meaning of accounting
meaning of book-keeping
difference between accounting and book-keeping
meaning of double entry system of book-keeping
accounting equation
accounting principles, concepts and conventions
parties interested in accounting information
accounting cycle
classification/types of accounts
golden rules of accounting
Basics of Accounting. Principles and concepts of Accounting
what is Double Entry System of Accounting?what Financial Statements?
Accounting is a process of identifying, recording, summarising and reporting economic information
to decision makers in the form of financial statements.
Accounting is the technique of recording, classifying, and summarizing financial transactions and interpreting the results. It involves recording business transactions in journals and ledgers, grouping like transactions, and preparing financial statements like the trial balance, income statement, and balance sheet. The double-entry system records both aspects of each transaction to ensure accuracy and allow calculation of profit and financial position. Financial accounting focuses on external reporting while cost and management accounting support internal decision making.
The document discusses key accounting principles including the four main financial statements, the basic accounting equation, and different types of accounts. It also covers topics like accrual versus cash accounting, depreciation, financial analysis methods, and financial ratios used to evaluate business performance and health. The document is intended to provide an overview of basic accounting concepts.
Financial accounting Meaning . This is useful for, BCOM,MCOM,CA,CS,CMA STUDENTSBibek Prajapati
Financial accounting is a specialized branch of accounting that keeps track of a company's financial transactions. Using standardized guidelines, the transactions are recorded, summarized, and presented in a financial report or financial statement such as an income statement or a balance sheet.
This is useful for, BCOM,MCOM,CA,CS,CMA STUDENTS
This document provides an overview of key concepts in accounting theory and principles, including:
1) It defines common accounting terms like assets, liabilities, capital, revenues, and expenses. It also distinguishes between current and non-current assets/liabilities.
2) It outlines important accounting principles like business entity, dual aspect, accounting period, going concern, cost, and matching.
3) It discusses the objectives of accounting, accounting records like vouchers, and concepts like materiality, full disclosure, consistency and objectivity in financial reporting.
This document provides an introduction to the concepts of accounting. It defines accounting as a system that collects and processes financial information to allow informed decisions by users. It discusses the need for accounting to determine results of business transactions and the financial position. It outlines the key functions of accounting like identifying, recording, classifying, summarizing, analyzing, interpreting and communicating financial information. It also discusses the accounting cycle and different branches and users of accounting information. Finally, it provides definitions of some basic accounting terms.
The document provides an overview of basic accounting concepts and the accounting cycle. It defines accounting as a process to record and communicate financial information. It explains the accounting equation that balances assets, liabilities, and owner's equity. Transactions are exchanges that affect accounts. The accounting cycle includes analyzing transactions, journalizing, posting, preparing a trial balance, adjusting entries, financial statements, and closing entries. The document also outlines users and branches of accounting.
Basics of Accounting. Principles and concepts of Accounting
what is Double Entry System of Accounting?what Financial Statements?
Accounting is a process of identifying, recording, summarising and reporting economic information
to decision makers in the form of financial statements.
Accounting is the technique of recording, classifying, and summarizing financial transactions and interpreting the results. It involves recording business transactions in journals and ledgers, grouping like transactions, and preparing financial statements like the trial balance, income statement, and balance sheet. The double-entry system records both aspects of each transaction to ensure accuracy and allow calculation of profit and financial position. Financial accounting focuses on external reporting while cost and management accounting support internal decision making.
The document discusses key accounting principles including the four main financial statements, the basic accounting equation, and different types of accounts. It also covers topics like accrual versus cash accounting, depreciation, financial analysis methods, and financial ratios used to evaluate business performance and health. The document is intended to provide an overview of basic accounting concepts.
Financial accounting Meaning . This is useful for, BCOM,MCOM,CA,CS,CMA STUDENTSBibek Prajapati
Financial accounting is a specialized branch of accounting that keeps track of a company's financial transactions. Using standardized guidelines, the transactions are recorded, summarized, and presented in a financial report or financial statement such as an income statement or a balance sheet.
This is useful for, BCOM,MCOM,CA,CS,CMA STUDENTS
This document provides an overview of key concepts in accounting theory and principles, including:
1) It defines common accounting terms like assets, liabilities, capital, revenues, and expenses. It also distinguishes between current and non-current assets/liabilities.
2) It outlines important accounting principles like business entity, dual aspect, accounting period, going concern, cost, and matching.
3) It discusses the objectives of accounting, accounting records like vouchers, and concepts like materiality, full disclosure, consistency and objectivity in financial reporting.
This document provides an introduction to the concepts of accounting. It defines accounting as a system that collects and processes financial information to allow informed decisions by users. It discusses the need for accounting to determine results of business transactions and the financial position. It outlines the key functions of accounting like identifying, recording, classifying, summarizing, analyzing, interpreting and communicating financial information. It also discusses the accounting cycle and different branches and users of accounting information. Finally, it provides definitions of some basic accounting terms.
The document provides an overview of basic accounting concepts and the accounting cycle. It defines accounting as a process to record and communicate financial information. It explains the accounting equation that balances assets, liabilities, and owner's equity. Transactions are exchanges that affect accounts. The accounting cycle includes analyzing transactions, journalizing, posting, preparing a trial balance, adjusting entries, financial statements, and closing entries. The document also outlines users and branches of accounting.
This document provides an overview of accounting basics and principles. It defines accounting as the process of identifying, recording, and communicating financial information. The objectives of accounting are to provide useful information to decision makers through relevance, reliability, and other qualitative characteristics. The document outlines key accounting principles like the business entity, accrual basis, and matching principles. It also describes the main financial statements - the balance sheet, income statement, statement of cash flows, and statement of owners' equity - and their purpose in communicating financial information to both internal and external users of accounting data.
