Decision making Decision making is a process of selecting the best  among the different alternative. It is the act of making a choice. There are so many alternative found in the Organization and departments. Decision making defined as the selection of choice of one best alternatives. Before making decisions all alternative should be evaluated from which advantages and disadvantages are known. It helps to make the best decision. It is also one of the important function of Management. Without other management functions such as planning, organizing, directing, Controlling, staffing can't be conducted because in this managerial function decision is very important. Decision making is an essential skill for Operational team leaders. Applying a systematic method to solve problems is critical to team performance and the safety of operation. Definitions Stephen P. Robbins - "Decision making is define as the selection of a preferred course of action from two or more alternative." C...

Advantages of working capital Working capital is the life blood and nerve centre of a business. Just as circulation of blood is essential in the human body for maintaining life, working capital is very essential to maintain the smooth running of a business. No business can run successfully without an adequate amount of working capital. The main advantages of adequate working capital are as follows:- 1. Solvency of the business : Adequate working capital helps in maintaining solvency of the business by providing uninterrupted flow of production. 2. Goodwill : Sufficient working capital enables a business concern to make prompt payment and hence help in creating and maintaining Goodwill. 3. Easy loans : A concerns having adequate working capital, high solvency and good credit standing can arrange loans from banks and others on easy and favorable terms. 4. Cash discount : Adequate working capital also enable a concern to avail cash discounts on the purchase and hence it reduces costs. 5. ...

Factors determining the working capital requirements The working capital requirements of a concern depend upon a large number of factors such as nature and size of business, the character of their operations, the length of production cycles, the rate of stock turnovers and the state of economic situation. It is not possible to rank them because all such factors are of different importance and the influence of individual factors changes for a firm over time. However the following are the important factors generally influence the working capital requirements: 1. Nature or character of business : The working capital requirements of a firm basically depend upon the nature of it's business. Public utility undertakings like Electricity, water supply and railways need very limited working capital because they offer cash sales only and supply services, not products, and as such no funds are tied up in inventories and receivables. On the other hand trading and financial firm's require l...

Objectives of Management Accounting The primary objective of management accounting is to enable management to maximize profit or minimize losses. This is done through the presentation of statements in such a way that management is able to take correct policy decision. Followings are the important Objectives of management accounting : (1) Planning and policy formulation : The object of Management accounting is to supply necessary data to the management for formulating plans. Planning is essentially related to taking decision for future. It also includes forecasting, setting goals and deciding alternative course of action. Management Accountant prepared statements of past results and gives his preference for a particular alternative. The figures supplied and opinion given by the management accountant help management in planning and policy formulation. (2) Helpful in controlling performance : Management accounting devices like standard costing and budgetary control are helpful in controll...

Scope of management accounting Management accounting is anew approach to Accounting. It provides techniques for the interpretation of Accounting data. It also helps in Developing realistic approach  to future course of action. The main Aim is to helps management in it's functions of planning, directing and Controlling. Management accounting is related to a number of fields. At the seven International Conference of accountant held in Amsterdam in 1957, the main emphasis was on cost accounting, Budgetary control, material control, interim Reporting, Determination of the most efficient and economical accounting system, Special cost and Economic studies and  assessing management in interpreting financial data. The following facts of management accounting are if a great significance and firm the scope of this subject. (1) Financial Accounting : Financial Accounting deals with the historical data. The record facts about an organization is useful for planning the future course of act...

Distinction between partnership and company These are the following differences between  partnership and company:- (1) Regulating Act : A Company is regulated by companies Act, 2013, while a partnership firm is governed by the Indian Partnership Act, 1932. (2) Registration : A company can not come into existence unless it is registered, whereas for a partnership firm registration is not compulsory.  (3) Number : The minimum number in a public company is seven and in case of a private company two. In case of partnership is two. The maximum number of members in case of a private company is two hundred but in case of a public company there is no such maximum number of Member. In partnership the number should not exceed twenty, while in case of banking business, it should not exceed ten.  (4) Liability : In case of joint stock company the liability of shareholders is limited (except in case of unlimited companies) to the extent of face value of shares or to the extent of guar...

