Category: Analyst

Seeing the growing fascination towards Finance by the students from non-commerce backgrounds I see an urge to make the student community familiar about the know how’s of Finance. So to start with, Accounts forms the base of any Finance stream.

One must know how to read and analyse the financial statements even if they don’t know how to pass the journal entries. This forms the basic understanding for any stream that you aim to go in whichever the field may be like equity research, investment banking, trading in derivatives or risk analysis. Accounting seems like a nightmare for engineers and non-commerce background students ohh! but please wait it won’t be that difficult because you people have gone through those rigorous 4 years of engineering (or may be of any other stream)where you have churned out the whole textbook in that available short time period during examinations. So have faith and get on board for the journey with me.

Accounting is a system for recording information about business transactions to provide summary statements of a company’s financial position and performance to users who require such information. Ohohohoh!!! wait in to tell you’ll simple words Accounting is a process where each and every financial transaction is recorded for some or the other use in the future which you’ll come to know as we go further. Accounting is done in various aspects like for Tax, Costing, Managerial and for various Financial reasons here we are going to discuss the financial accounting as the main prospect. In India, public companies as well as individuals must comply to some set of standards issued by the Govt. of India in accordance with Institute of Chartered Accountants of India(ICAI) and Securities and Exchange Board of India(SEBI). These set of standards are known as Accounting standards, the reason to follow this is that while comparing between various companies we can have them at par with each other without any technical shortcomings and to check for fraudulent measures in accounting methods or tax calculations by the tax authorities. In US, Companies comply to rules set down by Securities and Exchange Commission(SEC) in accordance with Generally Accepted Accounting Principles (US GAAP) which are in turn delegated to FASB(Financial Accounting Standards Board). Slowly the whole world including India and the US are moving towards a more evolved financial accounting system set down by the IASB know as the IFRS(International Financial Reporting Standards). This will help both the companies and the investor community to have a broader view of the scenario taking the companies in the whole world at par with each other. Hence trying to reduce the ambiguity and differences between the systems for the betterment of the investors. In this journey we will go through each and every aspect of Accounting from the perspective of a naive reader who is a newbie in Finance.

I will be posting a series of articles on this topic in the coming time. Stay tuned.

Welcome onboard!!!