This document provides an introduction to financial accounting. It discusses key topics such as the nature and purpose of accounting, accounting as an aid to decision making, the major financial statements including the balance sheet, and different forms of business ownership like sole proprietorships, partnerships, and corporations. The balance sheet, in particular, is explained in detail including its key components of assets, liabilities, and owners' equity.
The document discusses key concepts in financial accounting:
1. Accounting has evolved from a record keeping system to an information system that measures and reports on economic events in financial terms.
2. It involves recording, classifying, and summarizing financial data and communicating results to stakeholders.
3. Financial accounting aims to provide information to assess the financial position and performance of a business entity.
ACCOUNTANCY PROJECT
ON THE TOPIC
CONTENTS:
MEANING OF BOOK KEEPING
BOOK KEEPING IS A PART OF ACCOUNTING THAT IS CONCERNED WITH RECORDING OF FINANCIAL TRANSACTIONS IN THE BOOKS OF ACCOUNTS.
NOTE : EVENTS RELATED TO BUSINESS THAT CAN BE EXPRESSED IN TERMS OF MONEY ONLY ARE RECORDED.
STEPS INVOLVED IN BOOK KEEPING
AIMS OF BOOK KEEPING
RELATIONSHIP BETWEEN BOOK KEEPING, ACCOUNTING AND ACCOUNTANCY.
DIFFERENCE BETWEEN BOOK KEEPING AND ACCOUNTING.
THANK YOU
This document presents an overview of accounting principles for a group project. It discusses key assumptions like the monetary unit assumption, economic entity assumption, and time period assumption. It also covers important principles such as revenue recognition, matching, full disclosure, cost, and conservatism. Examples are provided to illustrate how each concept is applied. The document is intended to explore the basic guidelines that underlie the development of specific accounting rules and standards.
Accounting for Managers - Brief Overview'Nipun Jain'
The presentation discusses about the basics of accounting required for commerce and management students.
Contents:
Introduction to Accounting
Basic Accounting Terminologies
Generally Accepted Principles (G.A.A.P.)
Approaches to Accounting
Primary Book – Journal
Secondary Book – Ledger
Trial Balance
Sample Question
The presentation includes animations and can be used for display in seminars or lectures as well.
For further details, write to TheNipunJain@gmail.com
The document provides an overview of accounting, including its objectives and uses. It discusses that accounting involves recording, classifying, and summarizing financial transactions. It notes that accounting is required wherever money is involved to account for economic resources. The document also outlines the basic accounting equation of Assets = Liabilities + Owner's Equity and discusses key accounting concepts such as revenues, expenses, assets, liabilities, the double-entry system. It explains that accounting provides important financial information to various stakeholders like owners, management, creditors, investors, and governments.
This document discusses key accounting concepts and principles, including:
- Business entity, which treats a business and its owners as separate entities
- Money measurement, which records all transactions in monetary terms
- Going concern, which assumes a business will continue operating indefinitely
It also outlines principles such as historical cost, conservatism, consistency, and disclosure, and how they guide financial reporting. Challenges in revenue and expense recognition are addressed, along with users of financial statements and limitations of conventional reports.
This document discusses key accounting concepts and conventions. It explains the separate entity, money measurement, going concern, accounting period, accounting cost, matching, dual aspect, realization, conservatism, full disclosure, consistency, and materiality concepts/conventions. These concepts and conventions provide the basic assumptions and guidelines for preparing financial statements according to accounting principles.
The document outlines the steps for completing incomplete accounting records:
1) Prepare an opening statement of affairs with headings like assets, liabilities, capital.
2) Set up control accounts for debtors, creditors, cash, and the bank account.
3) Insert available figures and calculate any missing values, like gross profit or fixed assets.
4) Draft the required statements, including profit and loss, balance sheet.
This document provides an overview of key accounting concepts including bookkeeping, accounting, financial accounting, cost accounting, management accounting, accounting cycle, accounting equation, types of accounts, rules of accounting, analysis of transactions, and journal entries. It defines accounting as the process of collecting, recording, classifying, and summarizing financial transactions. It also describes the different types of accounts (asset, liability, capital, income, expense), users of accounting information, and the steps in the accounting cycle.
Preparation of financial statements for a business which has not maintained proper records(Double Entry records)
Profit Equation method or Converting incomplete records to complete records.
The accounting cycle is a series of steps that allows a business to track financial transactions and prepare financial statements. It begins with recording transactions from source documents, then journalizing and posting them to ledgers. A trial balance is prepared to check the accounting equation. Adjusting entries are made, then an adjusted trial balance. Finally, financial statements like the income statement and balance sheet are prepared to report on the business's profits and financial position. The accounting cycle is repeated each reporting period to continuously update the financial records.
Accounting is the process of identifying, measuring, recording, classifying, summarizing, analyzing, interpreting and communicating financial information about an entity. It involves recording economic events which affect the financial position and performance of a business. The key functions of accounting include identifying transactions, measuring transactions in monetary terms, recording transactions methodically in books of accounts, classifying transactions into appropriate accounts, summarizing transactions periodically into financial statements, analyzing trends and relationships, interpreting financial statements for decision making and communicating essential information to users.
The document discusses the meaning, contents, and purpose of ledgers in accounting. It explains that a ledger is the principal book of accounts that contains all personal, real, and nominal accounts from the journal. Transactions are posted from the journal to the relevant accounts in the ledger. Accounts are balanced by determining the difference between total debits and credits, and the ledger provides a complete record of business transactions and accounting information. Examples are given of ledger layout, posting entries, and balancing accounts.