Management Accountings management accounting is comprised of two  word management and Accounting .it is the study of managerial aspect of Accounting. the emphasis of management Accounting is to redesign Accounting in such a way that it is helpful to the management in formation of policy , control  of execution and appreciation of effectiveness. it is that system of accounting which helps management  in carrying out it's functions more efficiently.    Definitions Anglo-American Council on Productivity - "maccounting is the presentation of  Accounting information in such a ways as to assist management in the creation of policy and the day-to-day operations of an undertaking."  Characteristics of nature of management Accounting These are the following important features of management Accounting :- (1) Providing accounting information : Management accounting is based on accounting information. The collection and Classification of data is the primary functi...

Rules and principles of double entry System Under traditional approach, there are four types of accounts called Personal Accounts. Real Accounts. Nominal Accounts. Valuation Accounts. Personal accounts - Accounts relating to persons are called personal accounts. These persons may be customers, suppliers, money lenders, owners and banks. Real Accounts - Accounts related to tangible and intangible properties and possession are known as real accounts are classified as Tangible Real Accounts and Intangible Real Accounts. Nominal Accounts - Accounts concerning the expenses, losses, incomes and gains of a business enterprise are called as nominal Accounts. These accounts helps in preparation of Income statement. Valuation Accounts - The process of attaching monetary value to some assets and liabilities is called as valuation. The accounts where such valuation is effected are called as valuation Accounts. Rules of debit and card under traditional approach Personal Account : Debit the receiver...

Double entry system Accounting historian have established that double entry book keeping was practised in Florence in the later 13th century. Although several Systems were developed by mathematicians and businessman to summarized and communicate business transaction, only the one which Luca Friar Pacioli complied has survived and has become the basis of modern Accounting. Luca Friar Pocioli is rightly recognized as the father of modern accounting. He authored the first printed book on double entry book keeping. It was titled as  "Summa de arithmetical geometrics proportionate proportionality". He described a method of arranging accounts in such a way that the double aspect  (present in every Account transaction) would be expressed by a debit amount and an equal and offsetting credit amount. Double entry system is the system under which each transaction is regarded to have two fold aspects and both the aspects are recorded to obtain Complete record of dealings. Double entry sy...

Classification of Accounting principles Accounting principles are also referred to as standards, assumption, postulates, concepts, convention, axioms, generally accepted accounting principles (GAAP) etc. The above term are interchangeably used though they have different connotations. We will discuss here only assumption, concepts and conventions because these terms have reasonable bearing on the accounting system. (A) Accounting assumptions  Certain fundamental Accounting assumptions underline the preparation and presentation of financial statement. Institute of Chartered Accountants of India and International Accounting Standards Committee vide AS-1 respectively have stated the following as Fundamental accounting assumption : (1) Going concern : Accounting records presume that the business will exist for a very long time unless the evidence available is contrary to this. Under this assumption, "the enterprise is normally viewed as a going concern, that is, as continuing in operat...

Liabilities It refers to an amount owing by a person, ( a debtor) to another (a creditors) payable in money, goods or services. In general liabilities are financial obligations to outside parties arising from events that have already happened. Eric L. Kohler -  "an amount owing by one person (a creditors), payable in money or in goods and services" Types of liabilities These are the following types of liabilities:- (a) Current liabilities : It refers to those liabilities which fall due for payment in a relatively short period (normally within one year). These are also known as s term liabilities. For example, creditors, bills payable, short term loans, outstanding Expenses etc. (b) Fixed liabilities  : It refers to long term liabilities which are payable after a long period of one year. These are also known as long term liabilities. For example, long term loans, public deposits, debentures etc. (c) Contingent liabilities : It refers to amount which may  or may not become ...

Assets An assets is any owned physical object (tangible) or right (intangible) , having a money value. In other words, assets are economic resources which are owned by a business and from which future Economic benefits are expected to flow to the enterprise. W.B. Meigs and R.F. Meigs  - "Assets are  Economic resources which are owned by a business and expected to benefit further operations" Cash Debtors, Investors, Stock of goods, plant and machineries, Land and building, computers, Vehicles, Goodwill etc are the examples of assets. Assets may have the value for the business for several reasons; for instance  : Cash  have a value because other things can be aquired with it. Debtors and investors are assets because business is entitled to get claim from debtors in future and investment may be realised in cash by selling them in the market. Building, plants and machinery, Goodwill etc, are also assets because these assets offer some potential benefits or rights or serv...

