GAAP

• A set of concepts, conventions, rules,

and procedures
• Accepted by accountants over a
period of time
• Guides in the preparation and
presentation of financial reports
 ACCOUNTING STANDARDS
• Specifies acceptable accounting methods
• Uniformity
• Harmonization

• ASB of the ICAI – AS Vs. Ind AS

• IASB - IFRS
• FASB
 ACCOUNTING EQUATION

• Economic Resources =
Sources of Resources or Claims.

• Assets = Liabilities

• Equity + Liabilities = Assets

 Analysing the Effects of
Business Transactions.
Investment by Owner
Receipt of Loan
Purchase of Office Equipment
EQUITY & LIABILITIES ASSETS
• Creditors Rs.20,000 • Cash Rs.12,000
• Suresh, Equity 50,000 • Equipments Rs.58,000
-----------
70,000 ----------
----------- 70,000
----------
 BALANCE SHEET
as at 31st March, 2011

LIABILITIES ASSETS
• Share Capital • Fixed Assets
• Reserve and Surplus • Investments
• Secured Loans • Current Assets And
• Unsecured Loans Loans & Advances
• Current Liabilities and • Miscellaneous
Provisions Expenditures
• Profit & Loss A/C
 BALANCE SHEET
as at 31st March, 2011
SOURCES OF FUNDS
• Shareholders‟ Fund
• Loan Funds

APPLICATION OF FUNDS
• Fixed Assets
• Investments
• Current Assets, Loans & Advances
Less Current Liabilities & Provision
• Miscellaneous Expenditure
 BALANCE SHEET
as at 31st March, 2012
EQUITY AND LIABILITIES Note No. Current Previous
• Shareholders‟ Fund
• Share Application Money pending allotment
• Non-current Liabilities
• Current Liabilities

ASSETS
• Non-current Assets
– Fixed Assets
– Non-current Investments
– Deferred Tax Assets (net)
– Long term loans and advances
– Other non-current assets
• Current Assets
– Current Investments
– Inventories
– Trade receivables
– Cash and cash equivalents
– Short-term loans and advances
– Other current assets
 PROFIT & LOSS A/C
for the year ending 31st March 2011.
I. Income
II. Expenditure
III. Profit before Tax
IV. Provision for Taxation
V. Profit after Tax
VI. Balance b/f from last year
VII. Profit available for appropriation
Appropriations: Dividends, Reserves
VIII. Balance transferred to Balance Sheet
 PROFIT & LOSS STATEMENT
for the year ending 31st March 2012
I. Revenue from operations
II. Other income
III. Total Revenue
IV. Expenses …………….
V. Profit before exceptional and extraordinary items and tax
VI. Exceptional Items
VII. Profit before extraordinary items and tax
VIII. Extraordinary items
IX. Profit before tax
X. Tax expense: Current tax, Deferred tax
XI. Profit/(loss) for the period from continuing operations
XII. Profit/(loss) from discontinuing operations
XIII. Tax expense of discontinuing operations
XIV. Profit/(loss) from discontinuing operations (after tax)
XV. Profit/(loss) for the period
XVI. Earnings per equity share: Basic, Diluted
 CASH FLOW STATEMENT
for the period ending on March 31, 2012
• Cash flow from operating activities
• Cash flow from investing activities
• Cash flow from financing activities
• Net cash increase (decrease) in cash & CE
• Cash & CE at beginning of the period
• Cash & CE at the end of the period.