Financial accounting is the maintenance of daily record of All financial transactions in such a manner that it would help in the preparation of suitable information regarding the financial affairs of a business or an individual.The need for recording financial transactions arises because the individual or business wants to know the performance of the business and to assist the person in making decisions related to the business.
Transactions
In accounting or business terms, any dealing between two persons involving money or a valuable thing is called transaction.
Human beings are social animals and are bound to adopt a community living style. Living in a
community, essentially means that people interact with other people and are dependent on each other to fulfill their needs. Every person cannot fulfill all his needs like food, clothing, housing etc. on his own. He, therefore, depends on other people for his needs, in return to this providing others with some of theirs. It means that one will fulfill his needs from others and will provide others the things of their need in return. Every instance where one ‘gives something’ to ‘get something’ is called a transaction.
Nearly all developments happen because of human being’s need for the same. Accountancy is no
different. There was times when goods were bartered or exchanged. But when the concept of money was introduced, it became a little more difficult.
Budget
Budget is a plan of income, expenses & other financial operation for a future period.
Costing
A person making or producing any thing must not only know how much it costs to make but also to help in determining the selling price. It is necessary that the person not only knows the cost of what is being produced but also the cost of each component which has gone into production. The control of the costs being incurred is also necessary otherwise the same can exceed the estimates. All this is only possible if the costs and data relating to production is properly recorded and analysed. It is an exercise that only carries out by the Accountant.
The Impact of "IT" on Accounting
The old “Munshi,” who kept record of the financial dealings was the original accountant. But he is now of no use, as he lacks the capability for analysing the information recorded and forecasting financial information.
In fact, there is no need for any expert in writing of books. Information Technology has taken over. But some one has to tell the Software developer how books are written?
The need for an Accountant who is well versed in the art of writing up books still remains. The role has changed. Information Technology software can now produce the reports and analysis but need the expert to interpret all of this remains. The need for the professional to describe this has not yet been overtaken by Information Technology.
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