What is the internel of user accounting information.

                          What is the internel of user accounting information.

Internal users of accounting

information are those persons or groups which are within the organisation.
Following are such internal users :

1. Owners. The owners provide funds for the operations of a business and
they want to know whether their funds are being properly used or not. They need
accounting information to know the profitability and the financial position of the
concern in which they have invested their funds. The financial statements prepared
from time to time from accounting records depicts them the profitability and the
financial position.

2. Management. Management is the art of getting work done through others,

the management should ensure that the subordinates are doing work properly.

Accounting information is an aid in this respect because it helps a manager in

appraising the performance of the subordinates. Actual performance of theemployees can be compared with the budgeted performance they were expected

to achieve and remedial action can be taken if the actual performance is not upto

the mark. Thus, accounting information provides "the eyes and ears to

management.

The most important functions of management are planning and

controlling. Preparation of various budgets, such as sales budget, production

budget, cash budget, capital expenditure budget etc., is an important part of

planning function and the starting point for the preparation of the budgets is the

accounting information for the previous year. Controlling is the function of seeing

that programmes laid down in various budgets are being actually achieved i.e. actual

performance ascertained from accounting is compared with the budgeted

performance, enabling the manager to exercise controlling case of weak

performance. Accounting information is also helpful to the management in fixing

reasonable selling prices. In a competitive economy, a price should be based on

cost plus a reasonable rate of return. If a firm quotes a price which exceeds cost

plus a reasonable rate of return, it probably will not get the order. On the other

hand, if the firm quotes a price which is less than its cost, it will be given the

order but will incur a loss on account of price being lower than the cost. So,

selling prices should always be fixed on the basis of accounting data to get the

reasonable margin of profit on sales.

History of the Estimate of Chandragupta II

                                      History of the Estimate of Chandragupta II

The power and glory of Gupta empire reached its peak under
the rule Chandragupta II Vikramaditya. He also contributed to the
general cultural progress of the age and patronized great literary
figures like Kalidasa. He promoted artistic activity. Because of the
high level of cultural progress that was achieved during this period,
the Gupta period is generally referred to as a golden age. A detailed
account of the cultural progress in the Gupta age is given below.

Successors of Chandragupta II
Kumaragupta was the son and successor of Chandragupta
II. His reign was marked by general peace and prosperity. He issued
a number of coins and his inscriptions are found all over the Gupta
empire. He also performed an asvamedha sacrifice. Most
importantly, he laid the foundation of the Nalanda University which
emerged an institution of international reputation. At the end of his
reign, a powerful wealthy tribe called the ‘Pushyamitras’ defeated
the Gupta army. A branch of the Huns from Central Asia made
attempts to cross the Hindukush mountains and invade India.
But it was his successor Skandagupta who really faced the
Hun invasion. He fought successfully against the Huns and saved
the empire. This war must have been a great strain on thegovernment’s resources. After Skandagupta’s death, many of his
successors like Purugupta, Narasimhagupta, Buddhagupta and
Baladitya could not save the Gupta empire from the Huns. Ultimately,
the Gupta power totally disappeared due to the Hun invasions and
later by the rise of Yasodharman in Malwa.

Gupta Administration
According inscriptions, the Gupta kings assumed titles like
Paramabhattaraka, Maharajadhiraja, Parameswara, Samrat
and Chakravartin. The king was assisted in his administration by
a council consisting of a chief minister, a Senapati or commanderin-
chief of the army and other important officials. A high official
called Sandivigraha was mentioned in the Gupta inscriptions, most
probably minister for foreign affairs.
The king maintained a close contact with the provincial
administration through a class of officials called Kumaramatyas
and Ayuktas. Provinces in the Gupta Empire were known as Bhuktis
and provincial governors as Uparikas. They were mostly chosen
from among the princes. Bhuktis were subdivided into Vishyas or
districts. They were governed by Vishyapatis. Nagara Sreshtis
were the officers looking after the city administration. The villages
in the district were under the control of Gramikas.
Fahien’s account on the Gupta administration provides useful
information. He characterises the Gupta administration as mild and
benevolent. There were no restrictions on people’s movements and
they enjoyed a large degree of personal freedom. There was no
state interference in the individual’s life. Punishments were not severe.
Imposing a fine was a common punishment. There was no spy system.
The administration was so efficient that the roads were kept safe
for travelers, and there was no fear of thieves. He mentioned that
people were generally prosperous and the crimes were negligible.
Fahien had also appreciated the efficiency of the Guptaadministration as he was able to travel without any fear throughout the Gangetic valley. On the whole the administration was more liberal
than that of the Mauryas.