This document discusses financial statement analysis, which involves reviewing a company's financial statements like the income statement, balance sheet, and cash flow statement to assess the company's financial health and performance over time and relative to other companies. Key aspects of financial analysis include evaluating profitability, solvency, liquidity, and stability using tools like ratio analysis, comparative statements, common size statements, and trend analysis. The results of financial analysis are used by various interested parties like management, investors, and creditors to evaluate financial performance, position, operating efficiency, and predict future performance.
This document discusses key accounting concepts and conventions. It defines 8 accounting concepts: business entity, money measurement, accounting period, accounting cost, going concern, dual aspect, realization, and matching. It also discusses 4 accounting conventions: consistency, materiality, conservatism, and full disclosure. The concepts and conventions establish standard principles and practices for preparing accurate financial statements and reports.
The document discusses cost accounting and its evolution from a technique for ascertaining product costs to a technique for cost control and reduction. It defines cost accounting as recording, classifying, and summarizing costs to determine product costs, plan and control costs, and provide information for management decision making. Cost accounting is distinguished from financial accounting in that it focuses on internal cost analysis for management purposes, uses estimated data, and classifies costs as fixed and variable.
Management accounting began with small business owners keeping simple records of cash transactions, costs, and pricing on a piecework basis. As businesses grew larger, management accounting developed to track fixed costs, efficiency rates, stock management, cash flow, budgeting, and forecasting. Financial and taxation accounting then emerged to record profits and losses for shareholders, comply with legal requirements for companies, ensure trustworthy management, and calculate taxable profits and deductions.
This document provides an overview of the history of accounting from ancient times through the medieval period and discusses key developments. It discusses some of the earliest evidence of accounting found on clay tablets from ancient Mesopotamia and Egypt dating back to 3500 BC. It then covers accounting practices in ancient civilizations like China, Greece, and Rome. During the medieval period, accounting focused on monitoring property and resources, as seen through systems like the Domesday Book in England and manorial accounting. The document sets the stage for the seminal work of Luca Pacioli and the development of double-entry bookkeeping in the 15th century.
This document provides an overview of accounting basics and principles. It defines accounting as the process of identifying, recording, and communicating financial information. The objectives of accounting are to provide useful information to decision makers through relevance, reliability, and other qualitative characteristics. The document outlines key accounting principles like the business entity, accrual basis, and matching principles. It also describes the main financial statements - the balance sheet, income statement, statement of cash flows, and statement of owners' equity - and their purpose in communicating financial information to both internal and external users of accounting data.
This document provides an introduction to financial accounting. It discusses key topics such as the nature and purpose of accounting, accounting as an aid to decision making, the major financial statements including the balance sheet, and different forms of business ownership like sole proprietorships, partnerships, and corporations. The balance sheet, in particular, is explained in detail including its key components of assets, liabilities, and owners' equity.
The document discusses key concepts in financial accounting:
1. Accounting has evolved from a record keeping system to an information system that measures and reports on economic events in financial terms.
2. It involves recording, classifying, and summarizing financial data and communicating results to stakeholders.
3. Financial accounting aims to provide information to assess the financial position and performance of a business entity.
ACCOUNTANCY PROJECT
ON THE TOPIC
CONTENTS:
MEANING OF BOOK KEEPING
BOOK KEEPING IS A PART OF ACCOUNTING THAT IS CONCERNED WITH RECORDING OF FINANCIAL TRANSACTIONS IN THE BOOKS OF ACCOUNTS.
NOTE : EVENTS RELATED TO BUSINESS THAT CAN BE EXPRESSED IN TERMS OF MONEY ONLY ARE RECORDED.
STEPS INVOLVED IN BOOK KEEPING
AIMS OF BOOK KEEPING
RELATIONSHIP BETWEEN BOOK KEEPING, ACCOUNTING AND ACCOUNTANCY.
DIFFERENCE BETWEEN BOOK KEEPING AND ACCOUNTING.
THANK YOU
This document presents an overview of accounting principles for a group project. It discusses key assumptions like the monetary unit assumption, economic entity assumption, and time period assumption. It also covers important principles such as revenue recognition, matching, full disclosure, cost, and conservatism. Examples are provided to illustrate how each concept is applied. The document is intended to explore the basic guidelines that underlie the development of specific accounting rules and standards.
Accounting for Managers - Brief Overview'Nipun Jain'
The presentation discusses about the basics of accounting required for commerce and management students.
Contents:
Introduction to Accounting
Basic Accounting Terminologies
Generally Accepted Principles (G.A.A.P.)
Approaches to Accounting
Primary Book – Journal
Secondary Book – Ledger
Trial Balance
Sample Question
The presentation includes animations and can be used for display in seminars or lectures as well.
For further details, write to TheNipunJain@gmail.com
The document provides an overview of accounting, including its objectives and uses. It discusses that accounting involves recording, classifying, and summarizing financial transactions. It notes that accounting is required wherever money is involved to account for economic resources. The document also outlines the basic accounting equation of Assets = Liabilities + Owner's Equity and discusses key accounting concepts such as revenues, expenses, assets, liabilities, the double-entry system. It explains that accounting provides important financial information to various stakeholders like owners, management, creditors, investors, and governments.
This document discusses key accounting concepts and principles, including:
- Business entity, which treats a business and its owners as separate entities
- Money measurement, which records all transactions in monetary terms
- Going concern, which assumes a business will continue operating indefinitely
It also outlines principles such as historical cost, conservatism, consistency, and disclosure, and how they guide financial reporting. Challenges in revenue and expense recognition are addressed, along with users of financial statements and limitations of conventional reports.
This document discusses key accounting concepts and conventions. It explains the separate entity, money measurement, going concern, accounting period, accounting cost, matching, dual aspect, realization, conservatism, full disclosure, consistency, and materiality concepts/conventions. These concepts and conventions provide the basic assumptions and guidelines for preparing financial statements according to accounting principles.
