Accounting Standard and shortly brief of Book Keeping.

What is Accounting Standard?
It is a selected set of accounting policies or broad guidelines issued by an accounting body, regarding the principles and methods to be chosen out of several alternatives.that are followed for preparation of financial statements.it guide the treatment of transactions and events in the accounting process.

 Basis of Accounting Systems.
           A set of rules that the accountant follows in preparing three basic financial reports-Profit and loss account,Balance sheet and Cash flow statement. It tells when it count certain transactions in the records and how to do it.
        
Accrual or Mercantile Basis:
           The method of Transactions by which revenues, costs, assets and liabilities are reflected in accounts in the period in which they accrue. All the Income and Expenses are recorded in the books even transaction already done but cash not received during the accounting period, It is relating to Outstanding, prepaid, accrued (due but not received) and received in advance.

 this method is based on accounting technicalities, this method followed by business houses engaged in trading and manufacturing.

Cash or Receipt Basis:
            The method of recording transactions under which revenues, costs, assets and liablities are reflected in the accounts in the period which acctual received and actual payment are made.
                  which are outstanding such as Salaries due,rent unpaid, etc The profit under this system is calculated on the basis of the revenue received in cash during the accounting period less the expenditure incurred in cash during that period.
 

               Very few company use Cash Basis Method: 
                 1it does not give accurate picture of the profit and loss
                 2.Bank may not allow to use cash basis, it wants to know what you are earning or losing and cash
                    method is not good indicator of that.
                 3.Income tax law may not allow to use it.
   cash basis method mostly used by doctors,engineers,clubs,societies.
Tax Basis :
        This is the modified version of  accrual basis,Income tax law are used in deciding how to record transaction. but main difference between is that how you calculate depreciation. tax rules not let you deduct and expenses in the same period that you record it under accrual basis reporting.