Before preparation of the any financial statements .the double entry should be recorded.

This
recoding can be identified as the Bookkeeping. The simple definition of bookkeeping is
recoding of financial transactions. Bookkeeping is part of financial accounting. Scope of the
financial accounting starts with the reporting and ends with the decision making the decision
making is taken based on the analysis of the financial statements. Financial accounting have 3
main statements. Trading and profit and loss account (P&L), Balance sheet (BS) and the Cash
flow (CF). The main two financial statements are P&L and BS.
Accounting paly major role in the society. The organization use limited resources to run the
business. Due to the scarcity of the resources it should be used efficiently and effectively.
Accounting provides the guidance on how the organization should use the resources as for as
their activities are concern.
Business stakeholders are parties who are concern on the activities of the organizations.
These parties will be affected by the actions of the organizations and from the certain actions
taken by the stakeholders organization will also have impact. The stakeholders use the
financial information to analyse any impact for them from the past performance of the
organization. Stakeholders for an organization can two types internal stakeholders and the
external stakeholders. Internal parties are the management and the Employees and the trade
unions. The External parties can be the competitors, bankers, government, pressure groups,
and the general public.
Environment of accosting can be categorised into three major categories.
Business environment
Regulation environment
International environment
Sole traders, Partnership private and public organizations comes under business environment.
The mention organization have various type rules and regulations.in relation to accounting
each organization have to apply different types of transaction in making the final accounting
of these organizations.
Accounting will have impact from the Company law that exist in Sri Lanka. Accounting
standards developed by the Charted Accountants of Sri Lanka. Applying the standards will
provide the opportunity to have standardized the way accounting exercised in Sri Lanka.
which gives opportunity compare with other organizations as the accounting are done in the
same standards, international accounting standards., Globalization impact and the impact
from the British is having a significant impact on the Sri Lanka accounting system.
The accosting process consists of 8 steps. Organization accounting system should be able to
track and identify the when transactions happen. All the monetary actions needs to be picked
by the accounting system and these tractions should be recorder or documented as debit or
credit. The 3
rd
step is classifying, this is the step where the transactions is classified as a
assets liability income, expense. Most of the organizations will incur uncountable
transactions and all these cannot not be identified individually due to this reason transactions
are summarized that only the total is being taken in to consideration. After summarizing the
financial statements should be developed. This is the reporting stage. With this stage the work
of bookkeeping ends. Analysing the information gain from financial statements is done using
several tools such as ratios and other necessary methods .analysing is identifying what has
happened and the evaluation look for why this has happened and decision making is stage
where taking decision based on the analysis and the evaluation.
Initially transaction will be documented in the source documents. Is its a payments slips will
be the source documents. After that step is over it will be taken in to the day books or the
journals.
Sales daybook (or Sales journal) - for credit sales
Purchases daybook (or Purchases journal) - for credit purchases
Returns inwards daybook (or Returns inwards journal) - for returns inwards
Returns outwards daybook (or Returns outwards journal) - for returns outwards
Cashbook - for receipts and payments of cash and cheques
General journal (or just 'The journal' if the term 'Daybook' is used for other books of
original entry) - for other item

After recoding in the days books it will be taken in to ledger or the preparation of accosting
.end of financial year a trail balance will be prepared. This is a documented where all the
credit balance and the debit balances a list separately to the total is equal.
The trial balance is a report listing the ending debit and credit balances in all
accounts at the end of a reporting period. The trial balance has three uses:
Main distinction between Cost Accounting and Management Accounting are as follows.
1. Cost accounting deals with ascertainment, allocation, apportionment accounting aspect of
costs. Management accounting deals with the effect and impact of costs on the business.
2. Cost accounting is concerned with short term planning. Management accounting is
concerned with short range and long range planning.
3. Cost accounting merely assists the management with functioning. Management accounting
assists and evaluates the management performance.
4. Cost accounting can be installed with management accounting but management accounting
cannot be installed without cost and financial accounting.

In business and accounting, cost is the monetary value that a company has spent in order to
produce something.
Variable Cost: Changes in total, in direct proportion to changes in the level of activity. The
total cost increases/decreases as units made increases/decreases. Variable cost is constant if
expressed on a per unit basis.
Ex-Direct material, direct labour and variable overhead are all variable costs. Costs that vary
with sales, such as sales commission are variable costs.
It is a variable cost if it costs you more if you make or sell one more.

Fixed Cost: Total cost does not change with changes in the volume of activity (within a
relevant range).The cost per unit will change as the number of units change
Ex-Rent, insurance, administrative salaries are examples of fixed costs. These costs do not
change just because you make or sell one more unit as long as you stay within the relevant
range
Working capital is a common measure of a company's liquidity, efficiency, and overall
health. Because it includes cash, inventory, accounts receivable, accounts payable, the portion
of debt due within one year, and other short-term accounts, a company's working capital
reflects the results of a host of company activities, including inventory management, debt
management, revenue collection, and payments to suppliers. Positive working capital
generally indicates that a company is able to pay off its short-term liabilities almost
immediately. Negative working capital generally indicates a company is unable to do so.

Capital Structure A mix of a company's long-term debt, specific short-term debt, common
equity and preferred equity. The capital structure is how a firm finances its overall operations
and growth by using different sources of funds.Debt comes in the form of bond issues or
long-term notes payable, while equity is classified as common stock, preferred stock or
retained earnings. Short-term debt such as working capital requirements is also considered to
be part of the capital structure