Accounting. Easy Guide for FY 21-22 & Onwards
Accounting as we all know is a process of recording of financial transaction of a business. The Accounting process will include recording, summarizing, analyzing and reporting to various tax authorities or any other statue body. The Financial Statements i.e. Balance Sheet at the year end and Trading & Profit or Loss Account/Income or Expenditure Accounts pertaining to a year are the outcome of Accounting.
Four types of Accounting are:
- Financial Accounting
- Tax Accounting
- Cost Accounting
- Managerial Accounting
Key Principles of Accounting
- The Accrual Principle – Accrual Principle in very simple words means “Income” should be recognized as and when they are earned regardless of actually received or not and “expense” should be recognized as and when they are incurred regardless of actually paid or not. Accrual method of accounting is the most common method in use.
- The Matching Principle – Matching Principle in very simple words mean that revenues and expense should be aligned for a accounting period. It means all the expenses incurred to earn revenue of a particular period should be recognized in that period only.
- The Conservatism Principle – The Conservatism Principle requires businesses to anticipate any cost or liability to business such as from legal case. However, anticipated revenue or income should only be recognized if it is probable that revenue will flow to business.
- The Historic Cost Principle – All the Assets of a business should be recognized at historic cost i.e. the cost actually incurred. In cases where asset value is appreciated, the same should be recorded if accounting standards permits so. Also, in cases where asset value is diminished or impaired, the same should be recorded if accounting standards permits so.
- The Principle of substance over form – Transactions should be recognized in substance rather than what actually its legal form is.
Accounting Softwares
Commonly used software’s in India are:
- Tally – For detail article refer>> https://www.taxledgeradvisor.com/accounting-on-tally/
- Tally ERP 9 – For detail article refer>> https://www.taxledgeradvisor.com/accounting-on-tally-erp-9/
- MARG – For detail article refer>> https://www.taxledgeradvisor.com/accounting-on-marg/
- Quickbooks – For detail article refer>> https://www.taxledgeradvisor.com/accounting-on-quickbooks/
- Zoho
- Oracle/SAP
Which type of business is required to do Accounting
Each and every type business is required to do accounting. Regardless of size, nature of business, type of business, every business in order to evaluate performance, decision making, cost analysis or statue requirement are required to do accounting.
- Accounting of LLP/Company – For detail article refer>> https://www.taxledgeradvisor.com/accounting-of-llp-company/
- Accounting of Firm/Partnership – For detail article refer>> https://www.taxledgeradvisor.com/accounting-of-partnership/
- Accounting of Proprietorship – For detail article refer>> https://www.taxledgeradvisor.com/accounting-of-proprietorship/
- Accounting of Trust/NGO – For detail article refer>> https://www.taxledgeradvisor.com/accounting-of-trust-ngo/
Need Expert Assistance for Accounting
For expert assistance on Accounting in Udaipur and Rajasthan, reach our professionals at Tax Ledger Advisor.