This document outlines the fundamentals of accounting, focusing on the concepts of transactions, events, assets, liabilities, equity, revenues, and expenses. It distinguishes between events and transactions, defines key accounting terms such as debtors, creditors, capital, and various documents like invoices and vouchers used in accounting practices. The document also explains the accounting equation and rules related to recording financial transactions.

1. This presentation
is owned by
ABUL KALAM
AZAD PATWARY
“for class 9-
10[accounting]”

2. TRANSACTIONS
CHAPTER 2

3. “An event the
recognition of which
gives rise to an entry
in accounting
records. It is an
event which results
in change in the
balance sheet
equation. That is
which changes the
value of assets and
equity. In a simple
statement,
transaction means
the exchange of
money or moneys
worth from one
account to another
account Events like
purchase and sale of
goods, receipt and
payment of cash for
services or on
personal accounts,
loss or profit in
dealings etc., are the
transactions”.

4. "All transactions are event but all events are not transaction." Before
explaining this statement we have to know what is an event & what is a
transaction.
Event.
In general some happenings are called "Event".It changes the status of a person,a
community,a country and organigation or of a substance. The consequence of anything;
the issue; conclusion; result; that in which an action, operation, or series of operations,
terminates.
According to accountant Mr.E.L.Kohlar "A process or part of a process having particular
moment and place of occurrence is an Event. Example : India won 1983 cricket world
cup. In the other hand transaction is called when the exchange of a commodity or service
in terms of unit money exchange.
Transactions
An agreement between a buyer and a seller to exchange an asset for payment.
In accounting, any event or condition recorded in the book of accounts.
A Transaction is any process a user performs after successfully logging in. Examples of
Transactions are making a purchase, bill pay, money transfer, stock trade, address
change, and others. With each type of Transaction, different type of details are involved.
For example, in a stock trade, the data involved would be the symbol, unit price, number
of shares, buy or sell action, time of trade, total amount, broker commission, and so
on. As Mr.A.Field stone defined the definition of transaction is "A transaction consists
of an exchange or transfer of value , either in the form of money or goods or services
which are measured and expressed in terms of money."

5. According to Yoston, Smyth and
Brown "Transaction is an event ,
involving transfer of money or
moneys worth , the recognition of
which gives rise to record in the
books of account."
In the other hand Noble &
Niwonger said that "Any
happenings which brings change
in the pattern of assets or
liabilities or proprietorship of a
business concern , is a financial
transaction to it ." Example :
Purchase a motor car worh Rs.
2,00,000.
So from this definition we can find
that every incident are called event
. But when an incident happens
with a moneytory term it called
transaction. So we defiantly can
say that " All transactions are
event but all events are not
transaction."

6. Debtor
A person who owes money to the firm mostly
on account of credit sales of goods is called a
debtor. For example, when goods are sold to a
person on credit that person pays the price in
future, he is called a debtor because he owes the
amount to the firm.
Creditor
A person to whom money is owing by the firm is
called creditor. For example, Madan is a creditor
of the firm when goods are purchased on credit
from him
Capital / Owners equity
It means the amount (in terms of money or
assets having money value) which
the proprietor has invested in the firm or can
claim from the firm. It is also known as owner’s
equity or net worth. Owner’s equity means
owner’s claim against the assets. It will always
be equal to assets less liabilities, say: Capital =
Assets Liabilities.

7. Liability
It means the amount which
the firm owes to outsiders
that is, excepting the
proprietors. In the words
of Finny and Miller,
“Liabilities are debts; they
are amounts owed to
creditors; thus the claims
of those who ate not
owners are called
liabilities”. In simple
terms, debts repayable to
outsiders by the business
are known as liabilities.
Asset
Any physical thing or right owned
that has a money value is an asset.
In other
words, an asset is that
expenditure which results in
acquiring of some property or
benefits of a lasting nature.

8. Revenue
It means the amount
which, as a result of
operations, is added
to the capital. It is
defined as the inflow
of assets which
result in an increase
in the owner’s
equity. It includes all
incomes like sales
receipts, interest,
commission,
brokerage etc.,
However, receipts of
capital nature like
additional capital,
sale of assets etc.,
are not a
pant of revenue.
Expense
The terms ‘expense’
refers to the amount
incurred in the
process of earning
revenue. If the benefit
of an expenditure is
limited to one year, it
is treated as an
expense (also know is
as revenue
expenditure) such as
payment of salaries
and rent.

9. Purchases
Buying of goods by the trader
for selling them to his
customers is known as
purchases. As the trade is
buying and selling of
commodities purchase is the
main function of a trade.
Here, the trader gets
possession of the goods
which are not for own use
but for resale. Purchases can
be of two types. viz, cash
purchases and credit
purchases. If cash is paid
immediately for the
purchase, it is cash
purchases, If the
payment is postponed, it is
credit purchases.

