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.