Basic Concepts in Accounting

Matching Concept:

According to this concept, in order to calculate the profit for the accounting period in a correct manner, the expenses and costs incurred during that period, whether paid or not, should be matched with revenues generated during that period.

Materiality Concept:

According to this concept, while accounting for the various transactions, only those which are having material impact on profitability or financial position of the organisation will be considered, ignoring the insignificant ones e.g. if an organisation purchases some postage stamps some of which remain non-used at the end of the accounting period, according to matching concept, the cost of such non-used stamps should not be treated as an item of expenditure. However, as its impact on profitability is likely to be negligible, the cost of non-used stamps may be ignored treating the cost of purchase of stamps as expenditure. Now which transactions should be treated as material ones is a subjective concept and depends upon the judgement and knowledge of the accountant.

Consistency Concept:

According to this concept, whatever accounting policies and procedures are adopted, they should be adopted consistently from one period to another to enable the comparison between two different sets of financial statements. If there is any change in the accounting policies and procedure, this fact coupled with its effect on profitability should be disclosed specifically.

Basic Concepts in Accounting

Conservation Concept:

This concept is usually expressed as – “Anticipate all the future losses and expenses, however do not anticipate the future incomes and profits.” This principle is applicable to current assets generally and hence the current assets are valued at cost or market price whichever is lower. The valuation of non-current assets is made at cost (as per the cost concept.)

Accounting Period Concept:

According to this concept, even though a business is likely to be a going concern over a longer period of time, in order to facilitate the preparation of financial statements periodically, the future time is divided into shorter segment, each one of them being in the form of Accounting period. Income is computed according to this accounting period (by preparing profitability statement) and financial position is assessed at the end of such accounting period (by preparing balance sheet). It may be noted that the length of accounting period may depend upon various factors like characteristics of the business, tax consideration, statutory requirements and so on.

Basic Concepts in Accounting

Going Concern Concept:

According to this concept it is assumed that the business entity is going to be in business for an indefinitely long period of time and is not likely to close down its business in a shorter period of time. This concept affects the valuation of assets and liabilities. As such, the assets are shown on the Balance Sheet at cost less depreciation and not at the current market price or realisable value. If the assets are to be disclosed at the correct value in the Balance Sheet, the current market price will be most suitable. However, as the business is likely to be a going concern in future and as the assets are not likely to be sold in the market in the near future, they are disclosed at cost less depreciation.

Basic Concepts in Accounting

Cost Concept:

According to this concept, the assets acquired by a business are recorded at their cost of acquisition and this cost is considered for all the subsequent accounting purposes say charging of depreciation. The concept does not take into consideration the current market prices of the various assets.

Basic Concepts in Accounting

Money Measurement Concept:

According this concept, only those transactions and facts find the place in the process of accounting and hence on financial statements which can be expressed in terms of money. As such, all those transactions and facts which cannot be expressed in terms of money (e.g. Morale and motivation of the workers, goodwill of the organisation in the market etc.) are not within the purview of accounting though they may be having direct or indirect bearing on the business. This principle imposes severe restrictions on the kind of information available from the financial statements. In fact, it is the major drawback of the financial statements.

Basic Concepts in Accounting

Business Entity Concept:

According to this concept, the business is assumed to be a distinct entity from the persons who own the business E.g. if there is a partnership concern carrying the name of M/s. X, where Mr. A and Mr. B are partners, from accounting point view, M/s. X is supposed to be a separate entity from Mr. A and Mr. B. The financial statements prepared on the basis of accounting records relate to the business i.e. Mr X and not Mr. A and Mr. B individually. It should be noted in this connection that the business entity concept has nothing to do with the legal entity of the business. It applies to both corporate organisation (which by itself is a legal entity separate from the owners) as well as non-corporate organisation. (which is not a legal entity separate from the owners)

Customer is Always Right...!!!

Caller : Hi, our printer is not working.

Customer Service : What is wrong with it?

Caller : Mouse is jammed..

Customer Service : Mouse? Printers don't have a mouse you fool….!

