Inter-departmental rivalries may endanger the performance of the whole organisation. To advise management on future expansion policies and proposed capital projects; 9. But these are Philosophical Theories and are found in our ancient Indian Philosophy. The software are available both for intranet and internet. Inductive accounting Theory: The accounting theory which examines and analyses the happenings of past events is known as inductive accounting theory.
Cost Accounting Cost Accounting Definition: Cost Accounting implies a branch of accounting which deals with recording, classifying, accumulation, allocation and control of the cost of production. The Statutory auditors are required to audit the financial statements of an organization to express their opinion. Accounting standards lay down the terms and conditions of accounting policies and practices by way of codes, guidelines and adjustments for making the interpretation of the items appearing in the financial statements easy and even their treatment in the books of account. Role of Managerial Accounting: Financial analysis techniques are preferred by managers to interpret financial results. The purchasing power of money in 2005 is not the same in 2010. On the other hand, government or other authorities may also ask about the financial position of a business concern for various reasons. To provide financial information which are helping the top management for estimating earning potential of business.
For these reasons accounting can be said to be a science. Deductive theories are generally formulated to achieve some particular goal. A proper and satisfactory method of accounting is an essential part of any business house for the following reasons : 1 If no records are kept, it will be difficult to find out accurate net profit. If the budgets are achieved and if there is any favorable variances under standard costing technique, a suitable monetary and non-monetary motivating schemes are prepared and implemented. Meaning of Accounting Standards : Accounting standards are the written statements consisting of rules and guidelines, issued by the accounting institutions, for the preparation of uniform and consistent financial statements and also for other disclosures affecting the different users of accounting information.
To facilitate rational decision making: Accounting these days has taken upon itself the task of collection, analysis and reporting of information at the required points of time to the required levels of authority in order to facilitate rational decision making. Objectives of Accounting The objectives of accounting are two-fold: 1 To record permanently, all business transactions, and 2 To show the effect of each transaction and also the combined effect of all such transactions for a given period so as to find out the profit the business has earned or loss incurred, and also to know the correct financial position on a particular date. Moreover, it is legally binding on some forms of business, such as joint stock companies, to prepare periodically, statements in proper forms showing the position of the business. Just as a doctor will feel the pulse of his patient and know whether he is enjoying good health or not, in the same way by looking at the Balance Sheet one will know the financial health of an enterprise. The nature and amounts of possible losses.
Economy in Operations: Expenses are properly planned and financial resources are put to optimum use. It is based on repeated experiments and informs us that similar events in future will result in similar consequences. The is an industry leading organization in the area of financial accounting. The frauds could be detected by a thorough checking of the books and documents such as cash book, vouchers, invoices, wage sheets, etc. Accounting principles and postulates are based on sound reasoning. Accounting is systematic method of summering, classification, condensation and recording of day to day transactions. Based on the different results, different recommendations may be provided for the growth and development of a business concern.
The reports regarding the interpretations of the financial results. The accountant provides necessary information and data for forecasting. Market value or replacement cost is not shown in the financial statement. The scientific management movement led by Taylor gave impetus to the development of cost accounting because it contributed to the use of standard costs in planning manufacturing operations and in evaluating performance. The progress made in this regard, is always indicated only by the properly maintained financial records. But a subject of Arts is never, like that.
Accounting Conventions There are four types of accounting conventions. Generally accepted theories: The fundamental theories which can be applied equally in all cases and are adopted by all are called generally accepted theories. The necessity and importance of accounting can be understood by answering the following questions: 1 How much we have earned this year? Managerial is also called as Management Accounting. In view of this, a commercial organization always tries to expand its business, increase its sales and reduce operating expenses. Determination and evaluation of policy The object of Accounting is to help the management in determining and evaluating the management policies in running the business successfully by supplying necessary, information, interpreting and analyzing the financial statements.
Until the late 19th and early 20th centuries, manufacturing processes were simple and firms were producing a small variety of products. This art of keeping records passed through many phases since its inception. The complexity of the job are dependent on the abilities and skills of an accountant. Socio-economic progress has always depended on its linguistic advancement. To advise management on future expansion policies and proposed capital projects. If the accountant is to perform his work of accounting successfully and skillfully, he will have to equip himself with complete and full theoretical knowledge.