In open economic era, business
enterprises are growing in size and complexity faces high competition. The
demand of accountants is increasing day by day to provide accounting
information for making accurate and effective decision within short period.
Now-a-day accounting is used in business enterprise as well as in socioeconomic
development.
International Accounting Standards (IAS)
International Accounting Standards has developed a set of standards for
recognising and measuring financial assets, financial liabilities and
some contracts to buy or sell non-financial item. From 1973 to 2000,
international accounting standards (IAS) were issued by the Board of the
International Accounting Standards Committee (IASC). IAS has developed
39 principles for stating how particular types of transactions and other
events should be reflected in financial statements. In 2001, IASC was
replaced by International Accounting Standards Board (IASB) and is now
responsible to issue the international financial reporting standards
(IFRS).
IAS 1 Presentation of Financial Statements
IAS 2 Inventories
IAS 7 Cash Flow Statements
IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors
IAS 10 Events After the Balance Sheet Date
IAS 11 Construction Contracts
IAS 12 Income Taxes
IAS 16 Property, Plant and Equipment
IAS 17 Leases
IAS 18 Revenue
IAS 19 Employee Benefits
IAS 20 Accounting for Government Grants and Disclosure of Government Assistance
IAS 21 The Effects of Changes in Foreign Exchange Rates
IAS 23 Borrowing Costs
IAS 24 Related Party Disclosures
IAS 26 Accounting and Reporting by Retirement Benefit Plans
IAS 27 Consolidated and Separate Financial Statements
IAS 28 Investments in Associates
IAS 29 Financial Reporting in Hyperinflationary Economies
IAS 31 Interests in Joint Ventures
IAS 32 Financial Instruments: Presentation
IAS 33 Earnings per Share
IAS 34 Interim Financial Reporting
IAS 36 Impairment of Assets
IAS 37 Provisions, Contingent Liabilities and Contingent Assets
IAS 38 Intangible Assets
IAS 39 Financial Instruments: Recognition and Measurement
IAS 40 Investment Property
IAS 41 Agriculture
International Federation of Accountants (IFAC)
IFAC stand for International Federation of Accountants which is a global
organization for the accountancy professional. The International
Federation of Accountants was founded on October 7, 1977 in Munich,
Germany at the 11th World Congress of Accountants. The organziation’s
headquarters have been based in New York City since its founding.
Sixty-three professional accountancy bodies from 51 countries were
signatories of IFAC’s first Constitution Beginning with 63 members in
1977; IFAC’s membership has grown over the past 30 years to now include
157 members and associates in 123 countries and jurisdictions,
worldwide. IFAC members and associates, which are primarily national
professional accountancy bodies, represent 2.5 million accountants
employed in public practice, industry and commerce, government, and
academia. Through its independent standard-setting boards, IFAC develops
international standards on ethics, auditing and assurance, education,
and public sector accounting standards. It also issues guidance to
support professional accountants in business, small and medium
practices, and developing nations. In addition, IFAC issues policy
positions on topics of public interest and comment letters on matters
relevant to the profession.
South Asian Federation of Accountants (SAFA)
South Asian Federation of Accountants (SAFA) was formed in the year 1984
to serve the accountancy profession in the South Asian Region and
uphold its eminence in the world of accountancy. SAFA is an Apex Body of
the South Asian Association of Regional Co-operation (SAARC) and a
Regional Grouping of International Federation of Accountants (IFAC).
SAFA represents over 170000 accountants having membership of the
national chartered accountancy and cost and management accountancy
institutions in the South Asian countries namely Bangladesh, India,
Nepal, Pakistan and Sri Lanka. SAFA came into existence at the
initiative of the accounting professional bodies in the South Asian
Region, which has a bong of culture and homogeneity of professional
environment.
The Chartered Institute of Management Accountants (CIMA)
The Chartered Institute of Management Accountants (CIMA) is a United
Kingdom based professional body offering training and qualification in
management accountancy and related subjects, focused on accounting for
business; together with ongoing support for members.
