Assignment on :-

FINANCIAL ACCOUNTING

Accountancy is the process of communicating financial information about a business entity to users such as shareholders and managers.[1] The communication is generally in the form of financial statements that show in money terms the economic resources under the control of management; the art lies in selecting the information that is relevant to the user and is reliable.[2] The principles of accountancy are applied to business entities in three divisions of practical art, named accounting, bookkeeping, and auditing.[3] Accountancy is defined by the Oxford English Dictionary (OED) as "the profession or duties of an accountant". Accounting is defined by the American Institute of Certified Public Accountants (AICPA) as "the art of recording, classifying, and summarizing in a significant manner and in terms of money, transactions and events which are, in part at least, of financial character, and interpreting the results thereof."[4] Accounting is thousands of years old; the earliest accounting records, which date back more than 7,000 years, were found in Mesopotamia (Assyrians). The people of that time relied on primitive accounting methods to record the growth of crops and herds. Accounting evolved, improving over the years and advancing as business advanced.[5] Early accounts served mainly to assist the memory of the businessperson and the audience for the account was the proprietor or record keeper alone. Cruder forms of accounting were inadequate for the problems created by a business entity involving multiple

investors, so double-entry bookkeeping first emerged in northern Italy in the 14th century, where trading ventures began to require more capital than a single individual was able to invest. The development of joint stock companies created wider audiences for accounts, as investors without firsthand knowledge of their operations relied on accounts to provide the requisite information.[6] This development resulted in a split of accounting systems for internal (i.e. management accounting) and external (i.e. financial accounting) purposes, and subsequently also in accounting and disclosure regulations and a growing need for independent attestation of external accounts by auditors.[7] Today, accounting is called "the language of business" because it is the vehicle for reporting financial information about a business entity to many different groups of people. Accounting that concentrates on reporting to people inside the business entity is called management accounting and is used to provide information to employees, managers, owner-managers and auditors. Management accounting is concerned primarily with providing a basis for making management or operating decisions. Accounting that provides information to people outside the business entity is called financial accounting and provides information to present and potential shareholders, creditors such as banks or vendors, financial analysts, economists, and government agencies Aims & Objectives AIMS The Accounting Standards Board contributes to the achievement of the Financial Reporting Council's fundamental aim of supporting investor, market and public confidence in the financial and governance stewardship of listed and other entities by pursuing its own aims of establishing and improving standards of financial accounting and reporting, for the benefit of users, preparers, and auditors of financial information. OBJECTIVES The Board intends to achieve its aims by:

1. Developing principles to guide it in establishing standards and to provide a framework within which others can exercise judgement in resolving accounting issues. 2. Issuing new accounting standards, or amending existing ones, in response to evolving business practices, new economic developments and deficiencies being identified in current practice. 3. Addressing urgent issues promptly. 4. Working with the International Accounting Standards Board (IASB), with national standards-setters and relevant European Union (EU) institutions to encourage high quality in the IASB's standards and their adoption in the EU.

BANK RECONCILLATION

A company's general ledger account Cash contains a record of the transactions (checks written, receipts from customers, etc.) that involve its checking account. The bank also creates a record of the company's checking account when it processes the company's checks, deposits, service charges, and other items. Soon after each month ends the bank usually mails a bank statement to the company. The bank statement lists the activity in the bank account during the recent month as well as the balance in the bank account. When the company receives its bank statement, the company should verify that the amounts on the bank statement are consistent or compatible with the amounts in the company's Cash account in its general ledger and vice versa. This process of confirming the amounts is referred to as reconciling the bank statement, bank statement reconciliation, bank reconciliation, or doing a "bank rec." The benefit of reconciling the bank statement is knowing that the amount of Cash reported by the company (company's books) is consistent with the amount of cash shown in the bank's records. Because most companies write hundreds of checks each month and make many deposits, reconciling the amounts on the company's

