undertaken through the other.

Example: A has the same opinion to promote his books to B for percent 100, B’s promise to pay F one hundred is the consideration for A's promise to promote his books and A's promise to promote the books is the consideration for B's promise to pay = a hundred.

Lawful Consideration and Object: The consideration and object of the settlement should be lawful.

Section 23 states that consideration or object is now not lawful if it is prohibited with the aid of law, or it is such as would defeat the provisions of law if it is fraudulent or includes damage to the character or property of any other or court docket regards it as immoral or adverse to public policy.

Example:‘A’ guarantees to drop prosecution instituted towards ‘B’ for theft and ‘B’ guarantees to fix the cost of the matters taken. The settlement is void, as its object is unlawful.

Not expressly declared to be void: The settlement entered into ought to now not be which the regulation pronounces to be both unlawful or void. An unlawful settlement is a settlement expressly or impliedly prohibited through law. A void settlement is one barring any prison effects.

Example: Threat to commit homicide or making/publishing defamatory statements or getting into agreements that are adversarial to public coverage is unlawful in nature. Similarly, any settlement in restraint of trade, marriage, felony proceedings, etc. is a basic example of void agreements.  

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Discuss about characteristics of effective communication

Communication for humans is Tekken from the primary cry of the baby to the last breath of the person. Communication is a necessity from the primary cry of the baby to the last breath of the person first of communication is an essential part of life for the good communication is an advertisement that has been developed and honed. Effective communicators practice every aspect of the skin frequently.

It is a proven fact that our daily communications are commonly marred by confusion, misunderstandings, misconceptions, partial understanding, and obscurity. Several aspects must confine the mind while interacting with others for our communication to convey the intended message.

1) clear: any spoken and communication should state the aim of the message clearly first of the language should be simple. Sentences should be shot because the core message is lost in long, converted sentences. It had your point must be explained during separate bullet points or paragraphs. Make it easy for the reader to know the intent of the communique.

2) concise: brevity e and is the essence of business communication. nobody has two times to read long-drawn-out essays. Besides the core, content is lost in elaborate details. Avoid using too many e11 for adjectives for example UC I mean to mention its full stops ensured that there aren't any repetitions.

3) concrete: Abstract ideas and thoughts are ready for MS interpretation. ensure that there's just sufficient detail to support your case/argument and produce a focus on the most message.

4) coherent: coherence in writing and speech refers to the logical bridge between words sentences and paragraphs for Stop main ideas and meaning are often difficult for the reader to follow if the author jumps from one array to a different and uses contact words to precise himself. The key to coherence is very organized and logically presented information which is well understood first of all content and therefore the topic should be relevant fully interconnected and present information in an exceedingly flow.

 In fact, departments within the same company may also differ in their expectations, norms, and ideologies. This can impact organizational communication. The same principle applies to families and family groups, where people have different EXPeCtation, according to their background and traditions leading to friction and misunderstanding. A very simple, example is the way food is served by a member of a family. It can be the cause of appreciation o, displeasure. 

Emotional barriers: One of the chief barriers to open and free communications is the emotional barrier, Anger, fear of criticism or ridicule, mistrust of person, suspicion of intentions, jealousy, anxiety, and many more feelings and sentiments we carry within us, affect our communication ability and quality, 4 person who is upset and disturbed cannot pass on or receive information appropriately.

Physiological barriers to health, poor eyesight, hearing difficulties, or any other physiological problems can be hurdles in effective interaction with others. This communication technology is being constantly upgraded or new formats emerge ever so frequently. Anyone who is not tech-friendly struggles to communicate effectively via the medium. 

Moreover, an individual Is faced with a huge amount of information every day in the form of emails texts, and social updates. Multitasking Is the norm these days. The information overload and trying 0 accomplish too many things together can result in gaps In communication and miscommunication. 

Gender barriers and women communicate differently. women use both logic and emotion and are more verbose. This may be the cause of communication problems in an office where both men and women work side by side. Men can be held guilty of providing insufficient information, while women may be blamed for providing too much detail. Gender bias is another factor in communication barriers. Due to traditional mindsets, many men find it difficult to take orders from or provide information to women. 

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Tuesday, 29 December 2020

Discuss about types of communication

 a good understanding of the various sorts and designs of communication will enhance your personal and skilled relationships resolve any misunderstandings and misconceptions and contribute to a triple-crown business venture and a joyful personal life. all and sundry has his her personal form of interacting with others. in an exceedingly method of communication and individual user's manifold channels to convey the message to prevent but the effectiveness of the communication vogue depends upon whether or not the receiver has accurately understood within the supposed plan thought feelings etc. sometimes the speaker reveals over he/she needed the convict through tone gestures etcetera. thus it's necessary to grasp the various modes of communication.

The board classes of communication area unit

Based on communication channels-

1) verbal

2) nonverbal

3) visual

Based on purpose and style-

1) formal and 


1) verbal-verbal communication involves the employment of words and languages in delivering the intended message. Do verbal primary refers to communication through the spoken medium whereas categorizing kinds of verbal communication the written and oral variety of communication area unit enclosed.

a)written communication includes letters and documents for my emails, reports, handbooks, brooches, numerous platforms commerce SMS, and any variety of browse written interaction between individuals. The written variety of communication is actually and indispensable for formal business interactions contracts memos, press releases, formal business proposals, etc. And legal instruction and documentation for stop the effectiveness of written language depends on the literary genre of descriptive linguistics vocabulary and clarity.

b)oral communication refers to communication through the word alternative face to face telephonically BF voice chat, video conferencing, or the other medium. Formal mediums like lectures, conferences seminars, and conferences, and informal conversations chit-chat area unit the part of auditory communication 1st of effective of auditory communication depends on clear speech which solely utilized by the speaker. Speaking in high, low volume, or too quick/slow may improve communication between individuals. Even non-verbal communication like visual communication and visual clues have an effect on the standard of interactions among people or teams.

verbal communication is that the best quickest and also the most triple-crown variety of communication for study at astonishingly consistent with analysis it includes of solely seven-membered of all human communication!