CIMA is one of a number of professional associations for accountants in
the UK and Republic of Ireland. Its particular emphasis is on developing
the management accounting profession within the UK and worldwide. CIMA
is the largest management accounting body in the world. CIMA was founded
in 1919 as “The Institute of Cost and Works Accountants” (ICWA). It
specialized in the development of accounting techniques for use in the
internal control of manufacturing, service and public sector operations.
It developed a position as the leading professional body in the areas
of product costing, budgeting, management accounting, investment
appraisal and business decision making.
In October 1944 the Institute of Cost and Works Accountants organisation
in Ireland was formed. The institute changed its name from ICWA to the
Institute of Cost and Management Accountants (ICMA) in 1972 and
subsequently to the Chartered Institute of Management Accountants (CIMA)
in 1986, after the granting of a Royal Charter. A global Accounting
qualification based in the UK, which is particularly active in
Commonwealth countries. Its membership has grown from 15,000 in 1970 to
79,757 members and 92,909 students in 2009. It has played a role in
founding fraternal professional bodies such as the Institute of Cost and
Management Accountants of Pakistan, The Institute of Cost and
Management Accountants of Bangladesh Institute of Cost and Works
Accountants of India and the Institute of Management Accountants (USA).
The Institute of Cost and Works Accountants of India (ICWAI)
The Institute of Cost and Works Accountants of India (ICWAI) is a
statutory Professional body established on May 28,1959 under the Cost
and Works Accountants Act, 1959 (Act No.23rd of 1959) enacted by the
Parliament of India to regulate the profession of Cost and Management
Accountancy in India over the years, the ICWAI has emerged as a leading
professional institute in India and the second largest management
accounting body in the world with focus on knowledge, training and
research in the field of Management Accounting and Financial and Cost
Management. The ICWAI syllabus, research, publications, training, MDP
are renowned for exhaustive breadth and depth of knowledge. The ICWAI is
recognized by the Government of India as a-Scientific and Industrial
Research Organization (SIRO).
The ICWAI is committed
• To develop the Cost and Management Accountancy profession.
• To develop the body of members and properly equip them for functions.
• To ensure sound professional ethics.
• To keep abreast the latest developments in Management Accountancy, Cost and Financial Management.
The ICWAI is a Founder Member of International Federation Of
Accountants(IFAC), Confederation of Asian and Pacific Accountants(CAPA),
South Asian Federation of accountants (SAFA).
The Graduate/Associate/Fellow members of the ICWAI are the professional
Cost and Management Accountants of India. The headquarters of ICWAI is
situated in Kolkata, and operates through four regional, councils
(Kolkata, Chennai, Delhi and Mumbai), 94 chapters in India and 6
chapters abroad.
The Confederation of Asian and Pacific Accountants (CAPA)
The Confederation of Asian and Pacific Accountants (CAPA) represent
national accountancy organization in the Asia-Pacific region. Today,
CAPA has a membership of 34 accountancy organizations in 24
jurisdictions. CAPA is by far the largest regional accountancy
organization and its geographical area spans half the globe!
The idea of CAPA was conceived at the First East Conference of
Accountants that was held from November 28 to December 1, 1957 in
Manila, Philippines. However, it was only in 1976 that the Confederation
of Asian and Pacific Accountants was formerly established.
CAPA’s mission is to provide leadership in the development, enhancement
and coordination of the accounting profession in the Asia-Pacific
region. To enable the profession to provide services of consistently
high quality in the public interest. To achieve this mission, CAPA has a
commitment to assist the accounting profession in emerging countries in
the Asia-Pacific region.
CAPA region which spans from Canada in the east to Pakistan in the west
have diverse economies of varying levels of maturity. The diverse
resources and skills of these members are a unique strength of CAPA,
which is used to benefit all its members. CAPA also has an important
role to establish better communication and understanding amongst members
in order to encourage greater cross border activities in the accounting
and business arena.
CAPA also aims to enhance the accountancy standards and development of
the profession by promoting harmonisation through the adoption of IF AC
and IASC standards.