books with the amounts on the bank statement can be time consuming. The process is complicated because some items appear in the company's Cash account in one month, but appear on the bank statement in a different month. For example, checks written near the end of August are deducted immediately on the company's books, but those checks will likely clear the bank account in early September. Sometimes the bank decreases the company's bank account without informing the company of the amount. For example, a bank service charge might be deducted on the bank statement on August 31, but the company will not learn of the amount until the company receives the bank statement in early September. From these two examples, you can understand why there will likely be a difference in the balance on the bank statement vs. the balance in the Cash account on the company's books. It is also possible (perhaps likely) that neither balance is the true balance. Both balances may need adjustment in order to report the true amount of cash. After you adjust the balance per bank to be the true balance and after you adjust the balance per books to also be the same true balance, you have reconciled the bank statement. Most accountants would simply say that you have done the bank reconciliation or the bank rec. Example The following is a worked example[1] of a bank reconcillation problem. To understand this example fully, you should have a good knowledge of general accounting principles. Question The following was obtained from the records of ABC Computers of 30 September 20.9 Bank reconciliation statement on 31 August 20.9 (Previous month) Balance as per bank 12200

statement Outstanding deposit: Total Outstanding cheques: No: 100 No: 106 No: 109 2200 740

2100 14300

540 (3480)

10820 (Opening balance for cash book) Cash Book for September 20.9 Amount Amount Date Details Cheque Date Details () () Sales Water and 3 3700 110 3 and VAT Electricity 4 A Jones 2400 and VAT 400 10 Deposit 3100 111 4 S Payne 21100 Sales 15 850 112 9 J Kooste 350 and VAT Purchases 30 Deposit 1670 113 10 2700 and VAT 114 12 Salaries 4200 115 Donation 500 Purchases 116 20 3150 and VAT 118 J Goosen 600 Pencil 11720 Pencil Total 33000 Total Total Bank Statement for September 20.9 Debit Credit Balance Date 1 Balance 12200 Cr 4 Cheque 111 21100 8900 Dr Deposit 3700 5200 Dr

10

12 15 20

Deposit Deposit SF 60 DO 1400 Cheque 113 2070 Cheque 110 400 Deposit Cheque 112 530 Cheque 614 2180 CB 20 Cheque 109 540 SF 100 Cheque 115 500 Deposit Cheque 118 600 Deposit

2100 3100 2400 700 760 2160 4230 4630 3100 1530 2060 4240 4260 4800 4900 5400 850 4550 5150 4050 1100

Dr Dr Dr Dr Dr Dr Dr Dr Dr Dr Dr Dr Dr Dr Dr Dr

Additional information: 1. Cheque 100 was drawn on the 10 March 20.8 to pay a payable. (This cheque is therefore regarded as "stale" for this example some countries may have different requirements for stale cheques) 2. ABC Computers signed a debit order for the monthly instalment on their motor vehicle bought from Speedy Car Sales. 3. Cheque 614 was not drawn by ABC Computers. (Therefore must be taken out of the bank reconciliation) 4. According to the paid cheques, cheque 112 was drawn for 350 and cheque 113 was drawn for 2070. 5. A receivable deposited the amount of 4050 owed by him directly into ABC Computers bank account. Required: 1. Complete the cash book for September 20.9 by starting with the pencil totals. 2. Prepare the bank reconciliation statement as at 30 September 20.9.

Solution Compare all amounts in the cash book for September 20.9 with the amounts that are present on the bank statement to see if they are the same. All correct amounts should be crossed off on both statements as they do not contain errors. Any erroneous amounts should be marked so that they can be addressed. Erroneous amounts may include: 1. 2. 3. 4. 5. Reversed numbers i.e. 164 to 614 Outstanding cheques Payments received that have not yet been reflected Errors on cheques Date discrepancies (though amounts and figures may be correct)

Prepare the following two statements for any bank reconciliation: Cash book (Bank account) of ABC Computers Balance b/f Pencil total Payable (Cheque 100) Purchases and VAT (Cheque 113) Receivable Balance c/f Dr 10820 11720 Pencil total 2200 Speedy Car Sales Bank Charges and VAT 630 (60+20+100) 4050 5160 34580 Balance b/f Cr 33000 1400 180

34580 5160

Bank reconciliation statement Bank reconciliation Debit Credit Balance as per bank statement 1100 Erronerous cheque (614) 2180 Error on cheque 112 (530-350) 180 Outstanding deposit 1670 Outstanding cheques:

