School Work

Basic Accounting Notes

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  Needs And Importance Of Accounting: We live in a world where people need things from the day ther are born to the day that they die . Some of then are emotional wants a need for education entertainment , or recreation . Some of thede needs are physical needs a need fr goods of barious sorts . food , clothing , shelter , and so on.jjjj Some of thenare emotional ‘wants ‘ a need for education , entertainment , or recreation .  In satisfying such needs businessmen performuseful services to their fellow humans. In return they expect to earn a reasonablr reward for their efforts in the form of profits. “cut tour coat according to tour cloth” so goes the saying . Even a king becomes apauper, if he fails to exercise economhy inhis expenditures . In othr words every individual will have to plan his wzpenditur according to his income. Pbviously the question arises why is this p;anning necessary theneed for such planning arises as oor wants or desires or needs for gooods and srvices are ylimited while the meand ,i.e. the income with which to buy such goods and services are limited . Qhere, however , goods and drvices are available free of cost , i.e. gifts of natur , such as air , qater 9not in cities) etc. thre is no UESTION OF economy. But the necessity of economy is undeniable wher goods or servicesare not available free of cost and their supply I limited. Aproper andfair planningof expenditure s help s us to endure proper ude of our income . of course it is true that the quantity if goods or money cannot be increase by makig aproper planning. But certainly we can endur most wconomic use of goods or money at oyr disposal. Most of us do maintain some kind of awritten record of our income and expenditure .The idea behind maintaining such record is to know thecorrect position regarding income and expenditure .The need for keeping a record fo income and expenditure in a clear and systematic manner has given rise to the subject of book keeping.Some individuals donot recgnise the necessity of keeping account of their day to day expenditurs , since thehy spend their own income and are not required to account for it to anybody else but such an idea is wrong, A family , however , small it may be , must exercise proper control over ots expenditures so as to ensure futre security . family has two fold responsibilities one is that of ensuring all (round welfare of the family and the other is the social responsibility . needless to sy , money is the most essntioalpre request for ensuring peace and happiness of a family , which each and every member desires. The quantu of mney must be adequate in relation to the needs .But mere asequacy of money will not do one has to take care of ots proper ultilization.For this it would b necessary toexercise exonomy and maintain proper books of account , on the other hand each and every family myst save a portion of its imcome for future contingencies. It is possible to increase the amount of saving through proper management and effective control of the family expenses . Through such saving the family helps materializing the economic [lanning of the country.It is all themore necessary for an organization or a concern to keep proper accounts. At the end of the year the true result of the economic activities of aconcern must bbbe made available otherwise it will not be possible to run the concern . in case of abusiness concern the profit or loss at the end of ayear mustbe ascertained , because , thje amount of profit must be adequate in relation to that of investment made in the business . If it is not so or if there is a loss , ot is an indication of some defects existing somewhere in the management of the business . All such defects need to be detected and analysed and appropriate measures taken for thir rectification. But it is only possible , if proper books if  accounts are maintained in the business concern. So , the omportance of book keeping to to a business is the same as that of fresh air to a man to exist , without book keeping records a business would meet death, though not instantly, but in short time . Moreover , if proper books of accounts are not kept in a business , the amount of profit cannot be ascertained and it will not be possible to distribute the profit among the owners of the business , The income of tax dues to the Government cannot also be paid . In dthe absence of books of accounts misuse or defalcation of money will remain undetected . The owner
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