2) nonverbal communication-nonverbal communication may be a method of human activity by causing and receiving mute messages. These messages will a verbal communication coma convey thoughts and feeling contrary to the spoken words for specific concepts and emotions on their own. a number of the functions of nonverbal communication in humans area unit to enrich and notify reinforce and emphasize command to interchange and substitute to manage and regulate and to contradict the denote message.

a) physical nonverbal communication-an individual visual communication that's, facial expressions, stands a tone of voice command bit and alternative physical signals thought of this sort of communication, for instance, learning forward mean friendliness acceptance and interest whereas crossing arms are often understood as an antagonistic and defensive posture. the analysis estimates that physical nonverbal communication accounts for fifty-fifth of all communication. Smiles, frowns, pursing of lips, clenching of hands, etc. transmit emotions that aren't expressed through verbal communication.

b) paralanguage-the method you say one thing over the particular words employed in the interest of the message from the voice quality hotel Ocean that stress feeling and magnificence of speaking, communicates approval interest or the shortage of it 1st of researchers estimates that tone of voice accounts of for half-hour of all communications.

c) Aesthetic communication-art forms like recreation a painting, sculptor, music also means that of communication. They clearly convey the concepts and thoughts of the creative person.

d) appearance-appearance is sometimes the primary issue I detected a few people for stopping well dressed and the sleek person is plausible to be organized and organized, wherever may be a sloppy or shabby person fails to form a good impression for computer code for addressing fitly all told formal interactions is stressed.

the codification in the workplace is usually formal. It constitutes a proper suit, roses with plain white or light-weight color shirts or animal skin shoes WHO saw bright colors jeans and t-shirts particularly with slogans and alternative informal wherever area unit frowned upon. for women formal 2 piece garment or skirt sets of formal wherever like sarees, is permissible.

e) symbols like non-secular, status, or ego-building symbols.

3) visual communication-visual communication through visual aids like signs, typography, drawing, graphic style illustration,

Color and alternative electronic resources sometimes reinforce communication. generally, it should replace communication altogether full stop communication is a powerful medium. it's the rationale that the print and audiovisual media makes effective use of visuals to convey their message. visuals like graphs, pie charts, and alternative delineated presentation is conveyed clearly and shortly a good deal of knowledge 1st of their National a part of official presentation lately.

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Concept and accounting of depreciation

 Concept of depreciation

Property plant and instrumentality are tangible things that:

1)are command to be used within the production or offer of products and services for rental to others or for body purposes; and

2) are expected to be used throughout an amount of twelve months.

These also are known as fastened assets financial gain idiom. once {a fastened|a hard and fast|a set} quality is purchased it's recorded in books of account and its original or acquisition/ purchase however were fastened qualities are accustomed beneath been used for a variety of a twine accounting how were fastened assets are accustomed beneath been used for a variety of Accord accounting cleared in future with an equivalent acquisition value till the involved fixed asset is oversubscribed or discarded. this can be thus necessary that a neighborhood of the acquisition value of the fastened quality is treated because the allotted as Associate in Nursing expense in every of the accounting amount during which the quality is used for the quantity of or price of the fastened quality authority it in such manner to various accounting amount is termed appreciation for the stock price of like its decreases with the passage of your time within the because of the subsequent reasons.

1) wear and tear because of its use in business.

2) flow of your time even once it's not getting used.

3) excellence because of technological or alternative changes.

4) decrease in market price.

5)depletion Mel just in case of mines and alternative natural reserves.

it is vital to account for the price of a little of property plant Associate in Nursingd instrumentality used for generating revenue throughout Associate in Nursing accounting year to an exact to financial gain for stop this portion of the value of property plant and instrumentality allotted to an accounting year is termed depreciation.

as per schedule II beneath the businesses act, 2013 depreciation is that the systematic allocation of the trash cable quantity of Associate in Nursing quality of its helpful life. The applicable quantity of Associate in Nursing quality is that the value of Associate in Nursing quality or alternative quantity substituted for a value less its president decidual price 1st of the helpful lifetime of Associate in Nursing acid could be an amount of that Associate in Nursing quality {is expected|is predicted|is Associate in Nursingticipated} to be available for use by an entity or the quantity of production of comparable units expected to be obtained from the acid by the entity.

There are 3 vital factors for computing depreciation:

An estimated helpful lifetime of the quality.

Cost of quality.

residual price of the quality at the top of its calculable helpful life.

depreciation of Associate in Nursing acid begins once it's offered to be used that's once it's within the location and conditions necessary for it to be capable of operating within the manner supposed by management. it's not necessary then Associate in Nursing quality should be utilized by the bride appreciated. there's a decrease in the price of quality because of the conventional wear and tear even once these don't seem to be physically accustomed stop consequently price of such wear and tear ought to be calculable and businessperson for.

depreciation is allotted therefore on charge a good proportion of the depreciable quantity in every accounting amount throughout the expected helpful lifetime of the quality.

the loss within the price of assets utilized for carrying on a business being a vital part of business expenditure it's necessary to calculate the quantity of such loss and to form a provision and thus got wind of the quantity of profit and loss created by the business.

basically, {the value|the price|the price} of Associate in Nursing acid used for purpose of business must be written off over its economic, not physical life that essentially should be the calculable cost of a degree to recollect that's typically at the top of the economic life and quality has some value as scrap or otherwise. the quantity to be written off in annually ought to be per se which can scale back the {book price|value} of the quality at the top of its economic life to its calculable scrap value.

a pertinent question comics in fact is that the worth seems to prevail at the time of replacement full so is why some folks advocate the calculation of depreciation on the idea of replacement worth instead of value.

Depreciation on elements of Associate in Nursing assets

it may be noted that accounting principle yet as firms act 2013 request appreciation to be charged on the part basis for every a part of Associate in Nursing item of property plant and instrumentality with {a value|a price|a value} that's vital in respect to the overall cost of the item ought to be appreciated on an individual basis. And enterprise ought to allot the quantity at first recognize in respect of Associate in Nursing item of property plant Associate in Nursingd instrumentality to its vital elements part ought to be depreciated every such element {separately|individually|singly|severally|one by one|on Associate in Nursing individual basis} supported the helpful life and residual price of every explicit element used for instance craft is a classic example of such quality. The air type that's a body of craft engines and therefore the interiors have totally different individual helpful lives. If the lifetime of the frame been the longest of the individual lives of the 3 major forms of elements is taken because the lifetime of the craft it's vital that the 2 major parts that are engineer and interiors are depreciated over there various helpful life and not over the life frame.

another element typically tiny and low worth which can need replacement terribly ofttimes could also be depreciated over the helpful lifetime of the airframe and their frequent cost could also be charged to expense as and once it's enclosed. Here it's vital to notice that a section of a property plant and instrumentality to be known as a separate element ought to have each

1) important value compared to all or any overall value of an item of property plant instrumentality.