Cheque 114 4200 Cheque 116 3150 Cheque 106 740 Credit balance as per cash book 5160 9190 9190

Cost Centre Category Overview The similar set of transactions is grouped into the respective category. That is, the transactions related to expenses category is classified as Telephone expenses, Stationeries, Office expenses and etc below the expenses category. So, Cost centre category is used to classify categories for the cost allocation on the classified categories. Cost Centre Category is used to allocate cost for various expenses. It helps to track the details of cost segregated to each expenses of the organization. Multiple parent and sub category can be created under the cost centre category. All the Parent centre category can have too many Sub-Ledger Groups which are arranged under a hierarchical tree. Each Cost centre category name must be unique. The minimum length of Ledger Group Name is 3 characters the maximum length is 20 characters In the Create a New Cost centre category window, the category name has to be specified along with the corresponding cost centre category. For instance: the new category "Stationeries Expenses" is grouped under the Expenses category. Only the user-defined category is allowed to be modified, removed and renamed not the pre-defined one. You can also open and view the reports of all Ledger Group/particular Ledger Group and remove the unnecessary Ledger Groups. To Create a New Cost Centre Category

Fig: New Cost Centre Category 1. Select the Main Cost Centre Category in BAT Navigator 2. Go to Master Menu => New Cost Centre Category 3. The New Cost Centre Category screen appears as below In this field Name Cost Centre Category Do this Enter the Name of the Cost Centre Category Select the Cost Centre Category on which the new category has to be included '

4. Click on Save icon to save the new Cost Centre Category. The category edit scree will be displayed where you can alter the details or delete the category details 5. Use Save New icon to add many Cost Centre Category name one after the other Do one of the following Choice1

Select Cost Centre Category in BAT Navigator and Right click on it. Choose New Cost Centre Category

Choice 2

Select the main Cost Centre Category in BAT Navigator And, press Shift+Ctrl+N

Choice 3 The cost centre category can be created in the Category report window

Open the report of all or a particular Cost Centre Category Select the Cost Centre Category on which the new category has to be inserted and right click on it Select New Cost Centre Category

Choice 4

Open the report of a particular Cost Centre Category Right click on the Cost Centre Category Select New Cost Centre Category

To Open All Cost Centre Category This cost centre category report lists the cost centre category, cost centre, closing balance of both cost centre category/cost centre and the total amount of each category. Here, the actions like New Cost Centre Category, New Cost Centre, Open, Preview, Edit and Delete are available on every Cost centre category and cost centre.

Fig: All Cost Centre Category report As we all know that CAT doesn't allow modifying, removing any predefined cost centre and costing as your preferences. Because of this, Edit and Delete options will not be displayed for the pre-defined category and Cost centre. All the above specified actions are performed by right clicking on a category / cost centre or using the relevant shortcut keys. 1. Select the Cost Centre Category on the BAT Navigator 2. Go to Report Menu => All Cost Centre Category Choice 1

Right click on the Main Cost Centre Category in BAT Navigator Choose Open

To Open a Particular Cost Centre Category

Fig: Cost Centre Category

1. Right click a Cost Centre Category to be displayed 2. Choose Open 3. The selected Cost Centre Category screen will appear

To Edit a Cost Centre Category

Fig: Cost Centre Category edit mode 1. Select a Cost Centre Category you want to modify 2. Go to Master Menu => Edit "The Selected Cost Centre Category name will appear" 3. Now, you can edit the Cost Centre Category name as you wish. 4. Click on Save icon to save the modification 5. If you want to remove the category, click on Delete icon to remove the Cost Centre Category Do one of the following Choice 1

Right click on a Cost Centre Category in BAT Navigator Choose Edit

Choice 2

Select the cost centre which has to be altered And, press Ctrl+E

Choice 3

Open the report all Cost Centre Category

Choose the Cost Centre Category from the list (Or press Ctrl+E) Right click on Cost Centre Category Choose Edit

Choice 4

Open a particular Cost Centre Category report Select the cost centre category (or press Ctrl+E) Right click on Cost Centre Category Choose Edit

To Delete a Cost Centre Category 1. Choose the Cost Centre Category which has to be removed 2. Go to Master Menu => Delete "The Selected Cost Centre Category will appear" 3. The system will ask the confirmation message as "Are you sure you want to delete?" 4. Click Yes button to delete. If not click No button to cancel the deletion Do one of the following Choice 1

Right click on the Cost Centre Category to be removed Click on Delete

Choice 2

Select the cost centre category And press Ctrl+D

Choice 3

Open the report of all Cost Centre Category Choose the Cost Centre Category from the list (or press Ctrl+D) Right click on Cost Centre Category Choose Delete

Choice 4 You can also delete the Cost Centre Category, when you open the report of a particular Cost Centre Category.