The document outlines the steps for completing incomplete accounting records:
1) Prepare an opening statement of affairs with headings like assets, liabilities, capital.
2) Set up control accounts for debtors, creditors, cash, and the bank account.
3) Insert available figures and calculate any missing values, like gross profit or fixed assets.
4) Draft the required statements, including profit and loss, balance sheet.
This document provides an overview of key accounting concepts including bookkeeping, accounting, financial accounting, cost accounting, management accounting, accounting cycle, accounting equation, types of accounts, rules of accounting, analysis of transactions, and journal entries. It defines accounting as the process of collecting, recording, classifying, and summarizing financial transactions. It also describes the different types of accounts (asset, liability, capital, income, expense), users of accounting information, and the steps in the accounting cycle.
Preparation of financial statements for a business which has not maintained proper records(Double Entry records)
Profit Equation method or Converting incomplete records to complete records.
The accounting cycle is a series of steps that allows a business to track financial transactions and prepare financial statements. It begins with recording transactions from source documents, then journalizing and posting them to ledgers. A trial balance is prepared to check the accounting equation. Adjusting entries are made, then an adjusted trial balance. Finally, financial statements like the income statement and balance sheet are prepared to report on the business's profits and financial position. The accounting cycle is repeated each reporting period to continuously update the financial records.
Accounting is the process of identifying, measuring, recording, classifying, summarizing, analyzing, interpreting and communicating financial information about an entity. It involves recording economic events which affect the financial position and performance of a business. The key functions of accounting include identifying transactions, measuring transactions in monetary terms, recording transactions methodically in books of accounts, classifying transactions into appropriate accounts, summarizing transactions periodically into financial statements, analyzing trends and relationships, interpreting financial statements for decision making and communicating essential information to users.
The document discusses the meaning, contents, and purpose of ledgers in accounting. It explains that a ledger is the principal book of accounts that contains all personal, real, and nominal accounts from the journal. Transactions are posted from the journal to the relevant accounts in the ledger. Accounts are balanced by determining the difference between total debits and credits, and the ledger provides a complete record of business transactions and accounting information. Examples are given of ledger layout, posting entries, and balancing accounts.
This document discusses financial statement analysis, which involves reviewing a company's financial statements like the income statement, balance sheet, and cash flow statement to assess the company's financial health and performance over time and relative to other companies. Key aspects of financial analysis include evaluating profitability, solvency, liquidity, and stability using tools like ratio analysis, comparative statements, common size statements, and trend analysis. The results of financial analysis are used by various interested parties like management, investors, and creditors to evaluate financial performance, position, operating efficiency, and predict future performance.
This document discusses key accounting concepts and conventions. It defines 8 accounting concepts: business entity, money measurement, accounting period, accounting cost, going concern, dual aspect, realization, and matching. It also discusses 4 accounting conventions: consistency, materiality, conservatism, and full disclosure. The concepts and conventions establish standard principles and practices for preparing accurate financial statements and reports.
The document discusses cost accounting and its evolution from a technique for ascertaining product costs to a technique for cost control and reduction. It defines cost accounting as recording, classifying, and summarizing costs to determine product costs, plan and control costs, and provide information for management decision making. Cost accounting is distinguished from financial accounting in that it focuses on internal cost analysis for management purposes, uses estimated data, and classifies costs as fixed and variable.
Management accounting began with small business owners keeping simple records of cash transactions, costs, and pricing on a piecework basis. As businesses grew larger, management accounting developed to track fixed costs, efficiency rates, stock management, cash flow, budgeting, and forecasting. Financial and taxation accounting then emerged to record profits and losses for shareholders, comply with legal requirements for companies, ensure trustworthy management, and calculate taxable profits and deductions.
This document provides an overview of the history of accounting from ancient times through the medieval period and discusses key developments. It discusses some of the earliest evidence of accounting found on clay tablets from ancient Mesopotamia and Egypt dating back to 3500 BC. It then covers accounting practices in ancient civilizations like China, Greece, and Rome. During the medieval period, accounting focused on monitoring property and resources, as seen through systems like the Domesday Book in England and manorial accounting. The document sets the stage for the seminal work of Luca Pacioli and the development of double-entry bookkeeping in the 15th century.
http://accountinghomeworkrescue.com/accounting-the-evolution-of
There are many functions of both the idea of accounting and accountants in general. The need for bookkeeping and records, as well as keeping numbers is both an organizational tool that is used by many, as well as a framework for an entire business model. In order for a business to thrive and progress, it needs to have a strong sense of bookkeeping properties, which incorporates accounting greatly. Even in households, there is a large need for a type of accounting practice. The numbers of every bill and purchased item needs to be accounted for in one way or another to prevent a debt or loss of money. This idea of organization and checks and balances is what keeps bookkeeping and accounting so relevant today. Check out the above link for accounting homework help.
Qualitative characteristics & accounting principles slide show gamemickykell
This document outlines key qualitative characteristics and accounting principles. The qualitative characteristics that make financial reports useful are comparability, understandability, relevance, and reliability. Some important accounting principles discussed are the entity principle, going concern principle, historical cost principle, consistency principle, conservatism principle, and monetary principle. These principles provide guidance on how transactions should be recorded and reported.
This document provides a history of accounting from ancient times through the modern age. It describes the early development of accounting in Mesopotamia in 3500 BC, and then discusses accounting practices in ancient Egypt, China, Greece, and Rome. Medieval accounting is discussed next, followed by the birth of double-entry bookkeeping during the Italian Renaissance. Luca Pacioli and his 1494 publication "Summa" which documented the system are also summarized. The document then discusses the further development and global spread of accounting and the accounting profession over subsequent centuries.
