Zero To Mastery In Accounting: No.1 Accounting Book To Become Zero To Hero In Finance And Accounting, This Amazing Book Covers A-Z Fundamentals Of Accounting, 2022 Latest Edition

730 Pages·2022·26.919 MB·English

by  HECTOR ROBINETT, Ayaz Uddin (editor)

Hector Robinett
• Shadab Saifi (Illustrator) • Ayaz Uddin (Editor)
AN ISO 9001:2008 CERTIFIED COMPANY
Vayu Education of India
2/25, Ansari Road, Darya Ganj, New Delhi-110 002
Copyright © Vayu Education of India
First Edition: 2022
All rights reserved. No part of this publication may be reproduced, stored in a retrieval
system, or transmitted, in any form or by any means, electronic, mechanical, photocopying,
g recording or otherwise, without the prior permission of the copyright owners.
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A DISCLAIMER
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y i Errors, if any, are purely unintentional and readers are requested to communicate such
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st errors to the publisher to avoid discrepancies in future.
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Published by:
AN ISO 9001:2008 CERTIFIED COMPANY
VAYU EDUCATION OF INDIA
2/25, ANSARI ROAD, DARYA GANJ, NEW DELHI-110 002
PH.: 011-41564440, MOB. [phone]
E-MAIL: [email protected] • WEB: www.veiindia.com
ccounting is one of the most important tools for modern managers providing
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quantitative information, primarily of financial nature, necessary for making
vital economic decision.
The book adopts a fresh and novel approach to the study of Accounting, keeping
in view the specific requirements of the candidates appearing for MBA
examination from different universities.
It strictly follows a student friendly approach and has been written purely in
a “teach yourself” style.
Keeping the above objective in mind, most of the universities all over the country
have incorporated a paper in Accounting in the course curriculum of their MBA
progammes. Some of the uniques features of the book are.
• Whole course requirements of the students appearing in MBA
examination.
• Question wise and assignment material division of the chapters.
• Written in simple and precise style.
• Many Examples are given in all chapters.
• Essay type, objective type questions for review, discussion and practice.
• Examination papers are given at the end.
• Practical problems with short answers for practice are given to
develop a sense of confidence among the readers. s
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• With the above mentioned unique features along with comprehensive nt
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treatment of the subject in a classroom lecture style, it is earnest. C
Hoped that the book will be found useful by both students and teachers.
While every endeavour has been made to make this book complete and
comprehensive, the scope for further improvement is always there as improvement
is an ongoing process. Therefore, we request the readers to send in their suggestions
to enable us to make improvements in this book. These would be thankfully
received and if found useful, would be incorporated and acknowledged in the
subsequent editions.
The book is the end result of the faith and conviction on the part of many
persons.
With best wishes.
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 Need for Accounting.........................................................................................................4
 Definitions of Accounting................................................................................................4
 Functions of Accounting..................................................................................................5
 Book-keeping, Accountancy and Accounting................................................................6
 Is Accounting a Science or an Art?..................................................................................8
 Persons Interested in Accounting Information..............................................................8
 Types or Branches of Accounting ...................................................................................9
 Difference between Management Accounting and Financial Accounting...............11
 Accounting Concepts Assumptions.............................................................................12
 Accounting Conventions ...............................................................................................16
 Principles of Accounting................................................................................................19
 Importance, Limitation and Scope of Accounting.......................................................21
 Concept of Double Entry System...................................................................................23
 Accounts in Double Entry System.................................................................................25
 Basic Accounting Terms.................................................................................................27
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 List of Accounting Standards Issued by ICAI..............................................................32 nt
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Assignment Material................................................................................................................... o
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 Accounting Cycle............................................................................................................37
 Journal..............................................................................................................................38
 Accounting Elements......................................................................................................40
 Goods Account................................................................................................................41
 Types of Discount...........................................................................................................46
 Compound Journal Entries............................................................................................54
 Opening Entry.................................................................................................................55
 Ledger...............................................................................................................................58
 Rules of Posting...............................................................................................................59
 Posting of Compound Journal Entries..........................................................................60
 Difference between Journal and Ledger........................................................................64
 Sub-division of Journal: Subsidiary Books...................................................................70
 Cash Book........................................................................................................................70
 Pettey Cash Book.............................................................................................................81
 Purchase Book.................................................................................................................84
 Sales Book........................................................................................................................84
 Purchases Returns Book.................................................................................................84
 Sales Returns Book..........................................................................................................84
 Sales or Return Book.......................................................................................................87
 Consignment Outward Book.........................................................................................87
 Daily Cash Sales Book....................................................................................................88
 Credit Collection Day Book............................................................................................88
 Bills Receivable Book......................................................................................................88
 Bills Payable Book...........................................................................................................89
 Trial Balance....................................................................................................................91