10. Sales
When the goods purchased are
sold out, it is known as sales. Here,
the
possession and the ownership
right over the goods are
transferred to the buyer. It is
known as. 'Business Turnover’ or
sales proceeds. It can be of two
types, viz.,, cash sales and credit
sales. If the sale is for immediate
cash payment, it is cash sales. If
payment for sales is postponed, it
is credit sales.Stock
The goods purchased are for selling,
if the goods are not sold out fully, a
part
of the total goods purchased is kept
with the trader unlit it is sold out, it is
said to be a stock. If there is stock at
the end of the accounting year, it is
said to be a closing stock. This closing
stock at the year end will be the
opening stock for the subsequent

11. ACCOUNTING EQUATION
As indicated earlier, every business transaction has two
aspects. One aspect is debited other aspect is credited.
Both the aspects have to be recorded in accounts
appropriately. American Accountants have derived the
rules of debit and credit through a ‘novel’ medium, i.e.,
accounting equation. The equation is as follows: Assets =
Equities
The equation is based on the principle that accounting
deals with property and rights to property and the sum of
the properties owned is equal to the sum of the rights to
the properties. The properties owned by a business are
called assets and the rights to properties are known as
liabilities or equities of the business. Equities can be
subdivided into equity of the owners which is known as
capital and equity of creditors who represent the debts of
the business know as liabilities. These equities may also be
called internal equity and external equity. Internal equity
represents the owner’s equity in the assets and external
represents he outsider’s interest in the asset. Based on the
bifurcation of equity, the accounting equation can be
restated as follows:

13. Rules for accounting equation:
Following rules help in making the accounting equation:
(i) Assets: If there is increase in assets, this increase is debited in assets
account. If there is decrease in assets, this decrease credited in assets
account.
(ii) Liabilities: When liabilities are increase, outsider’s equities are credited
and when liabilities are decreased, outsider’s equities are debited.
(iii) Capital: When capital is increased, it is credited and when capital is
withdrawn, it is debited.
(iv) Expenses: Owner’s equity is decreased by the amount of revenue
expenses.
(v) Income or profits: Owner’s equity is increased by the amount of revenue
income.

15. Invoice
While making a sale, the seller prepares a statement giving the
particulars such
as the quantity, price per unit, the total amount payable, any
deductions made and
shows the net amount payable by the buyer. Such a statement is called
an invoice. Specimen of invoice are given below :

16. Cash Memo
The cash memo is a document that a seller passes to a buyer at the time of a specific
purchase of goods or services. It is the equivalent of an invoice and is only used to
record transactions that are paid for using cash, rather than bank transactions or
checks.
A cash memo will contain the
following information:
1) Date of purchase
2) Details of goods or
Service sold
3) Price of items sold
4) Name and address
of Seller.
5) Name and address
Of buyer.

17. A cash memo is recognized as a legal
document, in the same way that an invoice
is.
The only difference is that the cash memo is
for any transaction that is paid for in cash.
An invoice can also be used in this respect, but
many companies find it easier to differentiate
between cash sales and those paid for at a later
date.

18. Voucher
A voucher is a written document in support of a
transaction. It is a proof that a particular transaction has
taken place for the value stated in the voucher. Voucher is
necessary to audit the accounts. It is the documentary
evidence of transactions like Cash sales, cash purchase,
expenditure , income etc used for maintaining cash book.
Voucher are of two types :
1) Debit Voucher
2) Credit Voucher

19. A debit voucher plays a similar
role to a check in that it is a
substitute to cash. The debit
voucher will have a
particular cash value and they
are used to transfer money
from one bank account to
another.
One person will fill out an
amount that the debit voucher
will be worth to the person
who is receiving it. The
voucher is then passed on to
this person and they then pay
it into their bank and receive
the total some on the voucher
in their bank account.
However, in the modern age a
lot of people prefer to use
online banking functions
instead of checks or debit
DEBIT VOUCHER:

20. CREDIT VOUCHER:
A credit voucher is a form of payment that can be
given in the absence of cash. It can come in many
forms and is common throughout business.
A company that has cash flow problems is likely to use a credit voucher. This can
come in various forms, it can have a straight cash value or have an additional value
in terms of goods on offer from one company to another. In most situations it will
have a straight cash value and be used between two companies that regularly do
business with each other.
Another use of a credit voucher is from shops where a customer wishes to return a
purchase. Consumer law varies from country to country, in most nations a customer
is entitled to a full cash refund but some companies will issue a credit voucher
which means that the same amount of money must be spent in their store.

21. A document used by a
purchaser to inform a vendor
of the quantity and dollar
amount of goods being
returned, and requesting that
the dollar amount be
returned to the purchaser. A
debit note is often used to
return goods on credit. The
vendor then issues a credit
note to the purchaser
indicating that the goods
have been received, and that
the purchaser will not have to
pay for them.
Also known as a "debit
memo".
DEBIT NOTE

22. CREDIT NOTE
A note or memo sent from
a business to a customer,
informing the customer
that money has been added
to the customer's account.
Credit notes are typically
used when products are
returned for a refund, when
an invoice amount has been
overstated, or in other
circumstances where the
business must return money
to the customer. It is also
called as credit memo.