Objectives for providing depreciation

The prime objective for providing depreciation are:

1) correct financial gain measurement: depreciation ought to be charged for correct estimation of amount period or loss. just in case an enterprise doesn't account for depreciation on property plant and instrumentality it'll not be considered worthy of property plant and instrumentality thanks to their use in production and operation of the enterprise and can not end in true profit or loss of the amount.

2) true position statement: the value of the property plant and instrumentality ought to be adjusted for a charge so as to repeat the particular money position. just in case depreciation isn't accounted for fittingly the property plant and instrumentality would be disclosed in a financial plan at {a worth|a worth|a price} on top of their true value.

3) points of replacement: generation of adequate funds within the hands of the business of replacement of the quality at the tip of its helpful life. Depreciation could be a smart indication of the number and enterprise ought to put aside to switch a set quality once its economic helpful life is overfull cowl the cost of a set quality could also be wedged by infection and or alternative 2 technological changes.

4) ascertainment of the true value of production: for ascertaining {the value|the value|the price} of production it's necessary to charge depreciation as AN item of cost of production.

father depreciation could be a nonmoney expense and in contrast to alternative traditional expenditure example wages rent etc. doesn't end in any money outflow initial of the depreciation by itself doesn't produce funds it attracts attention to the actual fact that out of income receives an explicit quantity ought to be preserved for replacement of assets used for carrying on the operation.

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Thursday, 24 December 2020

Brief discussing about accounting standards

accounting as a language of business communicates the financial results of an enterprise to various shareholders by means of financial statements. If the financial accounting process is not properly regulated there is a possibility of financial statements being misleading tendon tears and providing a distorted picture of the business rather than the truth. To ensure transparency consistency comparability adequacy and reliability of financial reporting it is essential to standardize the accounting principle and policies.

accounting standards provide a framework and standard accounting policies for the treatment of transactions and events that the financial statement of different enterprises become comparable. Accounting standard return policy document issued by the expert accounting body or by the government or other regulatory body cover in the aspect of the organization measurement presentation and disclosure of accounting transactions and events in the financial statement. purpose of the standard-setting is used to promote the termination of timely new school financial information to investors in certain other parties having any interest in the company's economic performance.

The accounting standards deals with the issues of-

1) recognition of events and conditions in the financial statements. 2) measurement of destinations in events. 3)presentation of these transactions and events in the financial statement in the manner that is meaningful and understandable to the render and 4)the disclosure requirements should be there to enable the public at large and the stakeholders and the potential investors in particular to get an insight into what the financial statement is trying to reflect and thereby facilitating them to take student and informed business decisions. Objectives of accounting standards:
the whole idea of accounting standards is centralized around the harmonization of accounting policies and practices followed by the different business entities so that the diverse accounting practices adopted for various aspects of accounting can be standardized.

Accounting standard size diverse accounting policies with a view to:

1)eliminate the non-comparability of financial statements and thereby improving the reliability of financial statements; and 2)provide a set of standard accounting policies valuation norms and disclosure requirements. accounting standards reduce the accounting Elton it is in the presentation of financial statements within the bounds of rationality there was institute incomparability of financial statements of different enterprises.

Benefits and limitations of accounting standards:

accounting standard 6 to describe the accounting principle the valuation techniques and methods of applying the accounting principles in the presentation and preparation of financial statements so that they may give a true and fair view. By setting the accounting standards commerce accountant has fallen benefits: 1)standards reduced to a responsible X10 or eliminate altogether confusion with patients in the accounting treatments used to prepare financial statements. 2)there are certain areas where is important information or not statue really required to be disclosed tenders main cal for disclosure beyond that required by law. 3)the application of accounting standards would to a limited extent facilitated the comparison of financial statements of companies situated in different parts of the world and also different companies situated in the same country. How it should be noted in this respect that differences in the institution's traditions and legal system from one country to another give rise to differences in accounting standards adopted in different countries. However, there are some limitations of accounting standards: 1) difficulties in making choice between different treatments: alternative solutions to certain accounting problems may each have arguments to recommend them to stop there for the choice between different and active accounting treatments may become difficult. 2) restricted scope: accounting standards cannot override the state to foster the standards that are required to be framed within the admit of prevailing statutes.

A process of formulation of accounting standards in India:

the institute of chartered accountants of India being a premier accounting body in the country to upon itself the leadership role by concentrating the accounting standard board in 1977. the ICI has taken significant initiatives in the setting in issuing procedure of accounting standards to ensure that the standard-setting process is fully conservative and transparent. That ASB is considered international financial reporting standards while framing India accounting standards in India and try to integrate them in the light of the applicable laws and customs usage and business environment in the country first of the composition of ASB includes, Representatives of industries regulators academicians government departments, etc although as ASB is a body constrained by the council of the ICAI it is 20 independent in the formulation of accounting standards and council of an ICAI is not empowered to make any modifications in the draught accounting standards formulated by ASB without consulting with the ASB.

the standard-setting procedure of the accounting standard board can be briefly outlined as follows: 1) identification of board areas by ASB for the formulation of AS. 2)constitution of study groups by USB to consider specific projects and to prepare preliminary drops of the proposed accounting standards the draught normally includes objective and scope of the standard definitions of the term used in a standard organization and management principles wherever applicable in presentation and disclosure requirements. 3) consideration of the preliminary draught repaired by the study group of an ASB revision. Is any of the draught on the basis of deliberations? 4) circulation of the draught of accounting standard to the council members of the ICAI and specified outside body such as a department of company affairs securities and exchange board of India roller and auditor general of India Central Board of Direct taxes attending a conference of public enterprises etc for comments. 5)meeting with the representatives of the specified outside bodies to ascertain their views on the draught of the purpose accounting standard. 6) finalization of the exposure draught of the proposed accounting standard in its assurance inviting public comments. 7)consideration of comments received on the exposure draught and finalization of the draught accounting standard by the ASB for submission of the council of the ICAI for its consideration in approval for students. 8 ) the accounting standard on the development subject is then issued by the ICAI foster for corporate entities the accounting standards are issued by the central government of India.

