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Basic concepts3
The document outlines the basic accounting process and classification of accounts. It begins with recording transactions in a journal, then posting to ledger accounts. A trial balance is prepared from the ledger accounts to check debits and credits are equal. The financial statements are prepared from the trial balance. Different types of accounts - personal, impersonal, real, and nominal - are classified. Rules of debit and credit are provided for different account types.
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- 1. RECORDING TRANSACTION –FLOW CHART Transaction Journal Ledger Trial Balance Financial Statement Analysis of financial statement Report
- 2. What is anAccount? An account is a summarised record of all transactions relating to a particular person, a thing, or an item of income or expense. Name of the Account Dr Cr
- 3. CLASSIFICATION OF ACCOUNTS Accounts Personal Accounts Impersonal Accounts Real Accounts Nominal Accounts Krishna Furniture Salaries Gopal Buildings Wages Loan from Ratanlal Machinery Interest Salaries outstanding Vehicles Rent Insurance pre-paid Cash
- 4. RULES OF DEBITAND CREDIT Real Accounts Debit what comes in Credit what goes out Nominal Accounts Debit expenses and losses Credit income and gains Personal Accounts Debit the receiver Credit the giver
- 5. JOURNAL Date Particulars L.F. Debit Amt. Credit Amt.
- 6. LEDGER Name of Account Date Particulars J.F. Amt. Date Particulars J.F. Amt. Rs. Rs.