Accounting and Book Keeping

Accounting and Book Keeping

 

Understanding Basics of Accounting

Business owners should have a basic understanding of the fundamentals of accounting. Being a business proprietor, you have to understand how you generated earnings every month. You have to keep track of the figures frequently to be able to monitor how the business is functioning. The three most important financial statements to be understood are:

  • Profit & Loss account: You have to understand the basic principles regarding profit and loss account so as to understand just how much you may invest whilst running the business. You’ll be ready to produce the needed information by figuring out your revenues. You would also have to include the information about the immediate expenses incurred in production and marketing.
  • Balance Sheet: This is actually the blueprint or the tool which provides you the image of the company’s assets and liabilities. You do not require daily checking however you have to be familiar with the information within the balance sheet.
  • Cash Flow: This is an essential element which business owners must keep in mind. Tight checking regarding cash flow will be required to understand when you have got the money to spend for the necessary expenditure while running the business.


 

Annual Filings with the Registrar of Companies (RoC)

As a part of Annual eFiling, Companies incorporated under the Companies Act, 1956 are required to efile the following documents with the Registrar of Companies (RoC):

Sr. No.

Document

e-Form

1

Balance-Sheet

Form 23AC to be filed by all Companies

2

Profit & Loss Account

Form 23ACA to be filed by all Companies

3

Annual Return

Form 20B to be filed by Companies having share capital

4

Annual Return

Form 21A to be filed by companies without share capital

5

Compliance Certificate

Form 66 to be filed by Companies having paid up capital of Rs.10 lakh to Rs. 5 crore

 

To know more details on how to do annual efiling and download various e-forms, click here.

 

International Financial Reporting Standards (IFRS)

Accounting Standards are formulated with a view to harmonise different accounting policies and practices in use in a country. Accounting standards are concerned with the system of measurement and disclosure rules for preparation and presentation of financials statements. They appear with a set of authoritative statements of how particular types of transactions, events and other costs should be recognized and reported in the financial statements. Accounting standards are devised to furnish useful information to different users of the financial statements, to such as shareholders, creditors, lenders, management, investors, suppliers, competitors, researchers, regulatory bodies and society at large and so on.


In India, Institute of Chartered Accountants of India (ICAI) is the main authority entrusted with formulating accounting standards. To know details on the existing Accounting Standards, click here.


In recent years, need for international harmonisation of Accounting Standards followed in different countries has grown considerably as the cross-border transfers of capital are becoming increasingly common. The International Financial Reporting Standards (“IFRS”) issued by the International Accounting Standards Board (“IASB”) are increasingly being recognised as the global financial reporting standards. Convergence with IFRS has gained worldwide momentum in recent years. India being an important emerging global economy, the Government of India has too committed to convergence of Indian Accounting Standards with IFRS from April 1, 2011. To begin with, these standards will apply only to public listed companies; other companies will be brought under IFRS ambit in a phased manner.


To know more on IFRS, especially for SMEs, click here. The IFRS for SMEs is a self-contained standard of fewer than 230 pages, designed to meet the needs and capabilities of small and medium-sized entities (SMEs), which are estimated to account for over 95 per cent of all companies around the world.

You can also know more about convergence of India’s Accounting Standards with the IFRS from the Blended Learning Portal for IFRS created by ICAI.

 

References:
“Financial Management”, I M Pandey
www.exinfm.com
Accounting coach
Businessballs.com