Certified Public Accountant (CPA)
Certified Public Accountant (CPA) is the statutory title of
qualified accountants in the United States who have passed the Uniform
Certified Public Accountant Examination and have not met additional
state education and experience requirement for certification-as a CPA .
Individuals who have passed the Exam but have not either accomplished
the required on-the-fob experience, or have previously met it but-in the
meantime have lapsed their continuing professional education are, in
many states permitted the designation “CPA Inactive” or an equivalent
phrase. In most US states only CPAs who are licensed are able to provide
to the public attestation (including auditing) opinions on financial
statements. The exceptions to this rule are Arizona, Kansas, North
Carolina and Ohio where, although the "CPA" designation is restricted,
the practice of auditing is not.
Many states have a lower tier of accountant qualification (below that of
CPA), usually entitled "Public Accountant" (with designatory letters
"PA"). However the majority of states have closed the designation
"Public Accountant" to new entrants, with only about 10 states
continuing to offer the designation. Many PAs belong to the National
Society of (Public) Accountants.
Many states prohibit the use of the designations "Certified Public
Accountant" or "Public Accountant" (or the abbreviations "CPA-`-or "PA")
by a person who is not certified as a CPA or, PA in that state. As a
result, in many circumstances, an out-of-state CPA is restricted from
using the CPA designation or designatory letters until a license or
certificate from that state is obtained.
Texas additionally prohibits the use of the designations "accountant"
and "auditor" by a person not certified as a Texas CPA, unless that
person is a CPA .in another state, a non-resident of Texas, and
otherwise meets the requirements for practice in Texas by out-of-state
CPA firms and practitioners. Many other countries also use the title CPA
to designate local public accountants. The equivalent in formerly
British countries is the chartered accountant.
Certified General Accountant (CGA)
Certified General Accountant (CGA) is
the designation of professionals who are jointly members of the
Certified_ General Accountants Association of Canada (CCA-Canada) and
a provincial or territorial CGA association or a CGA association
overseas. Provincial, territorial and offshore CGA affiliate
associations work collaboratively with CGA-Canada as part of a
federation. The national association, first known as the Canadian
Accountants' Association, was founded in 1908 by a trio of Canadian
Pacific Railway accountants in Montreal, Quebec. Five years later, in
1913, the General Accountants' Association, as it was then known, was
granted a charter from the government of Canada. By the mid-1940s,
association chapters were established from coast-to-coast. Provincial,
territorial and regional (offshore) chapters were later established
under their own Charters.
The Association of Chartered Certified Accountants (ACCA)
The Association of Chartered Certified
Accountants (ACCA) is a British –accountancy body which offers the
Chartered Certified Accountant (Designator letters ACCA or FCCA)
qualification worldwide. It is one of the world's largest and fast
growing accountancy bodies with 140000 members and 404000 affiliates and
students in 170 countries (as at April 2010). The Institutes
headquarters are in London with the principal administrative office
being based in Glasgow. In addition the ACCA has a network of nearly 80
staffed offices and other centres around the world. The ACCA is a founding member body
of the Consultative Committee of Accountancy Bodies (CCAB) and the
International Federation of Accountants (IFAC)
The term 'Chartered' in ACCA qualification refers to the Royal Charter
granted in 1974 by Her Majesty the Queen in the United Kingdom. ACCA can
trace its history back to 1904 when eight people formed the London
Association of Accountants. This was done in order to allow more open
access to the profession than was available through the existing
accounting bodies. at the time, notably the Institute of Chartered
Accountants in England and Wales and the Institute of Chartered
Accountants of Scotland: As of 2006, the goal of ACCA is to become the
world's leading global professional body by size.
Since Chartered Certified Accountant is a legally protected term,
individuals who describe themselves as Chartered Certified Accountants
must be members of ACCA and, if they carry out public practice
engagements, must comply with additional regulations such as holding a
practicing certificate, being insured against any possible liability claims and submitting to inspections.
