Page 21 - DMGT104_FINANCIAL_ACCOUNTING

Unit 1: Introduction to Accounting

and Auditor General of India have already resolved to effect the conversion. Various Notes
governments across the globe now follow the double entry accounting system. We need to
switch to double entry quickly,” he added.
He clarified his statement by stating: “I am not saying that the Government accounts are not
perfect. We need to ensure better transparency. The double entry accounting system would
help measure cost escalation, go into the details of total public expenditure and so on.”
The Vice-President of ICAI, Mr G. Ramasamy, said that the Governmental outgo towards
the Mahatma Gandhi National Rural Employment Guarantee Act Scheme totalled over
42,000 crore and there were over 6 lakh panchayats in the country preparing their
expenditure statement. “The institute is supporting the panchayats prepare the statement,”
he said.
On implementation of International Financial Reporting Standards (IFRS), he said by
July 31, all approvals would be in place. The institute has started programmes to enlighten
professionals and jumpstart the process in India, launched certification course on IFRS.
“In the first phase, we have started with Nifty companies with a turnover of over
1,000 crore.”

The institute, he said has inked MoUs with its various international counterparts to augment
bilateral relationships. “We recently interacted with professional bodies in West Asia,
discussed the need for improving networking ties between members and professionals of
the two countries. We are looking to enter into mutual recognition agreements with the
professional bodies in Canada, Singapore and New Zealand among others,” he said.
Source: http://www.thehindubusinessline.in/2010/07/05/stories/2010070551931300.htm

Self Assessment

Fill in the blanks:
11. …………………… is incomplete system of recording business transactions.
12. …………………… system of accounting is a systematic and scientific system of accounting,
so it offers a number of advantages.

1.5 Types of Accounts

The object of bookkeeping is to keep a complete record of all the transactions that place in the
business. To achieve this object, business transactions have been classified into three categories:

1. Transactions relating to persons.
2. Transactions relating to properties and assets
3. Transactions relating to incomes and expenses.

The accounts falling under the first heading are known as ‘personal Accounts’.
The accounts falling under the second heading are known as ‘Real Accounts’, the accounts falling
under the third heading are called ‘Nominal Accounts’. The accounts can also be classified as
personal and impersonal.

1.5.1 Personal Accounts

Accounts recording transactions with a person or group of persons are known as personal
accounts. These accounts are necessary, in particular, to record credit transactions.

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