Assignment Material.................................................................................................................111
 Concept of Depreciation...............................................................................................124
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n  Characteristics of Depreciation...................................................................................124
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Ac  Objects or Need for Providing Depreciation ..............................................................125
in  Causes of Depreciation.................................................................................................126
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er  Methods of Providing or Allocating Depreciation ....................................................127
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Ma  Fixed Instalment Method or Straight-line Method ....................................................127
to  Diminishing Balance Method or Written Down Value Method...............................136
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er  Difference between fixed Instalment Method and Diminishing Balance Method....137
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 Change the Method of Depreciation...........................................................................144
 Depreciation Fund Method..........................................................................................148
 Use of this Method........................................................................................................148
 Sum of Years Digits (SYD) Method .............................................................................155
 Deflation Method..........................................................................................................156
 Machine hour rate method...........................................................................................157
 Inventory System of Depreciation ...............................................................................157
 Annuity Method............................................................................................................158
 Insurance Policy Method .............................................................................................159
 Provisions......................................................................................................................159
 Reserves .........................................................................................................................163
 Accounting Standard (AS)-6 on Depreciation Accounting......................................165
Assignment Material.................................................................................................................
 Final Accounts ..............................................................................................................175
 Trading Account...........................................................................................................176
 Profit and Loss Account...............................................................................................179
 Balance Sheet.................................................................................................................183
 Provision for Discount on Debtors..............................................................................194
 Reserve for Discount on Creditors...............................................................................198
 Manager’s Commission................................................................................................199
 Treatment in Final Accounts .......................................................................................200
 Manufacturing Account...............................................................................................211
 Summary of Adjustments.............................................................................................215
Assignment Material.................................................................................................................
 Accounting Ratios ........................................................................................................236
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 Ratio Analysis...............................................................................................................236 e
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 Limitations of Accounting Ratios ...............................................................................237 Co
 Classification of RatioS ................................................................................................239
 Liquidity Ratio ..............................................................................................................240
 Leverage or Capital Structure Ratios ..........................................................................249
 Turnover Ratios or Activity Ratios..............................................................................257
 Profitability Ratio..........................................................................................................266
 Profitability Ratios Based on Investment....................................................................276
 Simple Solved Problems...............................................................................................292
Assignment Material.................................................................................................................
 Meaning of Financial Statement..................................................................................334
 Funds Flow Statement..................................................................................................334
 Objectives, Uses and Importance of Funds Flow Statement.....................................335
 Limitations of Funds Flow Statement.........................................................................337
 Calculation of Funds from Operation.........................................................................338
Assignment Material.................................................................................................................
 Cash Flow Statement (CFS)..........................................................................................392
 Objectives.......................................................................................................................392
 Utility, Importance and Advantages...........................................................................393
 Preparation of Cash Flow Statement [As per As-3 (Revised)]..................................393
 Explanation of Cash and Cash Equivalents..............................................................394
 Classification of Cash Flows .......................................................................................394
 Cash Flows from Operating Activities........................................................................394
 Cash Flows from Investing Activities.........................................................................410
 Cash Flows from Financing Activities........................................................................413
 Treatment of Some Special Items.................................................................................416
 Difference between Funds-flow Statement and Cash-Flow Statement....................419
Assignment Material.................................................................................................................
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n  Management Accounting.............................................................................................450
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y  Scope ..............................................................................................................................451
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 Principles.......................................................................................................................455
Assignment Material.................................................................................................................
 Cost Accounting............................................................................................................461
 Methods of Costing.......................................................................................................468