Accounting developed as a way to track private property, capital, commerce and credit transactions in a society with money and writing. Early accounting records in ancient Egypt and Mesopotamia helped tally goods and amounts, though record keeping was difficult without widespread literacy, numeracy, or consistent monetary systems. Some evidence suggests that counting systems developed before full writing systems to track stocks of goods using tokens. By ancient Mesopotamia, scribes served as accountants to ensure commercial agreements complied with requirements, and accounting records have been found dating back to 3200 BC.
This document provides an introduction to computerized accounting. It discusses the meaning of computerized accounting and how it differs from traditional manual accounting systems. The key steps in the computerized accounting process are outlined, including entering data, coding, bank reconciliation, posting, and generating reports. The major advantages of computerized accounting systems are speed, accuracy, and the ability to easily store and share large amounts of data. However, initial investment and security risks are disadvantages. Components of a computerized financial accounting system and the process for setting up a new company in Peachtree accounting software are also overviewed.
The document discusses the historical development of accounting. It begins with early forms of accounting using stones and clay tokens dating back 10,000 years. Double-entry bookkeeping was developed in the 1400s and published by Luca Pacioli. Accounting further developed during the Industrial Revolution and modernized with standardized principles and specialized fields. The document also provides an overview of accounting in Vietnam, from early feudal systems to developments after the country's reunification and economic reforms starting in the 1990s.
Accounting originated around 4000 BC in Babylonia and Egypt, where clay tablets were used to record transactions. It later developed in Greece and Rome, with the Romans using ledgers and cash books. Double entry bookkeeping was developed in Italy in the 14th century. Luca Pacioli is considered the father of accounting for introducing the double entry system in 1494. The modern accounting profession emerged in Scotland and England in the 19th century. In India, accounting practices have existed since at least the 4th century BC, as described in the ancient text Arthashastra. The Institute of Chartered Accountants of India was established in 1949.
Accounting identifies, measures, records, and communicates economic transactions. It has two main branches: financial accounting provides information to external users, while management accounting provides information internally. The legal structure of a business determines aspects like the number of owners, their liability, capital raising, and financial reporting requirements. Limited companies must publicly disclose annual financial statements to inform present and potential investors, employees, lenders, suppliers, customers, governments, and the public.
Acc0101. Meaning and Scope of AccountingCPT Success
Accounting involves recording, classifying, summarizing, analyzing, interpreting and communicating financial transactions and events. It includes journal entries, a ledger, a trial balance, income statements, balance sheets, and cash flow statements. The results are used by internal managers and external parties like investors, lenders, and government agencies. Accounting provides information for decision making, compares performance over time, identifies weaknesses for control, and supplies data for taxes and regulation.
This document discusses key accounting concepts and conventions. It describes 12 major concepts: business entity, going concern, money measurement, accounting period, cost, dual aspect, realization, matching, materiality, full disclosure, conservatism, and consistency. It provides examples and explanations of how each concept is applied in accounting practices and financial reporting.
Power Point Presentation on Accounting Concepts and Principlesjinulazer
The document discusses accounting concepts and principles, including the basic assumptions that the accounting system is based on the separate existence of business and proprietor, that the business will last for a long time, and that transactions involving money or money's worth will be recorded in account books. It also mentions that the accounting period is the interval for which accounts are prepared, expenses and revenues should match the same accounting period, and that every business transaction has a dual effect of debit and credit.
The document provides an overview of basic accounting concepts, including:
- Accounting is the process of recording, classifying, and summarizing financial transactions to prepare financial statements.
- Key accounting concepts include business entity, money measurement, dual aspect, cost, accounting period, conservatism, realization, and matching.
- Accounting conventions include going concern, consistency, and accrual.
- The document also discusses classifying accounting events as capital, revenue, or deferred revenue expenditures.
COMPUTERIZED ACCOUNTING AND AUDITING TECHNIQUES (CAAT)Rikesh Chaurasia
This document discusses computerized accounting auditing technology (CAATTs). It explains that CAATTs involves using computers to automate accounting and audit processes, including basic software like spreadsheets as well as more advanced statistical and business intelligence tools. The document contrasts traditional auditing methods, which rely on small samples, with CAATTs which allows auditors to analyze large volumes of data. It provides examples of how CAATTs can be used for tasks like fraud detection. The document also outlines some advantages and disadvantages of computerized accounting and auditing.
This document provides an overview of the history and origins of accounting. It discusses how accounting dates back to early civilizations like Sumerians and Egyptians who used accurate records of agricultural products. Double-entry bookkeeping was first published and introduced by Luca Pacioli in 1494 in his book Summa de Arithmetica where he laid out the framework for the modern practice of double-entry bookkeeping using debits and credits. The document also discusses key accounting books like the memorandum, journal, and ledger that form the basis of the double-entry system.
For more content and questions refer (Copy and Paste this link)
https://clickuniv.com/introduction-to-accounting/
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Here in this slide fundamentals of accounting are discussed. After studying this slide you will be able to know
Meaning and Definition of Accounting
Attributes (Characteristics) of accounting
Functions of Accounting
Accounting Process
Bookkeeping
Objectives of Accounting
Advantages of Accounting
Limitations of Accounting
Users of Accounting Information
Systems of Accounting
Basis of Accounting
This document provides definitions and explanations of key accounting concepts and terms. It discusses accounting as a system to record and communicate financial information. Key topics covered include the accounting equation, double-entry bookkeeping system, types of accounts, accounting cycle, journals, ledgers, debits and credits, balancing accounts, and more.
Accounting involves identifying, measuring, recording, classifying, and communicating the financial transactions and events of a business or organization. It provides essential financial information to evaluate an entity's activities. The key aspects of accounting include recording business transactions and activities, processing and storing financial data, and communicating information through financial reports. The accounting process involves setting up record keeping systems to track assets, liabilities, equity, revenues, and expenses according to accounting principles like the accounting equation.