Social Life
The pre-Gupta period in India witnessed a series of foreign
invasions. Indian society had given way to those foreigners who
had become permanent residents here. But during the Gupta period,
the caste system became rigid. The Brahmins occupied the top ladder
of the society. They were given enormous gifts by the rulers as well
as other wealthy people. The practice of untouchability had slowly
begun during this period. Fahien mentions that Chandalas were
segregated from the society. Their miserable condition was
elaborated by the Chinese traveler. The position of women had also become miserable during the
Gupta period. They were prohibited from studying the religious texts
like the Puranas. The subjection of women to men was thoroughly
regularized. But it was insisted that they should be protected and
generously treated by men. The practice of Swyamvara was given
up and the Manusmriti suggested the early marriage for girls.
In the sphere of religion, Brahmanism reigned supreme during
the Gupta period. It had two branches - Vaishnavism and Saivism.
Most of the Gupta kings were Vaishnavaites. They performed
Aswamedha sacrifices. The worship of images and celebration of
religious festivals with elaborate rituals made these two religions
popular. Religious literature like the Puranas was composed during
this period. The progress of Brahmanism led to the neglect of
Buddhism and Jainism. Fahien refers to the decline of Buddhism in
the Gangetic valley. But a few Buddhist scholars like Vasubandhu
were patronized by Gupta kings. In western and southern India
Jainism flourished. The great Jain Council was held at Valabhi during
this period and the Jain Canon of the Swetambras was writtenArt and Culture
The Gupta period witnessed a tremendous progress in the
field of art, science and literature and on account of this it has been
called “a golden age”. A few scholars even call this period a period
of renaissance. But it should be remembered that there was no dark
period before the Gupta rule. Therefore the cultural progress
witnessed during the Gupta period may be called the culmination of
Indian intellectual activities.

Art and Architecture
In the history of Indian art and architecture, the Gupta period
occupies an important place. Both the Nagara and Dravidian styles
of art evolved during this period. But most of the architecture of this
period had been lost due to foreign invasions
like that of Huns. Yet, the remaining temples,
sculptures and cave paintings provide an
idea about the grandeur of the Gupta art.
The temple at Deogarh near Jhansi
and the sculptures in the temple at Garhwas
near Allahabad remain important specimen
of the Gupta art. There was no influence of
Gandhara style. But the beautiful statue of
standing Buddha at Mathura reveals a little
Greek style. The Buddha statue unearthed
at Saranath was unique piece of Gupta art.
The Bhitari monolithic pillar of Skandagupta
is also remarkable. Metallurgy had also made a wonderful
progress during the Gupta period. The
craftsmen were efficient in the art of casting
metal statues and pillars. The gigantic copperstatue of Buddha, originally found at Sultanganj now kept at
Birmingham museum, was about seven and a half feet height and
nearly a ton weight. The Delhi Iron pillar of the Gupta period is still
free from rust though completely exposed to sun and rain for so
many centuries.
The paintings of the Gupta period are seen at Bagh caves
near Gwalior. The mural paintings of Ajantha mostly illustrate the
life of the Buddha as depicted in the Jataka stories. The paintings at
Sigiriya in Sri Lanka were highly influenced by the Ajantha style.
The Gupta coinage was also remarkable. Samudragupta
issued eight types of gold coins. The legends on them throw much
light on the achievements of that marvelous king. The figures inscribed
on them are illustrative of the skill and greatness of Gupta numismatic
art. Chandragupta II and his successors had also issued gold, silver
and copper coins of different varieties.

Literature
The Sanskrit language became prominent during the Gupta
period. Nagari script had evolved from the Brahmi script. Numerous
works in classical Sanskrit came to be written in the forms of epic,
lyrics, drama and prose. The best of the Sanskrit literature belonged
to the Gupta age. Himself a great poet, Samudragupta patronized a number of
scholars including Harisena. The court of Chandragupta II was
adorned by the celebrated Navratnas. Kalidasa remain the foremost
among them. His master-piece was the Sanskrit drama Shakuntala.
It is considered one among the ‘hundred best books of the world’.
He wrote two other plays - the Malavikagnimitra and
Vikramorvasiya. His two well-known epics are Raghuvamsa and
Kumarasambhava. Ritusamhara and Meghaduta are his two
lyrics.Visakadatta was another celebrated author of this period. He
was the author of two Sanskrit dramas, Mudrarakshasa and
Devichandraguptam. Sudraka was a renowned poet of this age
and his book Mrichchakatika is rich in humour and pathos.
Bharavi’s Kritarjuniya is the story of the conflict between Arjuna
and Siva. Dandin was the author of Kavyadarsa and
Dasakumaracharita. Another important work of this period was
Vasavadatta written by Subhandhu. The Panchatantra stories
were composed by Vishnusarma during the Gupta period. The
Buddhist author Amarasimha compiled a lexicon called Amarakosa.
The Puranas in their present form were composed during this
period. There are eighteen Puranas. The most important among them
are the Bhagavatha, Vishnu, Vayu and Matsya Puranas. The
Mahabharatha and the Ramayana were given final touches and
written in the present form during this period.

