itft-GAAP

Financial management

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• Financial Management means the efficient and effective management of money (funds) in such a manner as to accomplish the objectives of the organization.

Introduction

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• Generally Accepted Accounting Principles define the accounting procedures, and understanding them is essential to producing accurate and meaningful records.

Generally Accepted Accounting Principles (GAAP)

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• It makes comparison easy.

• Need for standardization

• For easy research and understanding

Why Generally Accepted Accounting Principles?

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• Under the business entity concept, the activities of a business are recorded separately from the activities of the stakeholders

GAAP1: The Business Entity Principle:

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• The Cost Principle states that anything a business purchases is recorded as the amount paid, regardless of its real or perceived value.

GAAP2: The Cost Principle:

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• The Objectivity Principle states that accounting operates on objective evidence.

• All transactions must have proof that they were carried out

GAAP3: The Objectivity Principle:

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• economic data be recorded in monetary terms that are rupees or any other currency as applicable.

GAAP4: The Unit of Measure Principle:

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• The 'going concern' concept directs accountants to prepare financial statements on the assumption that the business is not about to go broke or be liquidated.

GAAP5: The Going-Concern Principle:

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• Accounting System1: Single Entry Accounting System:

• Accounting System2: Double Entry Accounting System:

Accounting Systems

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• The first – single entry – is simplistic, recording each transaction only once, either as revenue or as an expense.

Accounting Systems: Single Entry

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• your accounting data is recorded at two places for a meaningful way for use by the stakeholders.

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Double Entry Accounting System

• cash accounting method, revenue is recognized and recorded when the cash is received and expenses are recognized and recorded when the cash payments are made.

Accounting Methods: Cash

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• Under the accrual method of accounting, revenue and expenses are recognized and recorded, when the product or service is actually sold to customers or received from suppliers, generally before they're paid for.

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Accrual Basis

• accounting process, is a series of

procedures in the collection,

processing, and communication of

financial information.

Accounting Cycle

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1. Identifying and Analyzing Business Transactions

2. Recording in the Journals

3. Posting to the Ledger

4. Unadjusted Trial Balance

5. Adjusting Entries

Accounting Cycle Steps:

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6. Adjusted Trial Balance

7. Financial Statements

8. Closing Entries

9. Post-Closing Trial Balance

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Q1) what do you understand by financial management?

Q2) what is GAAP? Explain in detail?

Q3) what are the different methods of accounting?

Q4) discuss the accounting cycle in detail.

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Questions?

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THANK YOU