Branches of Accounting Accountancy is still in the process of evaluation. Accountancy has grown with the rapid growth of business. To meets the changing requirements of the business world, accountant have also discovered various specialized Branches of accounting. The important Branches of Accounting are stated below:- (1) Financial Accounting : It is concerned with the recording of transactions in financial books  in order to find out the trading results in term of profits or loss and financial position of the business, for a given period of time. The accounting which leads to the preparation of final accounts is called financial accounting. It is used by the proprietor, creditors, investors, employees, management, government, etc. Financial Accounting is historical in Nature. (2)  Cost accounting : It is concerned with Classification, recording, allocation and summarisation of current and budgeted costs. The object of cost Accounting is to find out the cost of goods produced...

Difference between book keeping and Accounting After studying the meaning of book keeping and Accounting the following point of difference emerge:- (1) Stage : Book keeping is the basis of Accounting. Accountings is the culmination of bookkeeping. It starts where book keeping ends. (2)  Scope :  Book keeping confined itself to recording posting, balancing and preparation of trial balance. Accounting is extends to preparation of final accounts after incorporating year end adjustment. (3)  Skill  :  Bookkeeping is done by junior staff because the nature of work is clerical. Accounting is done by senior staff, because nature of job requires imagination, skill and analytical ability. (4)  Operations :  Bookkeeping records transaction in significant and orderly manner.  Accounting classifies, summarises and provides information. (5)  Activities  : Bookkeeping covers journalising, posting and extracting of balance.  Accounting covers prep...

Advantages of Accounting Welse and Anthony has rightly said that : "A good system of accounting is a store house of valuable information". Accounting being the store house of information has a number of advantages. These are as follows: (1) Recording : Human memory has a limited capacity to store every business transaction in mind. Therefore, the need of accounting is felt to record every transaction in different books of Account. Accounting helps in keeping a systematic and permanent record of business, Which may be referred from time to time. (2) Helpful in Tax assessment : In most of the cases, the business is required to pay income tax, value added tax, excise duty etc.., to the government. The fixation of tax liability is done on the basis of accounts of books, provided these are prepared according to the requirements of taxation laws. (3) Prevents frauds : The maintenance of proper books of accounts prevent irregularities, misappropriation, frauds, errors etc,. A dishon...

Accounting Accounting may be defined as the Identifying, measuring, recording and communicating of financial information. Objectives of Accounting These are the following objectives of accounting:- (a) To keep systematic record: Accounting is done to keep a systematic record of financial transactions. In the absence of Accounting, there would have been terrific burden on human memory, which in most cases would have been impossible to bear. (b) To protect and control business properties: Accounting provide protection to business properties from unjustified and unwarranted use. Unjustified and unwarranted use is avoided by supply of the following transaction: The amount of the proprietors funds invested in the business. How much the business has to pay the others. How much the business has to recover from others. How much the business has in the form of (a) fixed assets, (b) cash in hand, (c) cash at bank, (d) stock of raw material, work in progress and finished goods? (c) To ascertain t...

Book keeping Book keeping is that branch of knowledge which tells us how to keep a record of financial transaction. Book keeping denotes as an art and science of recording business transactions in a systematic and chronological order. Definitions R.N. Carter - "Book-keeping is the science and art of recording correctly in the books accounts all those business transactions that results in the transfer of money or money's worth". Characteristics or Features of Book-keeping Book keeping is the fundamental accounting activity for recording businesses transactions in the prescribed books. Every transaction is properly analysed before recording. The transaction recorded relate to transfer of money or money's worth (also referred as pecuniary transaction). Thus, events which are non-pecuniary, like giving a gift to a friend on his appointment as  a new director of a company will not be recorded irrespective of their importance to the company. Book keeping is a systematic met...

Journal  The word 'journal' has been derived the French word 'jour' which means day. Therefore, journal means a daily record. It is called a book of original entry because every business transaction is first recorded in this book. In case of small businesses, journal is the only book of original entry. But in case if big business, where the number if transactions are large, it is practically impossible to record transaction through journal. To overcome this shortcoming, subsidiary books (special journals) are prepared for specific transaction of similar nature. Entries in the journal are recorded in chronological order i.e. as and when the business transaction occur. It will be wrong to record transaction of 21st June and of 8th June later. Definitions Eric. L. Kohler - "The journal is a book of original entry in which are recorded transaction not provided for in specialized journals". Features of Journal There are the below, features of Journal :- It is a boo...