Caller : Mmmmm…??.. Oh really ?... I will send a picture, see idiot ,,,,,,,,,,,,

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               Moral: Customer is always right........ listen him thoroughly and believe what he is saying.

SUPERB REACTIONS!!!!!!!!!!!!!!!!!!!!!!!!!!!

would have felt the same!!!!!
                                                          before joining company

Induction Programme

                                                                          At Work

                                                               Problem at work

Boss Please.....Increment..... Dede ....Bagvan.........Ke... Naam pe 

 

  

गब्बर सिंह का चरित्र

                                                  गब्बर सिंह का चरित्र चित्रण


1. सादा जीवन, उच्च विचार: उसके जीने का ढंग बड़ा सरल था. पुराने और मैले कपड़े, बढ़ी हुई दाढ़ी, महीनों से जंग खाते दांत और पहाड़ों पर खानाबदोश जीवन. जैसे मध्यकालीन भारत का फकीर हो. जीवन में अपने लक्ष्य की ओर इतना समर्पित कि ऐशो-आराम और विलासिता के लिए एक पल की भी फुर्सत नहीं. और विचारों में उत्कृष्टता के क्या कहने! 'जो डर गया, सो मर गया' जैसे संवादों से उसने जीवन की क्षणभंगुरता पर प्रकाश डाला था.

२. दयालु प्रवृत्ति: ठाकुर ने उसे अपने हाथों से पकड़ा था. इसलिए उसने ठाकुर के सिर्फ हाथों को सज़ा दी. अगर वो चाहता तो गर्दन भी काट सकता था. पर उसके ममतापूर्ण और करुणामय ह्रदय ने उसे ऐसा करने से रोक दिया.

3. नृत्य-संगीत का शौकीन: 'महबूबा ओये महबूबा' गीत के समय उसके कलाकार ह्रदय का परिचय मिलता है. अन्य डाकुओं की तरह उसका ह्रदय शुष्क नहीं था. वह जीवन में नृत्य-संगीत एवंकला के महत्त्व को समझता था. बसन्ती को पकड़ने के बाद उसके मन का नृत्यप्रेमी फिर से जाग उठा था. उसने बसन्ती के अन्दर छुपी नर्तकी को एक पल में पहचान लिया था. गौरतलब यह कि कला के प्रति अपने प्रेम को अभिव्यक्त करने का वह कोई अवसर नहीं छोड़ता था.

4. अनुशासनप्रिय नायक: जब कालिया और उसके दोस्त अपने प्रोजेक्ट से नाकाम होकर लौटे तो उसने कतई ढीलाई नहीं बरती. अनुशासन के प्रति अपने अगाध समर्पण को दर्शाते हुए उसने उन्हें तुरंत सज़ा दी.
5. हास्य-रस का प्रेमी: उसमें गज़ब का सेन्स ऑफ ह्यूमर था. कालिया और उसके दो दोस्तों को मारने से पहले उसने उन तीनों को खूब हंसाया था. ताकि वो हंसते-हंसते दुनिया को अलविदा कह सकें. वह आधुनिक यु का 'लाफिंग बुद्धा' था.

6. नारी के प्रति सम्मान: बसन्ती जैसी सुन्दर नारी का अपहरण करने के बाद उसने उससे एक नृत्य का निवेदन किया. आज-कल का खलनायक होता तो शायद कुछ और करता.  

7. भिक्षुक जीवन: उसने हिन्दू धर्म और महात्मा बुद्ध द्वारा दिखाए गए भिक्षुक जीवन के रास्ते को अपनाया था. रामपुर और अन्य गाँवों से उसे जो भी सूखा-कच्चा अनाज मिलता था, वो उसी से अपनी गुजर-बसर करता था. सोना, चांदी, बिरयानी या चिकन मलाई टिक्का की उसने कभी इच्छा ज़ाहिर नहीं की.

8. सामाजिक कार्य: डकैती के पेशे के अलावा वो छोटे बच्चों को सुलाने का भी काम करता था. सैकड़ों माताएं उसका नाम लेती थीं ताकि बच्चे बिना कलह किए सो जाएं. सरकार ने उसपर 50,000 रुपयों का इनाम घोषित

Financial Statements

Any organization doing the business, whether it is manufacturing activity or trading activity or service activity, is interested in knowing basically two facts about the business.

