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Introduction to Accountancy

Basic Accountancy The language of business is known as accountancy. It is very ancient practice and custom adopted by merchant to know their business status. Accounts of incomplete records, single entry system, were adapted by the ancient merchants to their business. It is a unscientific method of accountancy. Luca Pacioli gave a rise to double entry system, the scientific method and art of accountancy. As the language of business, it reveals the financial position and result of records of regular business transactions, whether profit or loss. The Art of Bookkeeping Accountancy is an art of recording, classifying, summerising, the business transactions and analyzing, interpreting the results of business transactions. Accounts are recorded in the books. It is an art of keeping the books in systematic manner. It is an art which explains how to record, classify the transactions in the books of accounts. Recording, classifying is the basic operation of the art of accountancy. Journals, Subsidiary books, ledgers are used as books in the art of accountancy. The Art of revealing the result Accountancy describes the result and financial position of the business. The art of grouping all business transactions of an accounting period is achieved through summerising the transactions. By summerising, the results of business transaction whether profit or loss or financial position whether strong or week is revealed. Profit and Loss A/c, Balance Sheet, Fund Flow Statement, etc are books used in the art of accountancy. The Art of interpretation Accountancy explains the results of all business transactions to the end users by way of financial reports, statements, etc. Analyzing, interpreting, is the art of accountancy to explain the results of all business transaction. Fund Flow statements, Ratio analysis are the tools for interpretation. Modern Accountancy Accountancy is developing every day. Modern approach of accountancy is one that is a branch of scientific approach. Accountancy has many branches today. Social Responsibility Accounting, Human Resources Accounting are some branches of modern accountancy. Various types of new accounts are included in accountancy. Accounting Standards, GAAP, etc., are adopted by accountancy to prepare accounts more accurately. Current Accountancy has adopted vertical types of balance sheets to the computer based accountancy for electricity companies, banking sectors, etc..These are compromise made by modern accountancy to confess with current techniques.

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