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Qualitative characteristics of financial statements


qualitative characteristics are the attributes that make the information provided in financial statements useful to users first of the following are the important quantity characteristics of the financial statements:

1. Understandability: essential quality of the information provided in financial statements is that it must be deadly understandable by users used for this purpose it is assumed that users have a reasonable knowledge of Business and economic activities in accounting in the study of the information with reasonable diligence post of information about contact matters that should be included in the financial statements because of its relevance to the economic decision making it's of the user should not be excluded mainly on the ground that it may be too difficult for certain users to understand. 2. Relevance: to be useful information must be delivered to the decision-making needs of users list of information is the quality of relevance when it influences the economic decisions of users by helping them we will use past present future events or conforming of collecting their fast evolutions. The protective and confirmatory roles of information are interrelated foster for example information about the current 11 structure of S8 holding as value to users when they and live you are to edit the ability of the enterprise to take advantage of opportunities and its ability to react to an adverse situation. The same information plays a confirmatory role in respect of past predictions about for example the way in which the enterprise would be structured or the outcome of planned operations. information about the financial position and past performance is frequently used as the basis of reducing future financial position and performance and other methods in which users are directly interested such as dividend and wage payments share price movements and the ability of the enterprises to meet commitments as they fall due to having predictive value information need not be in a form of explicit for cast foot of the ability to make predictions from financial statements is enhanced however by the manner in which information of past transactions and events is displayed. Example the predictive value of the statement of profit and losses and hence if unusual abnormal and infrequent items income and expense are separately disclosed. 3. Reliability: to be useful information must also be the level information has the quality of reliability when it is free from material hero and base and can be depended upon by a user to represent faithfully that which is either for the trip to the present or could reasonably be expected to represent. information may be delivered but so unreliable in nature or representation that is the organization may be potentially misleading. For example, if the validity and amount of claim for damages under a legal action against the enterprise are highly uncertain it may be inappropriate for the enterprises to recognize the amount of the claim in the balance sheet although it may be appropriate to disclose the amount and circumstances of the claim. 4. Comparability: users must be able to compare the financial statements of an enterprise through time in order to identify trends in its financial position stands and s floor. Users must also be able to compare the financial statements of different enterprises in order to evaluate their related financial position performance and cash Pro first offense the measurement and display of the essential effects or like transactions and other events must be carried out in the consistent with throughout and enterprises and overtime for that enterprise and in a consistent way for different prices. An important implication of the qualitative characteristics of compatibility is the tuition informed of the accounting policies and fluid in the preparation of a financial statement any changes in those policies and the effects of such changes. Users need to be able to identify the difference between the accounting policies of like transactions and other events used by the same enterprises from period to period and by different enterprises full compliance with the accounting standards including the disclosure of the accounting policies used by the enterprise, helps to achieve compatibility. the need for compatibility should not be confused with Mary uniformity and should not be allowed to become an impediment to the introduction of improved accounting standards use of it is not appropriate for an enterprise to continue accounting in the same manner for a transaction or other event if the policy adopted is not in keeping with the qualitative characteristics of relevance and reliability. It is also inappropriate for an enterprise to leave its accounting policies and change when more relevant and reliable alternatives exist. uses which to compare the financial position of performance and cash flow of enterprise over time. Hence, it is important in the financial statements to show corresponding information for the preceding periods. the four principal qualitative characteristics are stability relevance reliability and comparability. 5. Materiality: the relevance of information is affected by which material ATI. information is material if its a statement could influence the economic decisions of users taken on the basis of the financial information for stock material it depends on the size and nature of item or error judged in the particular circumstances of its statement for stock material ATI provides a resort for cut off point rather than point the primary qualitative factors to which the information must have if it is to be useful. 4. Faithful representation: study level information must represent fitfully the transactions and our events either for ports to represent or could reasonably be expected to represent. For example, a balance sheet should represent faithfully is a transaction and over an event that results in assets or liabilities and equity of the enterprises at the reporting get which made the recognition criteria. Most financial information is subject to some risk of being less than a faithful representation of that which it purports to portray. This is not due to base but rather the two inherent difficulties either in identifying the transactions and other events to be measured or in devising and applying measurement and presentation techniques that can on way messages that correspondent with those traditions and events in certain cases the management of the financial effects of the item could be so uncertain that enterprises generally would not recognize them in the financial statements semiconductor example although most enterprises generated Goodwill internally over time it is usually difficult to identify a measure that would be reliable. In other cases, however, it may be relevant to recognize items and to disclose the rates of Hero surrounding their organization in measurements. 7. Substance over form: if the information is to represent faithfully the transitions and other events that it puts it to represent it is necessary that they are accounted for and presented in accordance with their substance and economic reality and not merely their legal form the substance of transactions or other events is not always consistent with that which is evident from the legal and contributed from the first offer is ample their rights and beneficial interest in an approval property are transferred but documentations and legal formalities are pending the recording of acquisition disposal food in substance represent the transactions entered into. 8. Neutrality: to be reliable information contained in financial statements must be neutral that is free from the base is first of financial statements not neutral if by the selection or representation of information that influences the making of a decision of judgment in order to achieve a predetermined result for the outcome. 9. Prudence: the prepares of financial statements has to contend with the uncertainties that inevitably surrounded any events and circumstances such as the connectivity of receivables the probable useful life of plant and machinery and warranty claims that may occur. Such uncertainties are recognized by the disclosure of their nature and extent and by the exercise of students in the preparation of the financial statements of prudence is the inclusion of the degree the question in the exercise of the judgments needed in making the estimates required under conditions of uncertainty such that sets or income are not overstated and liabilities or expenses are not an understated post of Harvard the exercise of students does not allow for example the creation of hidden reserves or excessive provisions of the deliberate understatement of asset or income or the deliberate overstatement of liability or expenses coming because the financial statements would then not be neutral and therefore not have the quality or reliability. 10. Full fair and adequate disclosure: the financial statements must disclose all the reliable and relevant information about the business enterprises to the management and also to the external user for which they are meant which is, in turn, will help them to take a reasonable and rational decision. For it is necessary that financial statements are prepared in conformity with generally accepted accounting principles that is information is accounted for in presented in accordance with its substance and economic reality and not merely with its legal form for each of the disclosure should be full and final so that users can correctly assess the financial position of the enterprise. the principle of full disclosure implies that nothing should be omitted while the principle of fair disclosure implies that all the transactions recorded should be counted in a manner that financial statements purport a true and fair view of the results of a business of the enterprises adequate disclosure implies that the information financing the decision of the user should we can discuss in detail and should make sense. This principle is widely used in corporate organizations because of separation in management and ownership also the companies act in percent of this principle has come came out with the formal and of balance sheet and profit and loss account. The discussion of all the major accounting policies and other information is to be provided in the form of footnotes. the practice of appending notes to the financial statements is the outcome of this principle.