Open a particular Cost Centre Category report Right click on Cost Centre Category Choose Delete

Note:

Before deleting the Cost Centre Category, remove all the reference entries made based on this Cost Centre Category.

To Preview All Cost Centre Category

Fig: Preview All Cost Centre Category The cost centre category print preview window as same as the report window which displays the category of cost centre, included cost centre and the closing balance. To open the preview, 1. Right click on Cost Centre Category in BAT Navigator 2. Choose Preview 3. You'll see the print preview of all cost centre category Choice 1

Open the report of All Cost Centre Category Click on Print Preview icon

To Preview a Particular Cost Centre Category

Fig: Particular Cost Centre Category 1. Choose the cost centre category for which the summary has to be summarized 2. Right click on any Cost Centre Category in BAT Navigator 3. Choose Preview Do one of the following Choice 1

Open the report of All or a particular Cost Centre Category Right click the Cost Centre Category And, choose Preview

Choice 2

Select the cost centre which has to be summarized And, press Ctrl+Shift+P

Choice 3

Open the report of All or a Particular Cost Centre Category Right click on the category And choose Preview

Choice 4

Open the report of All or a Particular Cost Centre Category Click on Print Preview icon

Currency refers to a generally accepted medium of exchange. These are usually the coins and banknotes of a particular government, which comprise the physical aspects of a nation's money supply. The other part of a nation's money supply consists of bank deposits (sometimes called deposit money), ownership of which can be transferred by means of cheques, debit cards, or other forms of money transfer. Deposit money and currency are money in the sense that both are acceptable as a means of payment.[1] Money in the form of currency has predominated throughout most of history. Usually (gold or silver) coins of intrinsic value (commodity money) have been the norm. However, nearly all contemporary money systems are based on fiat money modern currency has value only by government order (fiat). Usually, the government declares the fiat currency (typically notes and coins issued by the central bank) to be legal tender, making it unlawful to not accept the fiat currency as a means of repayment for all debts, public and private

ODBC (Open Database Connectivity) is a standard software interface for accessing database management systems (DBMS). The designers of ODBC aimed to make it independent of programming languages, database systems, and operating systems. Thus, any application can use ODBC to query data from a database, regardless of the platform it is on or DBMS it uses. ODBC accomplishes platform and language independence by using an ODBC driver as a translation layer between the application and the DBMS. The application thus only needs to know ODBC syntax, and the driver can then pass the query to the DBMS in its native format, returning the data in a format the application can understand ODBC provides a standard software API method for accessing both relational and non-relational DBMS. It was developed by the SQL Access Group in 1992 in order facilitate easier communication between applications and databases across computing platforms.

Prior to its creation, if an application needed the ability to communicate with more than a single database, it would have to support and maintain an interface for each. ODBC provides a universal middleware layer between the application and DBMS, allowing the application developers to only have to learn a single interface, nor do they have to update their software if changes are made to the DBMS specification, only the driver needs updating. An ODBC driver can thus be thought of as analogous to a printer or other driver, providing a standard set of calls for the application to use, which then translates those commands into the correct commands at the DBMS end. An application that can communicate through ODBC is referred to as ODBC-compliant. Any ODBC-compliant application can access any DBMS that has a corresponding driver. For the driver, the ODBC model allows for two different solutions, either having the driver reside on the client machine, or as part of a server-side solution. Drivers exist for all major DBMS, as well as nontraditional data models, such as flat text or CSV files. Regardless of where the driver exists, the basic model is the same. The application sends ODBC commands to the driver, which then translates those commands into the native format of the DBMS. Once the DBMS has performed the query, it then sends those results back through the ODBC driver, which then translates them back into a standard format.