The Institute of Cost and Management Accountants of Bangladesh (ICMAB)
The Institute of Cost and Management Accountants of Bangladesh (ICMAB)
is a leading professional body in Bangladesh that offers professional
qualification in Cost and Management Accountancy, with a focus on
accounting for business. ICMAB programme has been designed to meet the
evolving needs of business today and tomorrow. The Institute is a
statutory constituted by the government -under the cost and management
Accountants Ordinance 1977 (Ordinance No. LIII of 1977) and regulated
under the cost and Management Accountants Regulations, 1980 (as amended
upto date. It is managed as an autonomous professional body under the
Ministry of Commerce. Apart from education, it is also engaged in
regulating and promoting the profession of cost and management
accounting in Bangladesh. The Institute of Cost and Management
Accountants of Bangladesh is the only national institute of the country
imparting training and education in the field of cost and management
accounting. It has branches. in Chittagong, Rajshahi, Comilla and Khulna
along with its main branch in Dhaka. The Institute. is managed by a
National Council of 16 members. It is a member of the International
Federation of Accountants (IFAC), Confederation of Asian and Pacific
Accountants (CAPA), and South Asian Federation of Accountants (SAFA).
ICMAB members are known as CMAs with their designatory title ACMA and
FCMA. They play leading roles in the accountancy and finance profession
in Bangladesh. 30% of members live and work in UK, USA, Canada,
Australia and Gulf Countries.
The Institute of Chartered Accountants of Bangladesh (ICAB)
The Institute of Chartered Accountants of Bangladesh (ICAB) is the
National Professional Accounting Body of Bangladesh established under
the Bangladesh Chartered Accountants Order 1973 (Presidential Order No. 2
of 1973). The Ministry of Commerce, Government of the People's Republic
of Bangladesh is the administrative Ministry of ICAB. The mission of
ICAB is to provide leadership in the development, enhancement and
coordination of the Accountancy Profession in Bangladesh in order to
enable the profession to provide services of consistently high quality
in the public interest. It is a member of The International Federation
of Accountants (IFAC), The International Accounting Standards Board
(IASB), The Confederation of Asian and Pacific Accountants (CAPA) and
The South Asian Federation of Accountants (SAFA). ICMAB members are
known as CAs with their designatory title ACA and FCA. They perform
management consultant and professional services involving auditing or
verification of financial transactions, books, accounts or records, or
preparation, verification or certification of financial, accounting and
related statements.
Difference between Put Option and Call Option
Options
•
An options give the holder (firm) the right (not
the obligation) to buy or sell an asset in the future at an agreed upon price
today.
Difference between Forward Contract and Futures Contract
Forward Contract
• These are agreements where 1 party agrees to buy
a commodity at a specific price on a specific future date and the other party agrees to sell the
product.
•
Goods are actually delivered under forward
contracts.
•
Forward contract is a tailor made futures
contract that is not traded on a organized exchange.
• Unless both parties are morally and financially
strong, there is a danger that 1 party will default on the contract, especially
if the price of the commodity changes markedly
after the agreement is reached.
Financial Ratio Analysis Formula
Financial statement analysis can provide clues to underlying conditions that may not apparent from individual financial statement components.
Significant business decisions are frequently made using one or more of the analytical tool. Here illustrate a number of analytical tools that help business decision maker obtaining business objective.
Cost Accounting Planning & Control by Adolph, Usry
Book Name: Cost Accounting
Planning & Control
Authors:
- Adolph Matz phd
Professor Emeritus of Accounting
The Wharton School
University of Pennsylvania
-Milton F. Usry phd, CPA
Regents Professor of Accounting
College of Business Administration
Oklahoma State University
Accounting Principles by Weygandt, Kieso & Kimmel
Book Name: Accounting
Principles
Authors:
-Jerry J. Weygandt Phd. CPA
Arthur Andersen Alumni Professor of Accounting
University of Wisconsin
-Donald E. Kieso Phd. CPA
KPMG Emeritus Professor of Accounting
Northern Illinois University
Dekalb, Illinois
-Paul D. Kimmel Phd. CPA
Associate Professor of Accounting
University of Wisconsin Milwaukee
Milwaukee, Wisconsin
Publisher: John
Wiley & Sons Inc.