1)      Where the business stands at any given point of time in financial terms.

2)      What is the result of operations carries out by the business organisation during a specific period.

First financial statement is Balance Sheet. This is the answer to the first question viz. Where the business stands in financial terms. Balance Sheet informs about the various sources used by the organisation to raise the funds which technically result into what are referred to as “liabilities” and the way these sources are used which technically result into the creation of “assets”. Sometimes, Balance Sheet is also referred to as “Statement of Sources and Application of funds”. Effectively, Balance Sheet is a listing of various assets and liabilities of the organisation at any given point of time. Technically, Balance Sheet is a position statement in the sense it refers to a particular date. As such, Balance Sheet is referred to as “Balance Sheet as on _____ or “Balance Sheet as at_____.

Second financial statement is Profitability Statement. In technical language, it is referred to as “Profit & Loss Account”. This is the answer to the second question viz. What is the result of operations carries out by the business organisation during a specific period i.e. whether the operations have resulted into a profit or loss and by what amount. Technically, Profitability statement is a period statement in the sense it refers to a particular period. This maybe a month, a quarter, a half year or a year depending upon the organisation and the purpose for which it is prepared. As such, Profitability statement is referred to as “Profit and Loss Account for the year ending on _____.

Public Limited Company

In non-technical language, a public company affects the fate of larger number of people. As such, operations of public limited companies are subjected to a close control in the form of compliance to the various provisions of Company Act, 1956. A public limited company is characterised by the following features:

1)      Minimum number of shareholders is 7 and there is no restriction on the maximum number of shareholders.

2)      Public limited company can freely approach public in general for subscribing to the shares and/or debentures of the company.

3)      The shareholders of a public limited company can freely transfer their shares to any other person. As such, shares of only a public limited company can be listed on the stock exchange.

4)      A public limited company needs to have a minimum paid-up share capital of Rs. 5 Lakhs or any higher amount as may be prescribed.

Private Limited Company

In non-technical language, operations of a private limited company affect the fate of smaller number of people. As such, Companies Act, 1956 is very liberal towards the private limited companies. Private Limited Company is entitled to many privileges/exemptions from the various provisions of the Companies Act, 1956. A Private Limited Company is characterised by the following features.

1)      Minimum number of shareholders is 2 and the maximum number is 50.

2)      A Private limited company cannot approach the public in general for subscribing to the shares/debentures of the company. Similarly, a private limited company cannot invite or accept deposits from public in general other than its shareholders, directors or their relatives. The funds required by the company are required to be collected through the private circulation only.

3)      In case of a private limited company, right of the shareholders to transfer the shares is restricted. These restrictions are usually in two forms:

a)      That the shares to be transferred should be offered to the existing members on priority basis and if the existing members do not want to take up those shares, they can be transferred to anybody else.

b)      That the director will have the power to refuse to register the transfer of shares provided that such power should be exercised by the directors in good faint and in the interest of the company.

4)      A private limited company needs to have a minimum paid-up shares capital of Rs. 1 Lakhs or any higher amount as may be prescribed.

Joint Stock Companies

This form of organization can raise large amount of funds as the resources of large number of people can be pooled together. In this case, the total requirement of funds of the organization is split into smaller units, each of such units being called as a ‘share’. Each such share carries a denomination value which is called as ‘face value’ or ‘nominal value’.  An individual can participate in the capital requirement of an organization by purchasing the shares of the company and he becomes the part owner of the company to the extent of his shareholding in the overall amount of capital of the company. Such shareholder can exercise his ownership rights through the voting rights offered to him.

1)      All the joint stock companies have a legal entity separate from their owner viz. shareholders. These companies can own assets, incur liabilities, enter into contracts, sue and to be sued. The shareholders of the company cannot be held liable for the actions of the company.

2)      Generally all joint stock companies are limited liability organisations and the liability of the shareholders is limited to the extent of amount of shares they undertake to purchase.

