Acctg Session

8/17/2019 Acctg Session

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Overview of Hedge Funds

Mar-2010

C O N F I D E N T IA L

Basics of Accounting

August 2010


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Basics of Accounting Page 2


Denition of Accounting

Accounting has been dened b the A!erican "nstitute of #ertiedPub$ic Accountants% as &'he art of recording% c$assifing andsu!!ari(ing in a signicant !anner and in ter!s of !one%transactions and events which are% in )art at $east% of a nancia$character% and inter)reting the resu$ts thereof*


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Basics of Accounting Page +


Groups of Accounts

Liabilities

Assets

Income

Expenditure

Owner’s Capital

,ach of the grou)s has severa$ sub-grou)s and ever such sub-grou)either has accounts or sub-grou)s as its sub-units% for!ing a treestructure


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Basics of Accounting Page .


Debits and #redits

A$$ a!ounts recorded in the boo/s of account are )$aced either to thedebit or credit of an account For an transaction% which accountsshou$d be debited and which shou$d be credited is deter!ined b thefo$$owing o$den ru$es3

D,B"' what co!es in% #4,D"' what goes out

D,B"' the receiver of benet% #4,D"' the giver of benet

D,B"' a$$ e5)enses and $osses% #4,D"' a$$ inco!es and gains


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Other 'o)ics

Capital and e!enue Expenditure " #a)ita$ ,5)enditure is that e5)enditurewhich resu$ts in the ac7uisition of an asset "te!s of e5)enditure whose benete5)ires within the ear or e5)enditure incurred for !aintaining the business or/ee)ing the assets in good wor/ing condition are referred to as 4evenue,5)enditure

Financial #tatements " At the end of the re)orting )eriod 8 which is genera$$one ear 8 the accounting transactions for the entire )eriod are su!!arised

into a few state!ents 'he !a9or Financia$ :tate!ents are3

1 Ba$ance :heet3 :tate!ent of Assets and ;iabi$ities as on a )articu$ar date%indicating the nancia$ )osition of an entit at a given )oint of ti!e

2 Prot and ;oss Account3 :tate!ent of "nco!e and ,5)enditure for there)orting )eriod% indicating the nancia$ )erfor!ance of the entit duringthe re)orting )eriod

$sers of Financial #tatements% Manage!ent% :hareho$ders% "nvestors%;enders% overn!ent


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Basics of Accounting Page <


#once)ts of Accounting

'o ensure unifor!it in )re)aration of accounts across entities% the fo$$owing

conce)ts are a))$ied when recording accounting transactions3

1&usiness Entit' Concept% 'he business for which accounts are!aintained is treated as an entit distinct fro! its owners and !anagers

2(one' (easurement Concept% A$$ transactions a=ecting the businessare stated in !one ter!s and recorded in the Boo/s of Account

+Dual Aspect Concept% ,ver transaction has two as)ects 8 a >debit? anda >credit? 8 and the su! of a$$ debits wi$$ e7ua$ the su! of a$$ credits

.Cost Concept% 'ransactions are recorded at the actua$ cost

6Goin) Concern Concept% At the ti!e of recording the transactions% it isassu!ed that the entit wi$$ continue to re!ain in business for as $ong as

can be foreseen


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Basics of Accounting Page @


#once)ts of Accounting contd


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Basics of Accounting Page


#onventions of Accounting

'o !a/e the infor!ation contained in nancia$ state!ents c$ear and!eaningfu$% the are drawn u) according to the fo$$owingconventions3

1Consistenc'% Accounting )ractices shou$d re!ain the sa!e fro!ear to ear

2Disclosure% A$$ infor!ation which is essentia$ for fu$$understanding the nancia$ state!ents shou$d be disc$osed inaddition to the infor!ation re7uired to be disc$osed b $aw

+Conser!atism% Financia$ state!ents shou$d be drawn u) on aconservative basis 8 ie antici)ated inco!e shou$d not be recordedwhereas $i/e$ $osses shou$d be )rovided for


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Basics of Accounting Page C


Process of Accounting

After each transaction is done% the )rocess to account for thistransaction can be de)icted with the he$) of the be$ow ste)s3

1Post the transaction in the $edger 'he ourna$ ,ntr

2enerate the 'ria$ Ba$ance ;ist of ba$ances in a$$ the accounts as ofthe end of the s)ecied )eriod

+#o!)i$ation of Prot E ;oss Account.Pre)aration of Ba$ance :heet


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:creenshots 8 "nco!e :tate!ent


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:creenshots 8 Ba$ance :heet


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T*an+s,

Acctg Session

Documents

Transcript of Acctg Session