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CA CPT Accounts Chapter 1 Accounting Introduction

CA CPT chapter “Accounting: An Introduction” deals with the meaning, scope and limitations of accounting; basic accounting concepts and principles. It includes a brief introduction to accounting standards.

CA CPT Exam 

With Sheela Warrier.Duration:3 hrs 09min 

Accounting : An IntroductionDuration (min:sec)
Meaning & Scope of Accounting 
Introduction02:26
Concepts03:18
Definitions09:08
Transaction vs. Event02:16
Why do we do Accounting04:34
Bookkeeping vs. Accounting03:12
Users of Accounting Information04:03
Subfields of Accounting04:36
Relationship with other discipline03:37
Limitation of Accounting03:19
Quiz06:14
Accounting Concepts, Principles & Conventions 
GAAP03:45
What is my profit03:42
Business Entity Concept03:20
Money Measurement Concept01:56
Going Concern Concept03:11
Periodicity concept02:32
Accrual concept07:33
Matching Concept04:13
Cost Concept02:38
Realisation Concept01:47
Conservatism Concept03:08
Dual Aspect10:48
Consistency Concept02:53
Materiality Concept04:25
Fundamental Accounting Assumptions01:58
Summary07:50
Quality of FS05:02
Quiz19:55
Accounting Standards 
Quiz08:27
Accounting Policies05:30
Accounting Policies 
Accounting Policy04:21
Quiz04:39
Measurement Discipline 
Measurement Principle10:08
Accounting Estimates01:35
Additional Questions13:20
Quiz03:50
Total3:09:09

Notes 

Few of things covered by us :

Introduction to Accounting

What is Accounting
Objectives of Accounting
Accounting concepts,principles & conventions
Accounting Standards
Accounting Policies
Measurement Principles
Relationship with other discipline
Limitations of accounting

Recording
Classifying
Summarizing
Significant manner
Monetary transactions and events
Interpreting the results
Communicating financial information
To take informed decisions

Objectives

1. Systematic recording of financial transactions
2. Ascertain the results of business operations
3. Ascertain the financial position
4. Communicate information
5. Ascertain solvency position

Users of Financial Statements

Owners
Mangement
Employees
Lenders
Suppliers
Customers
Govt agencies
Public

Subfields of Accounting

Financial Accounting
Management Accounting
Cost Accounting
Social Responsibility Accounting
Human Resource Accounting
Inflation Accounting

Relationship with other disciplines

Economics
Statistics
Law
Mathematics
Management

Business Entity Concept
Money Measurement Concept
Going Concern Concept
Periodicity Concept
Matching Concept
Accrual Concept
Cost Concept
Realisation Concept
Conservatism Concept
Dual Aspect
Consistency Concept
Materiality Concept

4 Main Qualitative Characteristics of FS

Understandability
Reliability
Relevance
Comparability

Other Qualitative Characteristics of FS

Faithful representation
Substance over form
Neutrality
Prudence
Completeness

Need for Accounting Standards

Many users of Financial Statements
Transparency , Reliability and Adequacy
Consistency and Comparability
Accounting Standards - Framework
Mandatory for Companies

What are Accounting Standards

Written policy documents
Issued by expert accounting body or government
To provide a set of standard accounting policies
Standard valuations norms
Lay down disclosure requirements
Thus ensure comparability

Accounting Standards
Deal with:
Recognition of transactions and events
Measurement
Presentation
Disclosure
Cannot override the law of the land

Accounting Standards in India

Framed by ASB
Under ICAI
32 Standards
AS 8 - withdrawn
AS 26

Accounting Policies “we decide”


Choice of a Policy would depend on 3 characteristics:
Prudence
Substance over Form
Materiality

Reasons for change on Accounting Policies

Policies to be applied consistently…..
Maybe changed only under the following circumstances:
Required by Statute
Compliance with Accounting Standards
More appropriate presentation of FS

Measurement Bases

4 Accepted Valuation Principles:
Historical cost - Actual cost
Current cost - Cost if acquired at present
Realisable value - The price if we sell the asset at present
Present value - Present value of future cash outflows


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