2. What is Accounting?
• Accounting is the process of identifying, measuring, recording, and
communicating the required information relating to the economic
events of an organization.
• Accounting provides financial information to the management and
those having a direct financial interest in the enterprise. Accounting
information is also of interest to those having an indirect interest in
the enterprise.
3. History of Accounting
• Luca Pacioli is considered "The Father of Accounting and
Bookkeeping" due to his contributions to the development of
accounting as a profession. An Italian mathematician and friend of
Leonardo da Vinci, Pacioli published a book on the double-entry
system of bookkeeping in 1494.
5. Record business activities in a systematic
manner
Evaluate the performance of the business in
terms of profit
Know the financial position of the business
Control business activities effectively
Provide information to various stake holders
in the business
10. Types
of
Accounts
Personal Accounts
Debit the Receiver
Credit the Giver
Real Accounts
Debit what comes in
Credit what goes out
Nominal Accounts
Debit All Expenses & Losses
Credit All Incomes & Gains
11. Rules of Debit and Credit
ACCOUNT INCREASED BY DECREASED BY
Assets Debit Credit
Expenses Debit Credit
Liabilities Credit Debit
Equity Credit Debit
Revenue Credit Debit
14. Recording of Transactions
• Business Transactions
• Receipts – Cash or Bank
• Payments – Cash or Bank
• Purchases
• Sales
• Source Document or Voucher
15. Accounting Equation
• Assets = Liabilities + Capital
• Assets – Liabilities = Capital
• Assets – Capital = Liabilities
17. Illustration - 1
Date Transactions
01-04-2022 Business started with cash Rs. 5,00,000
02-04-2022 Goods purchased from Mohan Rs. 40,000
02-04-2022 Stationary purchased for cash Rs. 2,000
02-04-2022 Opened a bank account with UTI Bank by depositing cash of Rs. 50,000
19. Solution:-
Date Particulars L.F. Debit (Rs.) Credit (Rs.)
01-04-
2022
Cash A/c Dr. 1 5,00,000
To Capital A/C 5,00,000
(Business started with cash)
02-04-
2022
Purchases A/c Dr. 2 40,000
To Mohan A/c 40,000
(Being Goods Purchased on Credit)
02-04-
2022
Stationery A/c Dr. 3 2,000
To Cash A/c 2,000
(Being purchase of stationery for cash)
02-04-
2022
UTI Bank A/c Dr. 4 50,000
To Cash A/c 50,000
(Being cash deposited into UTI Bank A/c)
21. Date Particulars J.F Amount Date Particulars J.F Amount
01-04-22 To Capital A/c 1 500000 02-04-22 By Stationary A/c 3 2000
02-04-22 By UTI Bank A/c 4 50000
30-04-22 By Balance C/D 448000
500000 500000
01-05-22 To Balance B/D 448000
Cash A/C
Date Particulars J.F Amount Date Particulars J.F Amount
30-04-22 To Balance C/D 500000 01-04-22 By Cash A/c 1 500000
500000 500000
01-05-22 By Balance B/D 500000
Capital A/C
22. Date Particulars J.F Amount Date Particulars J.F Amount
02-04-22 To Mohan 2 40000 30-04-22 By Balance C/D 40000
40000 40000
01-05-22 To Balance B/D 40000
Purchase A/C
Date Particulars J.F Amount Date Particulars J.F Amount
30-04-22 To Balance C/D 2 40000 02-04-22 By Purchase A/C 40000
40000 40000
01-05-22 By Balance B/D 40000
Mohan A/C
Date Particulars J.F Amount Date Particulars J.F Amount
02-04-22 To Cash A/c 3 2000 30-04-22 By Balance C/D 2000
2000 2000
01-05-22 To Balance B/D 2000
Stationary A/C
23. Date Particulars J.F Amount Date Particulars J.F Amount
02-04-22 To Cash A/c 4 50000 30-04-22 By Balance C/D 50000
50000 50000
01-05-22 To Balance B/D 50000
UTI Bank A/C
24. Trial Balance
Date Particulars L.F Debit (Rs.) Credit (Rs.)
01-05-2022 Cash A/c 448000
01-05-2022 Capital A/c 500000
01-05-2022 Purchase A/c 40000
01-05-2022 Mohan A/c 40000
01-05-2022 Stationary A/c 2000
01-05-2022 UTI Bank A/c 50000
5,40,000 5,40,000
25. Particulars Debit (Rs.) Credit (Rs.)
Commenced business with cash Cash Capital
Paid into Bank Bank ____
Purchased goods for cash ____ Cash
Paid cash for furniture ____ Cash
Sold to David, goods on credit ____ Goods
Received from David on account Cash _____
Sold to Suma goods for cash Cash _____
Received from Radha Cash Cash _____
Allowed Discount to Radha ____ Radha
Bought of Soham goods for cash Goods _____
Paid Mohan by Cheque Mohan _____
Received rent from a sub tenant Cash _____
Rent due to landlord Rent _____
Paid wages by Cheque Wages _____