Science
The Gupta period witnessed a brilliant activity in the sphere
of mathematics, astronomy, astrology and medicine. Aryabhatta was
a great mathematician and astronomer. He wrote the book
Aryabhatiya in 499 A.D. It deals with mathematics and astronomy.
It explains scientifically the occurrence of solar and lunar eclipses.
Aryabhatta was the first to declare that the earth was spherical in
shape and that it rotates on its own axis. However, these views
were rejected by later astronomers like Varahamihira and Brahmagupta.

Varahamihira composed Pancha Siddhantika, the five
astronomical systems. He was also a great authority on astrology.
His work Brihadsamhita is a great work in Sanskrit literature. It
deals with a variety of subjects like astronomy, astrology, geography,
architecture, weather, animals, marriage and omens. His
Brihadjataka is considered to be a standard work on astrologyIn the field of medicine, Vagbhata lived during this period. He
was the last of the great medical trio of ancient India. The other two
scholars Charaka and Susruta lived before the Gupta age. Vagbhata
was the author Ashtangasamgraha (Summary of the eight branches
of medicine.
So this is all about this thanks for reading.

What is the BRANCHES OF ACCOUNTING

                                What is the BRANCHES OF ACCOUNTING

To meet the ever increasing demands made on accounting by differentinterested parties such as owners, management, creditors, taxation authorities etc.

the various branches have come into existence. There are as follows

Financial accounting.The object of financial accounting is to ascertain
the results (profit or loss) of business operations during the particular period and
to state the financial position (balance sheet) as on a date at the end of the period.

Cost accounting.The object of cost accounting is to find out the cost of
goods produced or services rendered by a business. It also helps the business in
controlling the costs by indicating avoidable losses and wastes.

Management accounting.Management accounting. The object of management accounting is to supply
relevant information at appropriate time to the management to enable it to take
decisions and effect control.

In this lesson we are concerned only with financial accounting.
Financial accounting is the oldest and other branches have developed from it. The
objects of financial accounting, as stated above, can be achieved only by recording
the financial transactions in a systematic manner according to a set of principles.
The art of recording financial transactions and events in a systematic manner in
the books of account is known as book-keeping. However, mere record of
transactions is not enough. The recorded information has to be classified, analysed
and presented in a manner in which business results and financial position can be
ascertained.

What is the ROLE OF ACCOUNTING

                                    What is the ROLE OF ACCOUNTING

Accounting plays an important and useful role by developing the
information for providing answers to many questions faced by the users of
accounting information

(1) How good or bad is the financial condition of the business?

(2) Has the business activity resulted in a profit or loss ?

(3) How well the different departments of the business have performed in the

past?

(4) Which activities or products have been profitable?

(5) Out of the existing products which should be discontinued and the production

of which commodities should be increased?

(6) Whether to buy a component from the market or to manufacture the same?

(7) Whether the cost of production is reasonable or excessive?

(8) What has been the impact of existing policies on the profitability of the

business?

(9) What are the likely results of new policy decisions on future earning

capacity of the business?

(10) In the light of past performance of the business how should it plan for future

to ensure desired results?

Above mentioned are few examples of the types of questions faced

by the users of accounting information. These can be satisfactorily answered with

the help of suitable and necessary information provided by accounting.

Besides, accounting is also useful in the following respects :

(a) Increased volume of business results in large number of transactions and

no businessman can remember everything. Accounting records obviate the

necessity of remembering various transactions.

(b) Accounting records, prepared on the basis of uniform practices, will enable

a business to compare results of one period with another period.

(c) Taxation authorities (both income tax and sales tax) are likely to believe

the facts contained in the set of accounting books if maintained according

to generally accepted accounting principles.

(d) Accounting records, backed up by proper and authenticated vouchers, are

good evidence in a court of law.

(e) If a business is to be sold as a going concern, then the values of different

assets as shown by the balance sheet helps in bargaining proper price for

the business.

