AccountingBlog(Theory)

Accounting Concepts:- INTRODUCTION Let us imagine a situation where you are a proprietor and you take copies of your books of account to ve  di erent accountants. You ask them to prepare the nancial statements on the basis of the above records  and to calculate the pro ts of the business for the year. After few days, they are ready with the nancial  statements and all the ve accountants have calculated ve di erent amounts of pro ts and that too with  very wide variations among them. Guess in such a situation what impact would it leave on you about  accounting profession. To avoid this, a generally accepted set of rules have been developed. This generally  accepted set of rules provides unity of understanding and unity of approach in the practice of accounting  and also in better preparation and presentation of the nancial statements.  Accounting is a language of the business. Financial statements prepared by the accou...

-Evolution of Accounting as a social science:-      In its oldest form, accounting aided the stewards to discharge their stewardship function. The wealthy men employed stewards to manage their property; the stewards in turn rendered an account periodically of their stewardship. This ‘Stewardship Accounting’ was the root of nancial accounting system. The presently followed system of double-entry book-keeping has been developed only in the 15th Century. However, historians found records of debit and credit dating back to the 12th Century. Although double-entry system was followed, ‘stewardship accounting’ served the purpose of businessmen and wealthy persons at that time. In most of the countries, stewardship accounting was prevalent till the emergence of large-scale enterprises in the form of public limited companies. In the second phase, the idea of nancial accounting emerged with the concept of joint stock company and divorce of ownership from the manag...