Introduction to Accounting by Dr. Suresh VaddeSuresh Vadde
This document provides an introduction to accounting concepts. It defines accounting and discusses its importance for controlling financial performance and position. The key users of accounting information are identified as internal stakeholders like management and external stakeholders like investors. Financial accounting provides external reporting through financial statements, while managerial accounting provides internal reporting to support decision making. Accounting concepts like business entity, money measurement, accruals and conventions like consistency are also outlined. International standards like IAS and IFRS aim to harmonize accounting practices globally.
Introduction to Accounting by Dr. Suresh VaddeSuresh Vadde
This document provides an introduction to accounting concepts. It defines accounting as the process of identifying, measuring, and communicating financial information. It discusses the importance of accounting in providing reliable information to both internal and external users. Key accounting concepts covered include the accounting equation, revenue/expense recognition principles, and the going concern assumption. Financial accounting and management accounting are also introduced.
This presentation is based on accountancy notes on the topics-
1. Meaning of Accounting
2. Characteristics of Accounting
3. Branches of Accounting
4. Advantages and Disadvantages of Accounting
5. Accounting concepts and Conventions
6. Accounting Equation
Accounting involves identifying, measuring, and communicating financial information to allow for informed decisions. It records transactions and conveys a business's financial position through financial statements. Key principles include the business entity concept, money measurement concept, and dual aspect concept. Accounting methods include cash basis and accrual basis accounting. Key financial statements are the balance sheet, income statement, and cash flow statement, which provide information on a business's assets, profits, and cash flows.
1. The accounting process involves recording business transactions in journals and ledgers, preparing a trial balance to check for errors, and using the trial balance to create final accounts including a trading account, profit and loss account, and balance sheet.
2. Generally Accepted Accounting Principles (GAAP) provide uniform rules and guidelines for recording and reporting business transactions to standardize financial statement preparation and presentation.
3. Key accounting concepts include the business entity, money measurement, going concern, accounting period, cost, dual aspect, revenue recognition, matching, full disclosure, consistency, conservatism, materiality, and objectivity concepts.
accountings and financial anulysis.pptxKrishan Saini
The document provides an overview of accounting concepts, principles, and equations. It defines accounting as the process of recording financial transactions and communicating financial information. Some key points covered include:
- The basic accounting equation is Assets = Liabilities + Owner's Equity, indicating that assets are equal to liabilities plus the owner's investment.
- Accounting principles include accrual basis, matching, full disclosure, consistency, and conservatism.
- Accounting concepts include business entity, money measurement, cost, going concern, and dual aspect.
- Accounting has expanded in scope to include businesses, non-profits, governments, and individuals.
This document discusses the key concepts and principles of accounting. It defines accounting as identifying, recording, and communicating economic events of a business to interested users. It explains the processes of identifying transactions, recording transactions chronologically in journals and ledgers, and communicating information through financial reports. The document outlines the nature and functions of accounting in providing important financial information to business owners and stakeholders for decision making. It also discusses the different users of accounting information, both internal and external, and how the principles of accounting establish standards for financial reporting.
This document discusses the key concepts and principles of accounting. It defines accounting as identifying, recording, and communicating economic events of a business to interested users. It explains the processes of identifying transactions, recording transactions chronologically in journals and ledgers, and communicating information through financial reports. The document outlines the nature and functions of accounting in providing important financial information to business owners and stakeholders for decision making. It also discusses the different users of accounting information, both internal and external, and how the principles of accounting establish standards for financial reporting.
The primary purpose of accounting is to record financial transactions and classify them into accounts to produce financial reports. An accounting system records data from transactions, processes it, and provides meaningful financial information. It must provide timely and accurate information to decision makers while ensuring protection of assets and reliable reporting. Users of accounting information include business owners, employees, banks, investors, suppliers, lenders, government, customers, and management who all use the information for different purposes like assessing profitability, securing loans, or evaluating investment opportunities.
The document provides an overview of accounting concepts and principles for an MBA course. It defines bookkeeping and accounting, explains the double-entry system of bookkeeping, and covers key accounting concepts like the accounting equation, revenue and expense recognition, and accounting conventions like materiality and consistency. It also provides examples of journal entries and how to record transactions in ledger accounts.
Accounting is the language of business. It records business transactions taking place during the accounting period. Accounting communicates the result of the business transactions in the form of final accounts
The document discusses corporate objectives, finance and accounting concepts, and basic accounting principles. It explains that every organization aims to achieve broad objectives over time through vision and mission statements. It also defines key accounting terms like assets, liabilities, revenues, and expenses; and accounting principles including revenue recognition, historical cost, and matching. The document outlines the recording of transactions, rules of debit and credit, and types of original books like journals and cash books.
Accounting concepts and principles provide a framework for financial reporting and ensure users are not misled. Some key concepts are:
- Going concern assumes the business will continue operating indefinitely.
- Entity treats the business and its owners separately.
- Duality means every transaction has two aspects recorded.
- Realization recognizes revenue when goods/services are delivered.
- Matching recognizes revenue and expenses in the periods to which they relate.
Accounting involves recording, classifying, and summarizing financial transactions and events. The objectives of accounting include maintaining business records, ascertaining profit/loss, determining financial position, and providing information to internal and external users. The fundamental accounting equation shows that assets equal liabilities plus capital. Key accounting concepts include money measurement, entity, going concern, cost, dual aspect, periodicity, prudence, and realization. Accounting conventions include matching revenues and expenses, consistency, and materiality.