3)      Segregation of ownership and management is a typical feature of joint stock companies. In case of the companies, shareholders are owners. However, due to large number of shareholders and their wide geographical spread, it may not be possible for shareholders to exercise their ownership rights by participating in the day-to-day affairs of the company. As such, the shareholders appoint their representatives to manage the day-to-day affairs of the company.

4)      Transferability of shares is a feature of a joint stock company. A shareholder can transfer his ownership rights in the company by transferring his shares to some other person. In case of public limited companies, shares are freely transferable and such transfer can be greatly facilitated if the shares are listed on the stock exchange. In case of private limited companies, there may be some restrictions on the transfer of shares.

Advantages:

1)      The capacity of the corporate organizations to raise the funds is comparatively high. As the number of persons contributing to the requirement of funds is large, it is possible to raise large amount of funds.

2)      As the company has a separate legal entity, apart from its owners viz. shareholders, the personal property of the shareholders is generally not in danger.

3)      Transferability of shares is a facility available to the shareholders. If the shareholders want to release their investment in shares, they can transfer their shares to any other person. However, it should be remembered that in case of private limited companies, the shares are not freely transferable.

Disadvantages:

1)      The company form of organization is subjected to elaborate legal and procedural formalities to be completed not only for the purpose of formation but also for the regular operation. The basic applicable law in this connection is in the form of Companies Act, 1956. However, it should be noted that in case of private limited companies, these formalities are less rigorous in nature.

2)      Double Taxation is a typical characteristic feature of a company form of organization. The profits earned by the company are taxed in the hands of company first and when the same profits are distributed to the shareholders in the form of dividend, the same are taxed in the hands of shareholders again. This amounts to the payment of tax by both the company as well as the shareholders on the same amount of profits.

Partnership Firms

In this case, more than two persons but less than twenty persons come together and form a partnership firm. Each of these partners is the owner of the business in the proportion decided among themselves. Partnership is a contract among the partner s and the relationship among the partners is governed on the basis of terms and conditions laid down in an official and written document called as “partnership deed” or “partnership agreement”.

Advantages

1)      This form of organisation is also reasonably easy and economical to form and operate.

2)      As resources of more than one person are pooled together, capacity of the business to handle more complex business operations or operations requiring more amounts of funds is better as compared to the proprietary firms.

3)      The tax structure applicable to the partnership firms is fairly reasonable. At present, profit of the partnership firm is at a flat rate of 35%. While calculating the profit of the partnership firm, following amounts can be claimed by the firm as the allowable expenditure.

4)      Not many of the government regulations are applicable to the partnership firms.

Disadvantages

1)      This form of organisation also does not have any legal status. The partnership firms exist due to the existence of the partners. If the partners cease to be in existence, the firm ceases to be in existence. The retirement or death of a partner leads to the dissolution of the partnership firm.

2)      The capacity of the business to raise the funds and to coupe up with the complex business operations is comparatively limited through it is more than that of the proprietary firms.

3)      Partnership firm is also an unlimited liability organisation. In the sense, if the assets of the firm are insufficient to meet its liabilities, personal property of the partners is always at stake.

4)      It is not possible to transfer the ownership of the business to somebody else without affecting the basic constitution of the business.

Proprietary Firms

Only one person is the owner of the business who is called as the proprietor and the same person is the manager. All the profits earned by the business belong to the proprietor and he is liable for the losses and liabilities of the business.

Advantages:

1)      Proprietary firm is the easiest and most economical form of business organisation to form and operate. Not many of the government regulations are applicable to the proprietary firms.

2)      This type of organization is very suitable where size of the business is very small and the complexities involved in the business are comparatively less. However, if the size of the business increases or the complexities in the business operations grow, this form may prove to be insufficient.

Disadvantages:

1)      The proprietary firms exist due to the existence of the proprietor. If the proprietor ceases to be in existence, the firm ceases to be in existence.

2)      As only one person is owner and the manager, the capacity of the business to raise the funds and to cope up with the complex business operations is comparatively limited.