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Role of accountant in the society

 There are only a few types of professions in the world that are held in hike steam in public ice and there is no denying the fact that the accounting profession is one of them. Goethe had called the accountant's profession the fairest invention of the human mind. At the core of all types of learned professionals, there is the desire for the public good and of finding the best way to serve society. By the use of the science of accountancy and under the spell of its 8 a dynamic pattern which assists business in planning its future is women by accountants over of the inert mass of non-speaking silent figures. This is what makes their profession an instrument of social-economic change and the welfare of society.

an accountant with his education training analytical mind and experience is best qualified to prove multiple need-based services to the ever-growing society to stop the accountants of today can do full justice not only to matters relating to taxation costing management accounting financial layout company legislation and procedures but they can delve deep into the fields relating to financial policies and budgetary policies and even economic principles of the area of activities which can be undertaken by the accountants is not limited but it can also cover additional facets.

Area of service

the practice of accountancy has crossed its usual domain of preparation of financial statements interpretation of such statements and audit thereof. Accountants are presently taking an active role in company laws and other corporate legislation matters in taxation laws to matter both directly and indirectly and in general management problems. Some of the services rendered by accountants to society are briefly mentioned hereunder:

1. Maintenance of books of accounts: an accountant is able to maintain a systematic record of financial transactions in order to establish the net result of the transactions entered into during a period and to state the financial position of the concern at a particular date. For the fulfillment of the tween objective of ascertaining the profit and loss suffered and the financial position, it is necessary that all transaction be recorded in a systematic manner which can be done only by an accountant post of proper maintenance of books of accounts as management in planning decision making controlling functions.

2. Steady audit: every limited company is required to appoint a chartered accountant or a firm of chartered accountants as their auditor who is status only required to report each year whether in their opinion the balance sheet shows a true and fair view of the state of affairs on the balance sheet date and the profit and loss account show it a true and fair view of the profit or loss of the year for stock auditing is not confined to the accounts of companies and other organizations may also have their accounts audited either because the law so request, for example, the cooperative societies act of the income tax act it is easy or because the proprietors wisely decided so, for example, a partnership firm or an individual trader.

3. Internal audit: it is a management tool whereby an internal auditor trolley examines the accounting transactions and also the system according to which these have been recorded with a view to ensuring the management that the accounts are being properly maintained in the system contains attitude safeguards to check any leakage of revenue or misappropriation of property or assets and operations have been carried out in conformity with the plans of management.

nowadays internal auditing has developed as a service to management. The internal auditor constructively contributes to improving the operational efficiency of the business throw and independent review and appraisal of all business operations.

4. Taxation: an accountant can handle taxation matters of a business or a person and can he represent that business of person before the text of three trees and settle the tax liability under the statute prevailing. It can also assist in avoiding or reducing tax burden by proper planning of tax affairs to stop accountants also have a social obligation to express their views on broad tax policy on the effect of the tax rate on business and the economy in general and on all other aspects of taxation in which they have knowledge superior to that of the general public.

5. Management accounting and consultancies services: management accountant performs an advisory function. He is largely responsible for internal reporting to the management of planning and controlling Karen operations decision making on special matters and formulating long-range plans to stop his job is to collect analyze interpret and present all accounting information which is useful to the management post of accountant provides management consultancy services in the areas of management information system expenditure control and evolution of appraisal techniques for new investment and divestment Working capital management former corporate planning etc.

6. Financial advice: many people need help and guidance in planning their personal financial affairs. An accountant who knows about finances taxation and family problems are well placed to give such advice.

Some of the areas in which an accountant can render financial advice are:

a. Investments: an accountant can explain the significance of the form editable documents that shareholders receive from companies and help in making decisions relating to the investments.

b. Insurance: an accountant can provide information to his lines on various insurance policies and helps in choosing an appropriate policy.

c. Business expansion:s businesses grow in size and complexity and mothers are being considered accountants are the forefront in interpreting accounts making suggestions as to the form of schemes and the fairness of proposals considering cost and financial consequences and generally advising their clients. They also advise on how to set about the problem of borrowing money on whether this is an appropriate method of finance. Accountants can render extremely useful services in connection to negotiations and foreign collaborators.

A chartered accountant in industry

accountant 2 is a part of the highest planning team is not a planner in an industry. He was with the functional departments and translates the organization the same in terms of financial expectations. Therefore he has to make a throw a study of the business and of individuals in the functional departments of whether they are engineers or salesman. A qualified accountant will be able to play an important role in performing the important functions of a business related to accounting costing and budgetary control estimating and treasury.

A chartered accountant in public sector enterprises

both in the developed and developing countries public sector enterprises have become a special feature of the national economy. The system of financial and budgetary control of accounting auditing and reporting has therefore become a matter of interest and concern to the nation and does not women confined to a limited number of shareholders will stop the form of accounting followed by these corporations of companies is different from that of ordinary government accounting. It is the duty of the accountant to prepare the accounts and reports of these public operations in such a way that they enable the general public to know-how for the items appearing in the various type of records and financial statements justify their existence.

A chartered accountant in framing fiscal policies

accountants have a positive role to play in the determination of proper fiscal policies and advancement of trade commerce and industry. They should develop new techniques and prepare themselves for a new field of services towards their commitment to the concept of public goods and services cost of a business and enterprise can be used for success in the commercial sense only if accounting in business knowledge are put together to stop it is a social obligation for both accountants in industry and in practice to disclose that information regarding the corporate results. The state of affairs of the economy can be ascertained only when such consolidated corporate information is disclosed.

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Relationship of accounting with other disciplines

 Analysis of efficient use of scary sources for satisfying human wants. This may be viewed as an idea from the perspective of a single firm or of the country as a whole.

accounting is viewed as a system that provides data to the user to payment inform judgment and decision. Someone accounting data are also is an event for decision-making. Steel accounting provides a measure database.

accounting overlaps economics in many respects. It contributed a lot in improving the management decision making process. But economic theories influenced the development of the decision-making tools used in accounting.

however, there exists a white good between economics and accountants' concepts of income and capital. Accountants got the idea of value income and capital maintenance for economics but brushed suitable to make them usable in practical circumstances. accountants developed the valuation measurement and decision-making techniques which may owe to the economic theorems for origin but these are molded in the work environment and suitable tempered with reference to relevance verifiability freedom and base timelines comparability reliability and understandability.

an example may be given to explain the Nexus between accounting and economics. Economics thinks the value of an asset is the present value of all future earnings that can be derived from such assets. Now I think about a plant whose working life is more than 100 years. How can you estimate the future string of earnings? So account and develop the walkable valuation based on the acquisition cost that is the price paid to acquire the assets.

at the micro level accounting provides the database over which the economic decision models have been developed micro level that are arranged by the accounting system is summed up to get micro-level database. Nonoverlapping zones of accounting are not negligible. Development of the systems of recording classifying and summarising transactions and events harmonizing the systems by uniform rules and communicating the data is essential in the non-overlapping area of accounting.