Managing Accounting by H. Garrison, W. Noreen & C. Brewer
Book Name: Managing Accounting
Authors:
-Ray H. Garrison D.B.A CPA
Brigham Young University
-Eric W. Noreen, Ph.D, CMA
Professor Emeritus
University of Washington
-Peter C. Brewer, Ph.D., CPA
Miami University-Oxford, Ohio
Limitations of Backflush Costing
This system does not strictly adhere to Generally AcceptedAccounting Principles (GAAP). For example, work in process exists, but is not
recognized in the financial statements.
Costs & Benefits of Backflush Costing
‘Backflush Costing’ by organization manufacturing in cells,
reducing defects and manufacturing lead time, and ensuring timely delivered of
materials, enables purchasing, production and sales to occur in quick
succession with minimum inventories.
Difference between Backflush Costing and Conventional Costing
Two major differences between the two systems are:
Under conventional costing raw materials go to raw materials
inventory, they are transferred to WIP. Under JIT/Backflush costing raw
materials just go to RIP. In JIT raw materials are only ordered when required.
Under conventional costing, direct labor and overhead are
charged direct to WIP. They are then moved to finished goods and cost of goods
sold (sequential processing).
Different Types of Costs
Cost
A sacrifice or giving up of resources for a particular purpose, frequently measured by the monetary units that must be paid for goods and services.
Expense
The expired portion of cost is called expense. In other words, decrease in ownership claims arising from delivery of goods and services or using up of assets.
Direct Cost
Costs that can be identified specifically and exclusively with a given cost objective in a economically feasible way.
Indirect Cost
Costs that can’t be identified specifically and exclusively with a given cost objective in a economically feasible way.
Product Cost
Costs that are necessary and integral part of producing the finished product. These costs don’t become expenses under the matching principles until the finished goods inventory is sold.
Period Cost
Costs are not related to the manufacture of a product, the costs that are identified with a specific time period rather than a saleable product.
Manufacturing Cost
Costs that are related to production of an item. They are composite of direct material, direct labour and manufacturing overhead costs.
Commercial Cost
All the costs incurred outside the factory e.g. selling & marketing expenses and also administrative expenses.
Assignable Cost
The costs which are easily allocable to the respective department is called assignable cost.
Common Cost
The cost of operating a facility, operation, activity area or like cost objective that is shared by two or more users.
Process Costing
A costing system in which the cost of a product or service is obtained by using broad averages to assign costs to masses of identical or similar units. The method of allocating costs to products by averaging costs over large number of nearly identical products.
Operation Costing
A hybrid costing system applied to batches of similar product.
Fixed Cost
Costs that remain unchanged in total for a given period.
Variable Cost
Costs that change in total proportion to changes in the related level of activity volume.
Mixed Cost
A cost that has both fixed and variable elements.
Inventoriable Costs
All costs of a product that are regarded as an asset when they are incurred and then become cost of goods sold when the product is sold.
Target Costing
An approach that determines what a product or service should cost based on its sales price less a target profit. Target costing uses market research to estimate what consumer will pay for a specific product.
Management Cost
All the costs which are related to current operation which must continue to be paid to ensure the continued operating existence of the company.
Example- management and staff salary.
Traceable Cost
Any cost that may be traced to other department if some economic activity is changed or deleted.
Non-traceable Cost
Joint Cost
Cost of a single process that yield multiple products simultaneously.
Separable Cost
Cost incurred beyond spilt off point that are assignable to individual products.
Financial Cost
Costs that are related to obtaining funds for the operation of the company.
Avoidable Cost
Any cost that can be eliminated if some economic activity is changed or deleted.
Unavoidable Cost
Cost that can be continued even if some operation is halted.
Conversion Costs
Is written off at month or year end.
A sacrifice or giving up of resources for a particular purpose, frequently measured by the monetary units that must be paid for goods and services.
Expense
The expired portion of cost is called expense. In other words, decrease in ownership claims arising from delivery of goods and services or using up of assets.