3)      Proprietary firm is always an unlimited liability organisation. In the sense, if the assets of the firm are insufficient to meets its liabilities, personal property of the proprietor is always at stake.

4)      The income of the proprietary firm is always clubbed with the individual income of the proprietor. As such, effective rate of income tax which the proprietor may be required to pay is likely to be higher.

5)      It is not possible to transfer the ownership of the business to somebody else without affecting the basic constitution of the business.

The Fields of Finance

There can be various fields where finance function may operate. In each field, finance executive deals with the management of money and claims against money.

Business Finance: The term business finance covers all the activities carried on with the intention of earning profits. Thus, business finance covers the study of finance function in the area of business which includes both trade as well as industry.

Corporation Finance: Corporation Finance is a part of business finance and deals with the financial practices, policies and problems of corporate enterprises or companies. The corporation finance studies the financial operations carried on by a corporate enterprise from the stage of its inception to the stage of its growth and expansion.

International Finance: International finance is the study of flow of funds between individuals and organisations beyond national boundaries and developing the methods to handle these funds more effectively.  

Public Finance: It deals with the financial matters of the Governments. It becomes crucial as the Governments deal with huge sums of money which can be raised through the sources like taxes or other methods and are required to be utilised within the statutory and other limitations.

Private Finance: It deals with the financial matters of non-government organisations.

Database Administrator (DBA)

The main advantage of using database is to have central control of all data and transactions that happen in the database. A user who has the complete central control of the database is called as database administrator. The following are the functions of a DBA.

·         Schema definition: The DBA creates the original database schema by executing a set of data definition statements in the DDL.

·         Storage structure and access method definition.

·         Schema and physical organization modification: The DBA carries out changes to the schema and physical organization to reflect the changing needs of the organization.

·         Granting of authorization for data access: The main function of a DBA is to ensure security of the database by granting access to users. The authorization information is kept in a special system structure that the database system consults whenever someone attempts to access the data in the system.

·         Routine management: The activities of the DBA are periodically backing up of the database, ensuring enough free disk space and monitoring jobs running on the database and ensuring the performance of the system.

Database Languages

A database system provides a data definition language to specify the database schema and a data manipulation language to express database queries and updates. These two parts are separately two huge languages but complied together as two parts in a widely used SQL language.

Data Definition Language (DDL)

We specify a database schema by a set of definitions expressed by a special language called a Data Definition Language (DDL). Any DDL statement after creating the table schema updates a special set of tables called the data dictionary or data dictionary.

The data dictionary is called a metadata, that is ‘data of data’.  A database system consults the data dictionary before reading or modifying the actual data. The storage structure and access methods used by the database system by a set of the statements in a special type of DDL is called a data storage and definition language. The data definition language thus satisfies the constraints oriented to the database schema.

Data Manipulation Languages (DML)

·         The retrieval of information stored in the database.

·         The insertion of new information into the database.

·         The deletion of information from the database.

·         The modification of information stored in the database.

Data Models

Data Models can be defined as the structure of a database. It is collection of conceptual tools for describing data, data relationships, data semantics and consistency constraints. Any tool, which provides a way to describe the design of the database in a logical way, is called a data model.

The Entity-Relationship (ER) Model

The ER model is based on a perception of a real world that consists of a collection of basic objects called entities and of relationships among these objects. An entity is a thing or object. Entities are described in a database by a set of attributes. A relationship is an association among several entities.

For example, ‘customer’ and ‘account’ are entities in a banking database. Customer-ID, name are the attributes of a customer. Customer and account are related with each other.

The overall logical structure of a database can be expressed graphically by an E-R diagram, which is built up from the following components:

·         Rectangle, which represents entity sets.

·         Ellipse, which represents attributes.

·         Diamond, which represents relationships among entity sets.

·         Line, which link attributes to entity sets and entity sets to relationships.

Relational Model

The relational model uses a collection of tables to represent both data and the relationships among that data. Each table in this model has multiple columns and each column has a unique name. The relational data model is the most widely used data model and a vast majority of current database systems are based on this model. The relational model is at a lower level of abstraction than the E-R model. Database designs are often carried out in the E-R model and then translated to the relational model.