LIMITATIONS OF FINANCIAL ACCOUNTING

                            LIMITATIONS OF FINANCIAL ACCOUNTING

Advantages of accounting discussed in this lesson do not suggest that
accounting is free from limitations. Any one who is using accounting information
should be well aware of its limitations also. Following are the limitations :

(a) Financial accounting permits alternative treatments

No doubt accounting is based on concepts and it follows "generally

accepted accounting principles", but there exist more than one principle for the

treatment of any one item. This permits alternative treatments within the

framework of generally accepted accounting principles. For example, the closing

stock of a business may be valued by any one of the following methods : FIFO

(First-in-first-out); LIFO (Last-in-first-out); Average price, Standard price etc.,

Application of different methods will give different results but the methods are

generally accepted. So, the results are not comparable.

(b) Financial accounting is Influenced by personal judgementsInspite of the fact that convention of objectivity is respected in

accounting but to record certain events estimates have to be made which requires

personal judgement. It is very difficult to expect accuracy in future estimates and

objectivity suffers. For example, in order to determine the amount of depreciation

to be charged every year for the use of fixed asset it is required to estimate (a)

future life of the asset, and (b) scrap value of the asset. Thus in accounting we do

not determine but measure the income. In other words, the income disclosed by

accounting is not authoritative but approximation.

(c) Financial accounting ignores important non-monetary informationFinancial accounting takes into consideration only those transactions

and events which can be described in money. The transactions and events, however

important, if non-monetary in nature are ignored i.e., not recorded. For example,

extent of competition faced by the business, technical innovations possessed by

the business, loyalty and efficiency of the employees etc. are the important matters

in which management of the business is highly interested but accounting is not

tailored to take note of such matters. Thus any user of financial information is,

naturally, deprived of vital information which is of non-monetary character.

(d) Financial accounting does not provide timely informationFinancial accounting is designed to supply information in the form

of statements (Balance Sheet and Profit and Loss Account) for a period, normally,

one year. So the information is, at best, of historical interest and only postmortem

analysis of the past can be conducted. The business requires timely information

at frequent intervals to enable the management to plan and take corrective action.

For example, if a business has budgeted that during the current year sales should

be Rs. 12,00,000 then it requires information – whether the sales in the first

month of the year amounted to Rs. 1,00,000 or less or more? Traditionally,financial accounting is not supposed to supply information at shorter intervals

than one year.

(e) Financial accounting does not provide detailed analysis

The information supplied by the financial accounting is in reality

aggregate of the financial transactions during the course of the year. Of course, it

enables to study the overall results of the business activity during the accounting

period. For proper running of the business the information is required regarding

the cost, revenue and profit of each product but financial accounting does not

provide such detailed information product-wise. For example, if a business has

earned a total profit of, say, Rs. 5,00,000 during the accounting year and it sells

three products namely petrol, diesel and mobile oil and wants to know profit earned

by each product. Financial accounting is not likely to help him.

(f) Financial accounting does not disclose the present value of the business

In financial accounting the position of the business as on a particular

date is shown by a statement known as balance sheet. In balance sheet the assets

are shown on the basis of going concern concept. Thus it is presumed that business

has relatively longer life and will continue to exist indefinitely, hence the asset

values are going concern values. The realised value of each asset if sold today

can't be known by studying the balance sheet.

What is the SYSTEMS OF ACCOUNTING

                                     What is the SYSTEMS OF ACCOUNTING
The following are the main systems of recording business
transactions:

(a) Cash System. Under this system, actual cash receipts and actual cash

payments are recorded. Credit transactions are not recorded at all until the cash

in actually received or paid. The Receipts and Payments Account prepared in case

of non-trading concerns such as a charitable institution, a club, a school, a college,

etc. and professional men like a lawyer, a doctor, a chartered accountant etc. can

be cited as the best example of cash system. This system does not make a complete

record of financial transactions of a trading period as it does not record

outstanding transactions like outstanding expenses and outstanding incomes. The

system being based on a record of actual cash receipts and actual cash payments

will not be able to disclose correct profit or loss for a particular period and will

not exhibit true financial position of the business on a particular day.

(b) Mercantile (Accrual) system. Under this system all transactions relating to

a period are recorded in the books of account i.e., in addition to actual receipts

and payments of cash income receivable and expenses payable are also recorded.

This system gives a complete picture of the financial transactions of the business

as it makes a record of all transactions relating to a period. The system being

based on a complete record of the financial transactions discloses correct profit

or loss for a particular period and also exhibits true financial position of the

business on a particular day.

SUMMARY=  Accounting can be understood as the language of financial decisions.

