There cannot be any practice without the proper theoretical knowledge. The various persons and parties interested in the business, like, the Government, public, investors, Money-lenders, Researchers etc. So, we see that Accounting Theory and accounting Practice are interdependent and thus closely related. Accounting theory and Accounting Practices are absolutely closely related. A businessman can take the right steps for controlling the quantity of assets decrease and liability increase. So, one cannot even exist without the order.
This is possible through and standard costing which are an integral part of management accounting. The profit and loss account is prepared at the end of a period and if the amount of revenue for the period is more than the expenditure incurred in earning that revenue, there is said to be a profit. Descriptive Theory: This type of accounting theory is of descriptive approach. Accounting Practices need not always be strictly logical and scientific as practice depends upon prevailing customs, norms and conventions. As the language of The Sun is no sunrays, as that of a flower is its fragrance, and as the same of a thunderbolt is its lightning, so also the language of a business is accounting.
As a man without language turns out to be somewhat useless or as a mute man cannot be understood clearly, so also, a business without the accounts of its activities becomes meaningless. Cost accounting can be used to identify possible inefficiencies or areas of necessary improvement to control costs. The nature and values of liabilities outstanding. On many occasions, accounting standards develop and provide solutions to specific accounting issues. Accounting assistants also need outstanding skills in reading, writing, critical thinking, and oral communication in order to keep their office in proper working order. However, we can consider the following definitions: 1.
As all other theories are based on sound and solid reasoning. To help the management by supplying accounting ratios, reports and relevant data. If our total revenues will more than our total expenses, we will get net profit. So there is no doubt that accounting has originated from the real world problems, rather financial problems accounting is mostly concerned with business transactions. Generally accepted theories: The fundamental theories which can be applied equally in all cases and are adopted by all are called generally accepted theories. Surplus or deficit of revenue for a particular period of a non-trading concern can also be ascertained by preparing income and expenditure account or statement. So, one cannot even exist without the order.
Fundamental Qualities Relevancy Information should be timely and bear on the decision-making process by possessing predictive or confirmatory feedback value. This is equally true in cases of theories also. The three-fold assumptions involved in the definition of cost reduction may be summarized as under: a There is a saving in unit cost. Using of Qualitative Information Qualitative information means data cannot be measured in terms of rupees, units, kgs, tons, metres and the like. They both determine the accounting period, in which revenues and expenses are recognized. Normative accounting theory also evolves possible theories which are independent of current practice and help in solving critical problems in future. Generally Accepted Accounting Principles cannot be changed completely as they are widely and universally accepted but they can be reformed and remoduled to suit the needs of any changed Society or Economy.
They also help the potential users of the information contained in the financial statements by disclosure norms which make it easy even for a layman to interpret the data. Why is so much time and money spent on the development of accounting information? The broad objects of Accounting may be briefly stated follows: 1. Assess Cash Flows Financial statements and financial accounting principles are also designed to help users of financial statements assess the amount, timing and uncertainty of cash flows in the future. Valuation of various assets and liabilities can be more or less accurately if the accountant has the knowledge of accounting theory. One may be considered as a substitute for other because, theory cannot be separated from practice and practice is an integral part of theory.
Sample Accounting Assistant Resume Objectives When writing your resume objective, mention the name of the company to help show your genuine interest in working with them. Practice of accounting has developed through customs, usages and conventions which are called theories. This is what cost accounting provides. The Conceptual Framework The creation of accounting standards takes place within the conceptual framework of accounting. The creation of these principles is no small task and can sometimes seem nearly arbitrary.
Financial affairs of a concern at a particular date can be ascertained by. To maintain various other Journals for recording day-to —day non —cash transactions. Ratios are calculated and likely trends are projected. Deductive theories are generally formulated to achieve some particular goal. But a subject of Arts is never, like that. Revenues and Expenses: This graph shows the growth of the revenues, expenses, and net assets of the Wikimedia Foundation from june 2003 to june 2006.