 

Database Schema

The overall design of the database is called the database schema. A database schema corresponds to the variable declaration in a program. Each database system can have several schemas that are partitioned according to the levels of abstraction. The physical schema describes the database design at the physical level while the logical schema describes the database design at the logical level. A database can have several schemas at the view level which are called its sub-schemas.

Data Abstraction

The main purpose of the system is its usability and therefore the retrieval of data from the database should be made very efficient. Since many database system users are not computer trained, developers hide the complexity from users through several levels of abstraction, to simplify the user’s interaction with the system. The three main levels of abstraction are:

Physical Level: The lowest level of abstraction describes how the data is actually stored. The physical level describes complex low-level data structures in detail.

Logical Level: A higher level of abstraction describes the data stored in the database and the relationships that exists among the data. It describes the entire database in a relatively simple data structure.

View Level: The highest level of abstraction describes only part of the entire database. Even though the logical level uses a simpler structure, complexity remains because of the variety of information stored in a large database.

Database system versus file system

The traditional approach to information processing has for a separate master file and its own set of personal files for each application. The major disadvantage of a file system is that files become dependent upon programs and in turn programs become dependent upon files. Few other concerns of a file-oriented approach are:

Data Redundancy: The same piece of information may be stored in two or more files. Since different programmers create the files and application programs over a long period, the various files are likely to have different formats and the programs may be written in several programming languages. Moreover, the same information may be duplicated in several files. The redundancy leads to higher storage and access costs and may lead to data inconsistency.

Difficulty in accessing data: The conventional file-processing environments do not allow the needed data to be retrieved in a convenient and efficient manner. So more responsive data retrieval systems are required for general use.

Data isolation: Since we have all the data scattered in various files and these files may be in different formats, retrieval of data in an appropriate format is difficult.

Integrity problems: The data values stored in the database must satisfy certain types of consistency constraints. The problem is compounded when constraints involve several data items from different files.

Database System Applications

Databases are widely used. These are the some applications where a database is used:

Banking: For customer information, accounts, loans mad other banking transactions.

Airlines: For reservations and schedule information. Airlines were among the first to use databases.

Universities: For student information, course registrations and grades.

Credit card companies:  For purchases/transactions on credit cards and generation of monthly statements.

Telecom Sector: For keeping records of calls made, generating monthly bills, storing network information etc.

DBMS

A database is collection of related information stored so that it is available to many users for different purposes. The management of database is done by a software package known as Database Management System.

A database management system (DBMS) is a collection of interrelated data and a set of programs to access that data.

The primary goal of a DBMS is to provide a way to store and retrieve information that is both convenient and efficient.

A database management system is a combination of hardware and software components. A database management system is the major software component of a database system e.g. ORACLE , SYBASE.

Most database management systems have the following facilities:

1)      Creation, addition, deletion and modification of data.

2)      Creation, addition, deletion and modification of files.

3)      Collective or selective retrieval of data.

4)      Sorting or indexing of data at the user’s discretion and direction.

5)      Various reports can be produces from the system. Data stored in the system can be manipulated.

6)      Mathematical functions can be performed.

7)      Maintenance of data integrity.

The DBMS interprets and processes the user’s request to retrieve information from a database.

 

Life is confusing

I don't like going to office (like many other people), I dream about having enough money so that I don't have to work for somebody else. When I go to office I feel trapped but recently I had taken leaves from office and I was sitting at home and that also felt not so good. Life is really confusing!

Producing a child is a crime in our country...

The way population is growing in our country, I think producing a child is a crime. People think if they are getting married then its mandatory to breed. At least our conversative society thinks like that if you don't have a child then its something wrong with you..Really Sick Mentallity!

I have seen people who are incapable of handling their lives are bringing another life (child) on this planet...seriously disgusting. I think you must be mentally, physically, emotionally and economically stable to produce and raise a child, otherwise it will be extremely unfortunate for the child to be born to unstable parents/family.

I think we must do something about it, the situation is alarming. The government should take such steps where NOT producing a child is rewarding. We must have such social awareness.