1st Year B Com Financial Accounting lecture notes PDF

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Summary

This chapter explains the meaning and objectives and origin and growth of financial accounting. Students get an idea about financial accounting. They can understand how to do book keeping, systems of accounting, who are using this system, different types of accounting etc....

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In case the housewife records her transactions regularly, she can collect valuable information about the character of her receipts and payments. For example, she will be able to be told the whole amount spent by her during a period (say a year) on different items say milk, food, education, entertainment, etc. Similarly she can find the sources of her receipts like salary of her husband, rent from property, cash gifts from her relatives, etc. Thus, at the tip of a period (say a year) she will be able to see for herself about her financial position i.e., what she owns and what she owes. This can help her in planning her future income and expenses (or making out a budget) to a good extent. The need for accounting is all the more great for someone who is running a business. He must know : (i) What he owns? (ii) What he owes? (iii) Whether he has earn a profit or suffered a loss on account of running a business? (iv) what's his financial position i.e. whether he are going to be in an exceedingly position to fulfil all his commitments within the near future or he's within the process of becoming a bankrupt. 1.2 ORIGIN AND GROWTH OF ACCOUNTING Accounting is as old as money itself. However, the act of accounting was not as developed because it is today because within the early stages of civilisation, the number of transactions to be recorded were so small that every businessman was able to record and check for himself all his transactions. Accounting was practised in India twenty three centuries ago as is obvious from the book named "Arthashastra" written by Kautilya, King Chandragupta's minister. This book not only relates to politics and economics, but also explain the art of proper keeping of accounts. However, the fashionable system of accounting supported the principles of double-entry bookkeeping system owes it origin to Luco Pacioli who first published the principles of Double Entry System in 1494 at Venice in Italy. Thus, the art of accounting has been practised for hundreds of years but it's only within the late thirties that the study of the topic 'accounting' has been haunted seriously....