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    Accounting For Small Business

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    Arpita Mohapatra
    1. Accounting is the process of recording financial transactions pertaining to a business and reporting them through financial statements. 2. The objectives of accounting include systematically recording transactions, ascertaining profits and losses, determining financial position through assets and liabilities, and communicating financial information to various users. 3. Bookkeeping involves daily recording of financial transactions to track a company's financial position and make operating, investing, and financing decisions.

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    Accounting For Small Business

    Uploaded by

    Arpita Mohapatra
    45 views17 pages
    1. Accounting is the process of recording financial transactions pertaining to a business and reporting them through financial statements. 2. The objectives of accounting include systematically recording transactions, ascertaining profits and losses, determining financial position through assets and liabilities, and communicating financial information to various users. 3. Bookkeeping involves daily recording of financial transactions to track a company's financial position and make operating, investing, and financing decisions.

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    1. Accounting is the process of recording financial transactions pertaining to a business and reporting them through financial statements. 2. The objectives of accounting include systematically recording transactions, ascertaining profits and losses, determining financial position through assets and liabilities, and communicating financial information to various users. 3. Bookkeeping involves daily recording of financial transactions to track a company's financial position and make operating, investing, and financing decisions.

    Copyright:

    © All Rights Reserved
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    Download as pptx, pdf, or txt
    45 views17 pages

    Accounting For Small Business

    Uploaded by

    Arpita Mohapatra
    1. Accounting is the process of recording financial transactions pertaining to a business and reporting them through financial statements. 2. The objectives of accounting include systematically recording transactions, ascertaining profits and losses, determining financial position through assets and liabilities, and communicating financial information to various users. 3. Bookkeeping involves daily recording of financial transactions to track a company's financial position and make operating, investing, and financing decisions.

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    Accounting for Small

    business
    Accounting
    • Accounting is the process of recording financial transactions
    pertaining to a business. The accounting process includes
    summarizing, analyzing, and reporting these transactions to oversight
    agencies, regulators, and tax collection entities. The financial
    statements used in accounting are a concise summary of financial
    transactions over an accounting period, summarizing a company's
    operations, financial position, and cash flows.
    Objectives of Accounting
    1. Systematic Recording of Business
    Transactions:
    • A systematic and complete record helps the management to receive
    any retrieve information easily and in time. However, in every
    business there are numerous business transactions and it is not
    possible for the management to keep in their mind all business
    transactions.
    2. Ascertainment of Results
    • The main purpose of any business is to earn profit. For the
    ascertainment of profit earned or loss sustained by the business
    enterprise, all incomes and expenses are to be worked out and
    presented in a separate statement which is called Manufacturing,
    Trading and Profit & Loss Account.
    3. Ascertainment of Financial Position:
    • The aim of showing financial position can be achieved by preparing
    Balance Sheet of the business enterprise. Balance Sheet is a
    statement of assets and liabilities. The resources owned by an
    enterprise (Assets) and claims against such resources (Liabilities) are
    shown in the Balance Sheet.
    4. Communicating Information to Various
    Users:
    • In addition to the management, there are a number of other users
    who may be interested in knowing the information about the financial
    soundness and the profitability of the enterprise.
    Need for Accounting
    Book Keeping
    • Bookkeeping involves the recording, on a daily basis, of a company’s
    financial transactions. With proper bookkeeping, companies are able
    to track all information on its books to make key operating, investing,
    and financing decisions.
    • Bookkeepers are individuals who manage all financial data for
    companies. Without bookkeepers, companies would not be aware of
    their current financial position, as well as the transactions that occur
    within the company.
    Single entry book keeping
    • A single entry system records each accounting transaction with a
    single entry to the accounting records, rather than the vastly more
    widespread double entry system. The single entry system is centered
    on the results of a business that are reported in the income
    statement. The core information tracked in a single entry system is
    cash disbursements and cash receipts.
    Format of single entry book keeping
    Account
    Description Date Notes Expense (Debit) Income (Credit)
    Balance

    Starting
    6/1 2,000
    Balance

    Rent 6/3 800 1,200

    Sales 6/8 500 1,700

    Supplies 6/20 200 1,500

    Ending Balance 6/30 1,500


    Double entry book keeping
    • Double Entry Accounting System is an accounting approach under
    which each and every accounting transaction requires a
    corresponding and opposite entry in the accounting records and the
    number of transactions entered as the debits should be equal to that
    of the credits.
    Example
    • Annie purchased a laptop worth $5,000. She paid cash for the same
    from all the savings she had made for this. Hence, the entries for this
    date should be:
    Accounting Cycle
    • The accounting cycle is a collective process of identifying, analyzing,
    and recording the accounting events of a company. The series of steps
    begin when a transaction occurs and end with its inclusion in the
    financial statements.

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