Accounting provides essential information to both internal and external users of a business. It records financial transactions, classifies them, and summarizes the results to determine profit/loss and the overall financial position. The key objectives of accounting are to keep systematic records, calculate profit/loss, ascertain the financial position, and provide useful data to management, owners, investors, creditors, and other stakeholders. While accounting is useful for planning, decision-making and control, its information is limited by relying on estimates, judgments, and historical data rather than current market values.
Accounting is a comprehensive system to record, analyze, and communicate financial information according to certain principles. It has evolved over time as business transactions have increased. The accounting process involves collecting documents, journalizing transactions, posting to ledger accounts, preparing an adjusted trial balance, and ultimately generating financial statements. The objectives of accounting are to keep systematic records, ascertain profitability and financial position, assist in decision making, and ensure compliance with relevant laws.
The document provides an overview of key concepts in financial accounting including:
- The meaning and objectives of financial accounting
- The advantages and limitations of financial accounting
- Accounting principles like the accounting equation, concepts, and conventions
- International accounting standards set by the IASB
- Users of accounting information both internal and external to a business
Here are the journal entries for the above transactions:
Date Particulars L.F. Debit (Rs) Credit (Rs)
1/1/2012 Cash A/c 5,000
To Capital A/c
3/1/2012 Bank A/c 1 1,000
To Cash A/c
4/1/2012 Purchase A/c 2 1,000
To Cash A/c
5/1/2012 Furniture A/c 3 500
To Cash A/c
6/1/2012 Cash A/c 600
To Sales A/c
This document provides an introduction to basic accounting principles. It defines key accounting terms like assets, equity, revenue, expenses, and drawings. It explains the accounting cycle which involves recording transactions in a journal, posting to ledgers, preparing a trial balance, and ultimately financial statements like the income statement and balance sheet. It also outlines the different accounting methods and classifications of accounts. The goal is to introduce the reader to the fundamentals of accounting and bookkeeping.
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Basics of accounting
1.
2. Difference between Book-keeping and Accounting:-
Book-keeping Accounting
Book-keeping is a primary stage. Accounting is a secondary stage. It
starts where book-keeping ends.
Book-keeping work is performed by junior
staff.
Accounting work is performed by
senior staff.
The main activity of book-keeping is to
systematically record all the financial
transactions of business in journal and
prepare ledger accounts and ascertaining
the balance of each ledger account.
The main activity of accounting is to
prepare trial balance, profit and loss
account and balance sheet and
communicating such financial
information to interested parties.
A book-keeper cannot do the work of an
accountant.
An accountant can do the work of a
book-keeper.
The book-keeper is not required to have a
higher level of knowledge as accountant.
The accountant is required to have a
higher level of knowledge than a
book-keeper.
The job of book-keeper is often routine and
clerical in nature and does not require
analytical skill.
The job of accountant is analytical in
nature and hence analytical skill is
required.
What is Double entry system of book-keeping?
Double entry system of book-keeping refers to a system of accounting under which
two aspects of a financial transaction are recorded. The two aspects are debit and
credit. Every debit has a equal amount of credit and every credit has a equal amount
of debit. So total of all debits is equal to the total of all credits.
Every financial transaction involves at least two accounts. One account is debited
and the other account is credited by the same amount. If a transaction involves more
than two accounts, the sum of debit accounts and sum of credit accounts is equal.
3. What is Accounting equation?
The accounting equation is the foundation of double entry book-keeping system. The
equation is:-
Assets=Liabilities+Shareholders capital
or
Shareholders capital=Assets-Liabilities
or
Liabilities=Assets-Shareholders capital
According to the accounting equation, the total assets of a company are equal to the
total liabilities and shareholders capital. The accounting equation displays that
assets of a company are either financed by borrowing money or paying with the
money of company’s shareholders. The balance sheet reports a company’s assets,
liabilities and shareholders capital. It shows that a company’s total amount of assets
equals the total amount of liabilities plus shareholders capital.
The account equation can also be expanded like this:Assets=Liabilities+Shareholders
capital+Retained earnings
Retained earnings=Net profit-Dividends
Basis of Accounting:-
Basis of accounting is the method by which a company’s financial transactions are
recorded in the books of accounts. There are two basis or methods of accounting
which can be used to record the financial transactions:-
Cash basis of accounting:-
Cash basis of accounting is the method of recording transactions in which revenues
and expenses are reflected in the books of accounts for the period in which actual
receipts and actual payments are made. Cash basis of accounting recognizes
revenues when cash is actually received in business and expenses when cash is
actually paid. For e.g. if cash is received from the sale of goods, it is recorded as
revenue on the date of receipt of cash no matter when the sale was made. Similarly if
cash is paid for the purchase of goods, it is recorded as expense on the date of
payment of cash no matter when the purchase was made. Sole proprietors and small
companies which are not incorporated generally use cash basis of accounting.
Accrual basis of accounting:-
Accrual basis of accounting is the method of recording transactions in which
revenues and expenses are reflected in the books of accounts for the period in which
they accrue. Accrual basis of accounting recognizes revenues when they are earned
and not when cash is actually received and expenses when they are incurred and not
when cash is actually paid. For e.g. if sale of goods is made today and the cash is
received after one week, then it is recorded as revenue today. Similarly if purchase of
goods is made today and the cash is paid after two weeks, then it is recorded as
expense today. Accrual method allows the revenues to match the expenses which
gives more meaningful financial reports. Big incorporated companies all over the
world are generally required to compulsorily use accrual basis of accounting. Even in
4. India all the incorporated companies are required to compulsorily maintain the books
of accounts according to the accrued basis of accounting. Accrual basis of
accounting is also called as mercantile basis of accounting.
Accounting principles, concepts and conventions:-
There are certain rules to be followed in accounting for which a number of principles,
concepts and conventions are developed which guide how the financial transactions
should be recorded and how the financial statements should be reported. Following
are the main ones:-
Money measurement:-
Only those transactions and events which are capable of being expressed in terms of
money should be included in the books of accounts. In other words, information
which cannot be expressed in terms of money should not be included in books of
accounts. For e.g. quality of after sales service of a company or skills of employees
of a company do not have any monetary value so they are not to be included in
accounting books.