It is an ongoing process of performance measurement and reporting the results to

decision makers. The discipline of accounting can be traced back to very early

times of human civilization. With the advancement of industry, modern day

accounting has become formalized and structured. A person who maintains

accounts is known as the account. The information generated by accounting is

used by various interested groups like, individuals, managers, investors, creditors,

government, regulatory agencies, taxation authorities, employee, trade unions,

consumers and general public. Depending upon purpose and method, accountingcan be broadly three types; financial accounting, cost accounting and management

accounting. Financial accounting is primarily concerned with the preparation of

financial statements. It is used on certain well-defined concepts and conventions

and helps in framing broad financial policies. However, it suffers from certain

limitations.

MEANING AND FEATURES OF ACCOUNTING PRINCIPLES

                 MEANING AND FEATURES OF ACCOUNTING PRINCIPLES

For searching the goals of the accounting profession and for expanding
knowledge in this field, a logical and useful set of principles and procedures
are to be developed. We know that while driving our vehicles, follow
a standard traffic rules. Without adhering traffic rules, there would be
much chaos on the road. Similarly, some principles apply to accounting.
Thus, the accounting profession cannot reach its goals in the absence of a
set rules to guide the efforts of accountants and auditors. The rules and
principles of accounting are commonly referred to as the conceptual framework
of accounting. Accounting principles have been defined by the Canadian Institute of
Chartered Accountants as “The body of doctrines commonly associated with
the theory and procedure of accounting serving as an explanation of current
practices and as a guide for the selection of conventions or procedures
where alternatives exists. Rules governing the formation of accounting axioms
and the principles derived from them have arisen from common experience,
historical precedent statements by individuals and professional bodies
and regulations of Governmental agencies”. According to Hendriksen
(1997), Accounting theory may be defined as logical reasoning in the form
of a set of broad principles that (i) provide a general frame of reference by
which accounting practice can be evaluated, and (ii) guide the development
of new practices and procedures. Theory may also be used to explain existing
practices to obtain a better understanding of them. But the most important
goal of accounting theory should be to provide a coherent set of logical principles that form the general frame of reference for the evaluation
and development of sound accounting practices.

The American Institute of Certified Public Accountants (AICPA) has
advocated the use of the word” Principle” in the sense in which it means
“rule of action”. It discuses the generally accepted accounting principles
as follows :

Financial statements are the product of a process in which a large
volume of data about aspects of the economic activities of an enterprise
are accumulated, analysed and reported. This process should be carried out
in conformity with generally accepted accounting principles. These principles
represent the most current consensus about how accounting information
should be recorded, what information should be disclosed, how it
should be disclosed, and which financial statement should be prepared. Thus,
generally accepted principles and standards provide a common financial
language to enable informed users to read and interpret financial statements.
Generally accepted accounting principles encompass the conventions,
rules and procedures necessary to define accepted accounting practice at a
particular time....... generally accepted accounting principles include not
only broad guidelines of general application, but also detailed practices
and procedures (Source : AICPA Statement of the Accounting Principles
Board No. 4, “Basic Concepts and Accounting Principles underlying Financial
Statements of Business Enterprises “, October, 1970, pp 54-55)
According to ‘Dictionary of Accounting’ prepared by Prof. P.N. Abroal,
“Accounting standards refer to accounting rules and procedures which are relating
to measurement, valuation and disclosure prepared by such bodies as the
Accounting Standards Committee (ASC) of a particular country”. Thus, we may
define Accounting Principles as those rules of action or conduct which are adopted by the accountants universally while recording accounting transactions.
Accounting principles are man-made. They are accepted because they are believed
to be useful. The general acceptance of an accounting principle usually
depends on how well it meets the following three basic norms :

a) Usefulness b) Objectiveness, and c) Feasibility

A principle is useful to the extent that it results in meaningful or
relevant information to those who need to know about a certain business. In
other words, an accounting rule, which does not increase the utility of the
records to its readers, is not accepted as an accounting principles. A principle
is objective to the extent that the information is not influenced by
the personal bias or Judgement of those who furnished it. Accounting principle
is said to be objective when it is solidly supported by facts. Objectivity
means reliability which also means that the accuracy of the information
reported can be verified. Accounting principles should be such as are practicable.
A principle is feasible when it can be implemented without undue
difficulty or cost. Although these three features are generally found in accounting
principles, an optimum balance of three is struck in some cases
for adopting a particular rule as an accounting principle. For example, the
principle of making the provision for doubtful debts is found on feasibility
and usefulness though it is less objective. This is because of the fact that
such provisions are not supported by any outside evidence.