Contents

1 INTRODUCTION TO ACCOUNTING

1.1 What is Accounting?

1.2 Users of Financial Accounting Information

1.3 Financial Accounting Versus Management Accounting

1.4 Need for Accounting Principles—GAAP and Accounting Standards

1.5 Accounting Cycle

1.6 Financial Statements

1.7 Accounting Environment

2 GENERALLY ACCEPTED ACCOUNTING PRINCIPLES AND ACCOUNTING STANDARDS

2.1 Nature of Generally Accepted Accounting Principles

2.2 Need for Accounting Standards

2.3 Accounting Standards in India

2.4 Globalization of Accounting Standards

3 ACCOUNTING CYCLE

3.1 Introduction

3.2 Accounting Process

3.3 Journal Entry

3.4 Classification

3.5 Summarization

3.6 Adjustment Entries

3.7 Financial Statements

4 FINANCIAL STATEMENTS OF COMPANIES

4.1 Introduction

4.2 Financial Statements

4.3 Statement of Profit and Loss

4.4 Balance Sheet

4.5 Statement of Change in Equity

4.6 Cash Flow Statement

4.7 Notes to Accounts

5 STATEMENT OF PROFIT AND LOSS

5.1 Introduction

5.2 Format of Statement of Profit and Loss

5.3 Revenue

5.4 Expenses

5.5 Exceptional Items

5.6 Tax Expenses

5.7 Profit/Loss From Discontinued Operations

5.8 Profit/Loss for the Period

5.9 Other Comprehensive Income (OCI)

5.10 Earnings Per Share

5.11 Various Measures of Profit

5.12 Appropriation of Profit

6 BALANCE SHEET

6.1 Introduction

6.2 Format of Balance Sheet

6.3 Assets

6.4 Non-Current Assets

6.5 Current Assets

6.6 Current Tax Assets (NET)

6.7 Other Current Assets

6.8 Equity and Liabilities

6.9 Equity

6.10 Statement of Change in Equity

6.11 Liabilities

6.12 Non-Current Liabilities

6.13 Current Liabilities

6.14 Contingent Liabilities and Commitments

7 ACCOUNTING FOR REVENUE

7.1 Revenue

7.2 Quantum of Revenue

7.3 Timing of Revenue Recognition

7.4 Impact of Uncertainty

7.5 Disclosures

7.6 Accounting for Receivables

8 ACCOUNTING AND VALUATION OF INVENTORY

8.1 Meaning of Inventory

8.2 Inventories and the Financial Statements

8.3 Methods of Inventory Accounting

8.4 Valuation of Inventory

8.5 Costing Methods

8.6 Disclosures

9 ACCOUNTING FOR FIXED ASSETS AND DEPRECIATION

9.1 Introduction

9.2 Property, Plant and Equipment

9.3 Investment Property

9.4 Intangible Assets

9.5 Impairment of Asset

10 ACCOUNTING FOR INVESTMENTS

10.1 Introduction

10.2 Classification of Investments

10.3 Measurement

10.4 Investment in Subsidiaries, Associates and Joint Venture

11 CASH FLOW STATEMENT

11.1 Introduction

11.2 Cash Flow Statement

11.3 Cash Flow from Operating Activities

11.4 Cash Flow from Investing Activities

11.5 Cash Flows from Financing Activities

11.6 Special Points

11.7 Cash Flows at Different Stages of Life cycle

12 CONSOLIDATED FINANCIAL STATEMENTS

12.1 Introduction

12.2 Concept of Control

12.3 Consolidated Financial Statements

12.4 Consolidated Statement of Profit and Loss

12.5 Consolidated Balance Sheet

12.6 Investments in Associates and Joint Ventures

13 DISCLOSURES IN ANNUAL REPORTS

13.1 Introduction

13.2 Disclosures under the Companies Act, 2013

13.3 Disclosures under Listing Agreement

13.4 Disclosures under Accounting Standards

13.5 Voluntary Disclosures

14 ANALYSIS OF FINANCIAL STATEMENTS

14.1 Introduction

14.2 Common Size Statements

14.3 Indexed Financial Statements

14.4 Ratio Analysis

14.5 Ratios to Predict Financial Insolvency

15 FINANCIAL SHENANIGANS

15.1 Introduction

15.2 Financial Shenanigans

15.3 Motivations for Financial Shenanigans

15.4 Opportunities for Financial Shenanigans

15.5 Financial Shenanigans Techniques

15.6 Regulatory Reactions

15.7 How to Detect Financial Shenanigans?

15.8 Prevention of Financial Shenanigans