Dibrugarh University (Semester I (2)

Financial AccountingAlso known as the consistency concept, Consistency of Presentation is one of four fundamental assumptions of IAS 1 – along with going concern, fair presentation and accruals. Although the Summa was the first published accounting ‘textbook’, an earlier manuscript which describes double entry bookkeeping does exist: Della mercatura e del mercante perfetto, believed to be written in 1458 by Croatian Benedikt Kotruljevic Unfortunately for Kotruljevic it was not officially published until 1573. Cost accounting source: McKendrick, N. (1970) ‘Josiah Wedgwood and cost accounting in the Industrial Revolution’, Economic History Review, vol.

While others at the time were also developing various methods of cost accounting to aid business decision making, including the Carron Company in Scotland, the surviving letters and records of Wedgwood make a compelling case for his place in history as the first cost accountant. Although the International Accounting Standards Committee had been issuing standards for international use since 1973, they were not highly regarded. It runs from the day after the previous accounting year end to the next accounting year end.

However, the requirement for every registered company to appoint approved (by the Board of Trade) auditors was not introduced until 1855, as part of the Limited Liability Act which, unsurprisingly given its title, also introduced the concept of limited liability for the shareholders of registered companies. With global trade expanding, the need for common accounting standards to aid the comparison and analysis of financial statements from companies in different countries grew.

The IASB issues International Financial Reporting Standards (IFRS), and remains responsible for the earlier International Accounting Standards (IAS). As the chairman of the IASB from its inception in 2001 until 2011, Professor Sir David Tweedie successfully led the revitalisation of international accounting standards, and their widespread adoption around the world, and might therefore be regarded as the first true advocate of global accounting standards. For limited companies, the financial year runs from 1st April one year to 31st March the following year. The accounting year end is the date that a limited company chooses to prepare its accounts to every year.Financial Accounting

Many limited companies, but not all, choose 31st March for their accounting year end so that their accounting year matches the financial year. The date you choose to begin your accounting year will affect when you pay tax on your profits, as companies pay tax nine months and a day after their accounting year end. It’s worth double-checking that your accounting year isn’t setting you up for a tricky cash flow situation. For sole traders, partnerships and individuals working for a company, the tax year, also known as the fiscal year, runs from 6th April one year to 5th April the following year.

Financial Accounting