B ) accounting and statistics:The use of statistics in accounting can be appreciated better in the context of the nature of accounting records first of accounting information is very precise it is exact to the last Paisa. But for decision-making purposes such precision is not necessary and hence the statistical approximations are sought.

in accounts, all values are important individually because they relate the two business transactions for stock as against this statistic is concerned with the typical value behavior or trend over a period of time or the degree of variation of a series of observations. Therefore whenever the need arises for only broad generalisation of the average of relationship statistical method has to be applied in accounting data.

further, in accountancy, the classification of assets and liabilities, as well as the head of income and expenditure, has been done as per the needs of financial recording to ascertain financial results of various operations of. Other types of classification like the geographical and historical once and acholic furcation are done depending on the purpose to make such classification meaningful. Accounting records generally take a short-term view of events and are confirmed to a year while statistical analysis is more useful if a longer view is taken for the purpose. For example to fit the trend line on a longer period will be required for some herbal statistical methods to use past accounting records maintained on a consistent basis.

the functional relations showing mathematical relation of one variable with one or more other variables are based on statistical work which of these relations are used widely in making cost of price estimates for some estimated for the future value assigned to the given independent variables used for example given the functional relation to other cost to the price of an input the effect of changes in future prices on the cost of production can be calculated. In accountancy number of financial and other ratios are based on a statistical method which helps in averaging them over a period of time first of financial calculations are based on statistical formulae.

statistical methods are helping in developing accounting data and in their interpretation. For example time series and cross-sectional comparison of accounting data is based on statistical techniques. Now it is multiple discriminant analysis is properly used to identify symptoms of the sickness of a business firm. Therefore the study and application of statistical method would at the edge it is to the accounting data.

C) accounting and mathematics: double-entry bookkeeping can be converted in the algebraic form in fact the first loan book on the subject was part of a treatise on algebra. The fundamental accounting equation will be discussed in detail under the dual aspect concept.

knowledge of arithmetic and algebra is a pre-request site for accounting computations and measurements. Calculations of interest and duty are the example of such fundamental uses for stock while computing depreciation for finding out installment in hire purchase and installment payment transactions Calculating amount to be set aside for repayment of loan and replacement of asset in calculating lease rentals mathematical techniques are frequently used for shop accounting data are also presented in ratio form.

with the advent of the computer, mathematics is becoming a part of accounting. Instead of writing accounts in a traditional fashion come on the transactions and events can be recorded in the metric form and the rules of matrix algebra can be applied for classified and summarising data. Nowadays statistics and econometrics models are largely used for developing decision models for the users of accounts for stock also operations research techniques provide a lot of decision models. Since accounting is meant for providing information to the users to be effective for accounting data should feed the information requirements of such statistical economic trick and operations research models for understanding mathematics has become a must to grasp the decision models framed by statisticians, econometricians, and the O.R. experts.

presently graphs and charts are being extensively used for communicating accounting information. in addition to statistical knowledge, common knowledge in geometry and trigonometry seems to be essential to have a better understanding of the accounting communication system.

D) accounting and law: an economic entity operates within a legal environment first of all transactions will suppliers and customers are governed by a contract act the sale of goods act the negotiable instruments act, it is equal to the entity itself is created and controlled by laws, for example, a company is created by the companies act and also controlled by companies act.

similarly, every country has a set of economic physical and labor laws for stock transactions and events are always guided by the laws of the land was very of 10 the accounting system to be followed has been prescribed by the law firms for example the companies that have prescribed format of financial statements of companies. Banking insurance in electric supply undertakings may also have to produce financial statements as prescribed by the respective legislations controlling such entities.

 the legal description of the accounting system is a product of development in accounting knowledge. That is to say, legislation about the accounting system cannot be enacted unless there is a corresponding development in the accounting discipline. in that way counting influences law and is also influenced by law.

E) accounting and management: management is a broad occupational field that comprises many functions and accomplices application of many disciplines including those mentioned above. Accountants are well placed in the management and play a key role in the management team. A large portion of accounting information is prepared for management decision making for stock although management releases on other data sources and accounting data are used as basic source documents to stop in the management team and accountant is in a better position to understand and use such data full song, in other words, it seems an accountant plays an active role in management he understands the data requirements for a stop so the accounting system can be molded to serve the management purpose.

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Evolution of accounting in social science

 In its oldest form accounting aided the stewards to discharge their stewardship function. The wealthy man employed stewards to manage their property; the steward's intern rendered an account periodically of their stewardship. This Stewardship Accountingwhat is the root of the financial accounting system. The presently followed system of double-entry bookkeeping has been developed only in the 15th century. However, historians found records of debit and credit dating back to the 12th century. although the double-entry system was followed stay worship accounting served the purpose of businessman and well the persons at that time. In most countries, stewardship accounting was prevalent in the emergence of large-scale enterprises in the form of public limited companies.

in the second phrase comedy, the idea of financial accounting immersed with the concept of joint-stock company and diverse ownership from the management. To safeguard the interests of the shareholders and investors disclosure of financial statements profit and loss account and balance sheet and other accounting information was molded by law. Financial statements give periodic performance report by way of profit and loss account and financial position at the end of the prepared by way of balance sheet. It got the legal status due to changing relationships between the owner's economic entity and the managers. With the democratic station of society, relationships between the enterprise, on the one hand, the investors, employees, managers, and governments on the other, have also undergone a sea change. Also, the prospective investors and other business contact groups want to know a lot about the business before entering into transactions. Financial accounting emerged as an information system to identify measure and communicate useful information for informed judgments and decisions by a boarding group of users for a stop in the third phrase accounting information was generated to add management decision making in particular. It contributed a lot to improve the quality of management decisions. This new dimension of accounting is called management accounting and it is the development of 20 century only. It is preventive enough to cover all spheres of management decisions. lastly, social responsibility accounting is in the format of a process which AIMS at accounting for the social cost incurred by the business as well as the social benefit, created by it. It emerges from the growing social awareness about the undesirable byproducts of economic activities. While earning profit and enterprise in numerous social costs like pollution using the resources of society like materials labor etc. To compensate for this social cost in today's world and enterprise is expected to generate some social benefits also like employment opportunities recreation activities, more choice to customers at reasonable prices better quality products, etc. Therefore it is demanded that the accounting system should produce a report measuring the social cost invited and social benefit generated.
social science studies man as a member of society; the concerned about social processes and the results and consequences of social relationships. The usefulness of accounting to society as a whole is the fundamental criterion to treat it as a social science. Although individuals may benefit from the availability of accounting information, the accounting system generates information for social good full stop it serves social purposes it contributes to social progress; also it is being adapted to keep pace with social progress. So accounting is treated as a social science.