Direct Cost
Costs that can be identified specifically and exclusively with a given cost objective in a economically feasible way.
Indirect Cost
Costs that can’t be identified specifically and exclusively with a given cost objective in a economically feasible way.
Product Cost
Costs that are necessary and integral part of producing the finished product. These costs don’t become expenses under the matching principles until the finished goods inventory is sold.
Period Cost
Costs are not related to the manufacture of a product, the costs that are identified with a specific time period rather than a saleable product.
Manufacturing Cost
Costs that are related to production of an item. They are composite of direct material, direct labour and manufacturing overhead costs.
Commercial Cost
All the costs incurred outside the factory e.g. selling & marketing expenses and also administrative expenses.
Assignable Cost
The costs which are easily allocable to the respective department is called assignable cost.
Common Cost
The cost of operating a facility, operation, activity area or like cost objective that is shared by two or more users.
Process Costing
A costing system in which the cost of a product or service is obtained by using broad averages to assign costs to masses of identical or similar units. The method of allocating costs to products by averaging costs over large number of nearly identical products.
Operation Costing
A hybrid costing system applied to batches of similar product.
Fixed Cost
Costs that remain unchanged in total for a given period.
Variable Cost
Costs that change in total proportion to changes in the related level of activity volume.
Mixed Cost
A cost that has both fixed and variable elements.
Inventoriable Costs
All costs of a product that are regarded as an asset when they are incurred and then become cost of goods sold when the product is sold.
Target Costing
An approach that determines what a product or service should cost based on its sales price less a target profit. Target costing uses market research to estimate what consumer will pay for a specific product.
Management Cost
All the costs which are related to current operation which must continue to be paid to ensure the continued operating existence of the company.
Example- management and staff salary.
Traceable Cost
Any cost that may be traced to other department if some economic activity is changed or deleted.
Non-traceable Cost
Joint Cost
Cost of a single process that yield multiple products simultaneously.
Separable Cost
Cost incurred beyond spilt off point that are assignable to individual products.
Financial Cost
Costs that are related to obtaining funds for the operation of the company.
Avoidable Cost
Any cost that can be eliminated if some economic activity is changed or deleted.
Unavoidable Cost
Cost that can be continued even if some operation is halted.
Conversion Costs
Is written off at month or year end.
Career Opportunity for Accounting Profession
Accounting has always been considered as the language and basic tool of business. Over the last two decades, the field of accounting has been changing dramatically in response to computer revolution, increased government regulations, frequent tax law changes, the globalization of business, and the on-going downsizing and restructuring of corporations. In this increasingly complex and competitive business environment, accounting skills are very much in demand and accounting has become a dynamic career. Accountants are now performing as prestigious role of financial experts, system professionals, management consultants, budget analysts, etc.
Generally Accepted Accounting Principles (GAAP)
GAAP are the foundation, and ground rules of accounting practice. GAAP are followed by accountants all over the world.
Definition of GAAP: The accounting profession has developed a common set of standards that are generally accepted and universally practiced. This common set of standards is called generally accepted accounting principles (GAAP).
Luca Pacioli
Luca Pacioli was born in
Sansepulcro, in Tuscany. He was probably born during 1445. He born in a
poor family. He lived as a child with the Befolci family. This town is very
much in the centre of Italy about 60 km north of the city of Perugia. As far as
Pacioli was concerned, perhaps the most important feature of this small
commercial town was the fact that Piero delta Francesca had a studio and
workshop in there and delta Francesca spent quite some time there despite
frequent commissions in other towns.
History of Accounting
The
history of accounting is very ancient like thousands of years. But the history
of accounting profession is very young. It is indeed that modern civilization
is impossible without accounting. . It is indeed that modern civilization is
impossible without accounting.
Origin:
The
origins of accounting are generally attributed to the work of Luca Pacioli, and
Italian Renaissance mathematician. The concept of accounting comes from his
book. But it is considered the first book on -counting was Della Mercatura e
del Mercante Perfetto written by Benedetto Cotrugli in 1458 and published in
1573.
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