Objective of accounting

The objectives of accounting can be given as follows:

1. Systematic recording of the transactions-basic objective of accounting is to systematically record the financial aspects of business transactions that are bookkeeping. These regarded transactions are letter classified and summarised logically for the preparation of financial statements and for their analysis and interpretation. 2. Ascertainment of results of the above recorded transactions-accountant prepare profit and loss accounts to know the result of business operations for a particular period of time. if revenue exceeds expenses then it is said that the business is running profitability but if expenses exceed revenue then it can be said that the business is running under loss. The profit and loss account helps the management and different stakeholders in taking rational decisions poster for example if the business is not proved to be remunerative or profitable the cause of such a state of effort can be investigated by the management for taking remedial steps. 3. Ascertain mint of the financial position of the business-businessman is not only interested in knowing the results of the business in the term of profit or loss of a particular period but it is also access to know that what he owes to The outsiders and what he own son a certain date. To know this account and prepare a financial position statement properly known as a balance sheet. The balance sheet is a statement of assets and liabilities of the business at a particular point in time and helps in ascertaining the financial health of the business system.
4. Providing information to the users for rational decision making-accounting as a language of business communicates the financial results of an enterprise to various stakeholders by any means of financial statements. Accounting aims to meet the information needs of the decision-makers and helps them in rational decision making. 5. To know the solvency position-by people in the balance sheet, management not only Divas what is owned and owed by the enterprise, but also it gives information regarding concerns ability to meet its liability in the short run and also in the long run as and over they fall due.

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Meaning of accounting


The committee on terminology set up by the American institute of certified public accountants formulated the following definition of accounting in 1961:

"Accounting is 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 a financial character and interpreting the result thereof."

as per the definition, accounting is simply an art of record-keeping, the process of accounting starts by first identifying the events and transactions which are of a financial character and then be recorded in the books of account. This recording is done in general and subsidiary books, also known as primary books. Every good record keeping system includes which table classification of transactions and events as well as their summarisation for ready reference. After the transactions and events are recorded they are transferred to secondary books that are ledger. In laser transactions and events are classified in terms of income and expenses assets and liabilities according to their characteristics and summarised in the profit and loss account and balance sheet. essentially the transactions and events are to be measured in terms of money. Measurement in terms of money means measuring at the ruling currency of a country, for example, rupee in India dollar in the USA. And like. The transactions and events must have a least in part, financial characteristics. The inauguration of a new branch of a bank is an event without having financial character, while the business disposed of by the branch of in an event having financial character. Accounting also interprets the recorded classified and summarised transactions and events.

however, the above-mentioned definition does not reflect the present-day counting function. The Acca determination of accounting is much broader than that described in the above definition of cost of according to the above definition accounting ends with the interpretation of the result of the financial transactions and events but in the modern world with the diversification of management and ownership of globalization of Business and society gaining more interest in the functioning of the enterprises the importance of communicating the accounting results has increased and therefore this requirement of communicating and motivating informed judgment has also become the part of accounting as defined in the widely accepted definition of accounting, given by the American accounting association in 1966 which treated accounting as

"The process of identifying measuring and communicating economic information to limit informed judgments and decisions by the users of accounts."

in 1970 the accounting principles board of the American institute of certified public accountants enumerated the functions of accounting as follows:

"The function of accounting is to provide quantitative information, primarily of financial nature about economic and that is that is needed to be useful in making economic decisions."

Thus, accounting may be defined as a process of recording classifying summarising analyzing, and interpreting the financial transactions and communicating the results they are of the persons interested in such information.

Procedural aspects of accounting

on the basis of the above definitions, the procedure of accounting can be basically divided into two parts:

1. Generating financial information and

2. During the financial information.

Generating financial information

1. Recording-this is the basic function of accounting. All business transactions of the financial character, as evidenced by some documents such as sales bill passbook salary slip etc. Are recorded in the books of accounts for stop recording is done in the book called a journal. This book may further be divided into several subsidiary books according to the nature and size of the business.

2. Classifying-classification is concerned with the systematic analysis of the recorded data. With a view to group transactions or entries of one nature at one place so as to put information in a compact and usable form. the book containing classified information is called laser. This book contents on different pages. Individual accounts heads under which all financial transactions of similar nature are collected. For example, there may be separate accounts heads for salaries rent printing and stationery, advertisement, etc. All expenses under these heads after being recorded in the journal will be classified under separate heads in the ledger. This will help in finding out the total expenditure incurred under each of the above heads. 

3. Summarising-it is concerned with the preparation and presentation of the classified data in a manner useful to the internal as well as the external users of financial statements for stop this process leads to the preparation of the following financial statements:

a. Trial balance.

b. Profit and loss account.

c. Balance sheet.

d. Cash flow statement.

4. Analysing-the term analysis means the methodical classification of the data given in the financial statements. The figures given in the financial statement will not help anyone unless they are in a simplified form. For example, all items relating to the fixed assets are put in one place while all items relating to current assets are put in another is concerned with the establishment of a relationship between the items of the profit and loss account and balance sheet is it provides the basis for interpretation. The student will learn this aspect of financial statements in the later stages of the chartered accountancy course.

5. Interpreting-this is the final function of accounting. It is concerned with explaining the meaning and significance of the relationships established by the analysis of accounting data to stop the recorded financial data is analyzed and interpreted in a manner that will enable and use to make a meaningful judgment about the financial condition and profitability of the business operations first of the financial statements should explain not only what had happened but also why it happened and what is likely to happen under specific conditions.

6. Communicating-is concerned with the transmission of summarised Kam analyzed and interpreted information to the end-user to enable them to make rational decisions. This is done through the preparation and distribution of accounting reports which include besides the usual profit and loss account and balance sheet come additional information in the form of accounting ratios, graphs, diagrams, fund flow statement, etc.

the first to proceed all stages of the process of generating financial information along with the preparation of trial balance are covered under bookkeeping while the preparation of financial statements and its analysis interpretation and also its communication to be various users are considered as initial stages.

Using financial information

there are certain users of accounts for stock earlier it was reviewed that accounting is made for the proprietor of honor of the business, part changing social relationship diluted the earlier it is now believed that besides the owner of the management of the business enterprises is now believed that besides the owner of the management of the business enterprises users of accounts include the investor's employees Kamal and supplies customers a government and other agencies and the public at large. Accounting provides the art of presenting information systematically to the users of accounts for stop accounting data is more useful if it stresses economic substance rather than technical form for stop information is useless and meaningless unless it is 1110 material to users decision. The information should also be free of any basis. The user should understand not only the financial results deposited by the accounting figures but also should be able to access its reality and compare it with information about alternative opportunities and the past experience most of the owners or the management of the enterprise commonly known as the internet users can use the accounting information in any and analytical manner to take the valuable decision for the business first of so the information sought to them is presented in a manner different to the information presented to the external users first of even the small detail which can affect the internal working of a business are given in management report while financial statements presented to the external users contains information regarding assets or liabilities and capital which are summarised in a logical manner that helps them in their respective decision making.

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Discuss in detail about share capital

 the total capital of the company is divided into a number of small individual units of a fixed amount and each such unit called a share to stop the fixed value of a share printed on the share certificate is called nominal / par/ face value of a share. however, Kovai company can issue shares at a price different from the face value of a share. The liability of the holder of a share is limited to the issue price of shares acquired by them.

Note: the issue price need not be equal to the market price of the share. These days the shares are generally priced on the basis of the book-building process full stop the total capital of the company is divided into shares, the capital of the company is called share capital. At the time of issue of shares, every company is required to follow SEBI regulations.

The share capital of a company is divided into the following categories:

1) authorized share capital or nominal capital: a company estimates its maximum capital requirements. This amount of capital is mentioned in the capital clause of the memorandum of association registered with the registrar of puts a limit on the amount of capital, which a company is authorized to raise during its lifetime and is called authorized capital. It is shown in the balance sheet at a face value.

2) issued share capital: a company need not issue that arise capital. Whatever portion of the share capital is issued by the company, it is called issue capital to stop issued capital means and include the nominal value of share issued by the company for:

1) cash, and

2) consideration other than cash to:

a) promoters of a company; and

b) others.

It is also shown in the balance sheet at a nominal value.

the remaining portion of the authorized capital which is not issued either in cash or consideration may be terminus and issued capital. It is not shown in the balance sheet.

c) subscribed share capital: it is that part of the issued share capital, which is subscribed by the public that is applied by the public and floated by the company. It also includes the face value of shares issued by the company for consideration other than cash. 

d) called up share capital: companies generally receive the issue price of shares installment. The portion of the issue price of share which a company has demanded or called for shareholders is known as called up capital and the balance which the company has decided to demand in the future may be referred to as uncalled capital.

e) paid-up share capital: it is a portion of called up capital that is paid by the shareholders. Whenever a particular amount is called by the company in the shareholders fails to pay the amount fully or partially it is known as anpadh calls or installments first of installment in areas mean the amount not paid although it has been demanded by the company as payment towards the issue price of shares. To calculate paid-up capital of the number of installments in areas is deducted from called up capital.

but has already been paid by shareholders.

In the balance sheet, called up and paid-up capital are shown together.

f) reserve share capital: as per section 65 of the company act 2013, a company may decide by passing a resolution that a certain portion of its subscribed uncalled capital shall not be called up except in the event of winding up of the company. A portion of the uncalled capital that a  company has decided to call only in case of liquidation of a company is called reserve capital.

reserve capital is different from the capital reserve are part of reserves and surplus and defer to those reserves which are not available for declaration of dividend. Reserve capital which is a portion of the uncalled capital to be called up in the event of winding up of the company is entirely different in nature from the capital reserve which is created out of capital profits only.

Types of shares

Share issued by the company can be divided into the following categories:

1) preference shares: according to section 43 of the companies act 2013 persons holding preference shares or preference shareholders are issued a preferential dividend at a fixed rate during the life of the company. They also enjoy preferential rights in the matter of:

Payment of dividend and repayment of capital.

generally, holders of these shares do not get voting rights to stop companies use this mode of financing as it is cheaper than rising that. The dividend is generally communicative in nature and need not be paid every year in case of deficiency of profits will stop the companies act 2013 Robert's the issue of any preference share which is irritable. Define share our community and nonpractice participating unless expressly stated otherwise.

Types of shares

Preference shares can be of various types which are as follows:

1) cumulative preference shares: a cumulative preference share is one that carries the right to a fixed rate. such a dividend is payable even out of future profit if current years' profits are insufficient for the purpose. This means that dividend on the shares accumulates unless it is paid in full therefore the shares are called cumulative preference shares. the areas of dividend are there than shown in the balance sheet as a contingent liability. In India cumulative preference shares are considered cumulative unless otherwise stated. The dividend remains in arrears for a period of not less than two years former holders of such shares will be entitled to take part and vote on every resolution on every matter in a general body meeting of the shareholders.

b) non-cumulative preference shares: A non-cumulative preference share carries with it the right to be a fixed amount of dividend. In case not evident is declared in a year due to any reason the right to receive such dividend for the year expires. It implies that the holder of such a share is not entitled to areas of dividend in the future.

c) participating preference shares: notwithstanding the right to be fixed evident this category of reference share conversion the shareholder the right to participate in the surplus profits if any after the equity shareholders have been paid evident at the stipulated rate. Similarly, in the event of winding up of the company this type of share carries the right to receive a predetermined proportion of surplus as well once the equity shareholders have been paid off.

d) non participating preference shares: Is were on which only a fixed rate of dividend is paid up every year without any accompanying additional rights in profits and in the surface on welding of is called non participating preference shares full unless otherwise specified the preference share are generally not participating.

e) Redeemable preference shares: this share that a company may issue on the condition that the company will repay after the fixed period or even earlier at the companies discretion. the repayment on the shares is called redemption and is governed by section 55 of the companies act 2013.

g) convertible preference shares: the shares give the right to the holder to give them converted into equity shares at their of pin option according to the terms of condition and the issue.

h) nonconvertible preference shares: when the holder of the preference share has been not converted the right to get his holding converted into equity share it is called on converted preference shares. Differential and nonconvert and unless otherwise stated.

2) equity shares: equation acidosis coma which does not preference shares to stop this means that they do not enjoy any preferential rights in the matter of payment of dividend for repayment of capital. The rate of dividend on equity share is recommended by the board of directors and may vary for you to you. The rate of dividend depends upon the dividend policy and availability of profit after satisfying the rights of preference shareholders who are of the shares query voting rights schools of companies act 2013 premix issue of equity share capital with differential rights as to dividend voting otherwise in accordance with prescribed rules.

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