Going concern:-
It is assumed that the company is a going concern and it will continue to operate its
business for unspecified long period in the future. It is assumed that the company
has neither the intention nor the necessity to liquidate or significantly curtail its
operations in near future. Companies that are expected to continue operating for a
long period of time are called as going concern.
Accrual:-
Financial statements should be prepared according to the accrual basis of accounting
which recognizes all revenues and expenses when they are earned or incurred and
not when money is received or paid.
Dual aspect:-
Entry made for each financial transaction is composed of two parts- debit and credit.
Every debit has a corresponding credit and every credit has a corresponding debit.
Total of all debits must be equal to total of all credits. The two fold aspect of a
transaction is called duality of a transaction.
Business entity:-
A bus ness is treated as a separate entity that is distinct from its owner and all other
business entities and hence a distinction is made between (a) personal transactions
of the owner and his business transactions and (b) transactions of one business
entity and those of other business entities. Personal transactions and business
transactions of owner should be accounted separately and transactions of all
business entities should be accounted separately. In sole proprietorship, the
business entity and the sole proprietor are the same but for the purpose of
accounting, they are treated separately.
5. Historical cost:-
Historical cost is the cost at the time of acquisition of an asset. It is the original cost of
the asset at the time of its purchase. The assets must be reported in the financial
statements at their historical costs and not their current market value. For e.g if land
was purchased few years back at Rs 500000 and its current market value has
become Rs 800000, it should be shown in the balance sheet as Rs 500000 which is
its original cost at the time of purchase.
Periodicity:-
A company divides its business activities into artificial time periods which are known
as accounting periods. After the end of each accounting period, financial statements
such as profit and loss account and balance sheet are prepared and presented to the
interested parties or users.
Objectivity:-
A company’s accounting information should be based on verifiable data and must be
free from the personal bias of the accountant. Every financial transaction and event
recorded in the books of accounts should have adequate evidence to support it and
must be not based on the personal opinion or feeling of the accountant. The financial
statements so prepared are based on facts and not on opinions.
Substance over form:-
The financial transactions and events should be recorded and presented in
accordance with their economic substance and reality rather than just their legal
form.
Cost-benefit:-
The cost of providing accounting information in the financial statements should not be
more than the benefit from that information to users. It costs the company lot of
money to gather all the accounting and other financial information and present it
through financial statements and hence the benefit derived from this information
should be more than the cost of providing it.
Full disclosure:-
The company should disclose all the relevant and required information to the users in
the financial statements so that the users of the financial statements can make a
correct assessment about the financial performance and financial position of the
company and take informed decisions. The companies provide notes at the end of
the financial statements because of the requirement of full disclosure.
Conservatism:-
In the situation of uncertainty and doubt, there should be a conservative approach
which means expenses and losses which are uncertain should be recorded even if
they are not incurred yet and incomes and gains which are uncertain should not be
recorded till the time they are actually earned. The conservatism approach ensures
that the profit is not overstated and loss is not understated.
6. Consistency:-
The company should follow same accounting method or policy for a given category of
transactions and events for each accounting period. The company should change the
accounting method or policy only if the new method or policy is better than the earlier
one and it should disclose such change to the users by giving a note about it at the
end of financial statements.
Parties interested in or users of accounting information:-
There are various category of people who are interested in the accounting
information of a company and use this information to satisfy their respective needs
for information. Some of the users of accounting information are:-
Shareholders:-
Shareholders of the company need information to judge the prospects of their
investment in the company so that they can decide whether to hold or sell their
shares or buy more shares.
Potential shareholders:-
Potential investors need information to judge the prospects of the company so that
they can decide whether they should buy the shares of the company or not.
Lenders:-
Lenders need information so that they can know whether the company can return the
money lent to them along with the interest when due and on this basis the lenders
decide whether to give credit to the company or not.
Suppliers:-
Suppliers need information so that they can know whether the company can pay
them in time for the goods sold to them on credit and on this basis the suppliers
decide whether to sell raw materials to the company on credit and on what payment
terms.
Customers:-
Customers who have a long-term involvement with a company or dependent on a
company are interested in knowing whether the company would be able to continue
its existence.
Government and tax authorities:-
Government and tax authorities need information for regulatory purpose and for
assessing the tax liabilities of the company.
Management:-
Management of a company need information to review the company’s performance
and to take various kinds of decisions.
7. Employees:-
Employees of a company are interested in information about the profitability and
stability of the company. They need information so that they can decide the ability of
the company to pay salaries and provide various kinds of employee benefits to them.
Accounting cycle:-
Accounting cycle consists of the steps or stages that are involved in the accounting
process. Accounting cycle starts with the recording of financial transactions and
events of a business and ends with the preparation of financial statements. Following
are the main steps in the accounting cycle:-
Recording financial transactions:-
Identifying and recording the financial transactions of the business in the journal. The
process of recording the transactions in journal is called as journalizing and the
transactions recorded in journal are called as journal entries.
Transferring financial transactions to ledger:-
Opening ledger accounts and transferring the transactions recorded in journal to the
respective ledger accounts. The process of transferring the transactions to the ledger
accounts is called as posting.
Balancing the ledger accounts:-
Ascertaining the difference between the total of debit amount column and total of
credit amount column of all the ledger accounts. This process is called as balancing.
Preparing trial balance:
Preparing trial balance which contains a list showing the balances of each and
every ledger account opened. Trial balance helps to verify whether the sum of debit
balances and sum of credit balances are equal.
Preparing financial statements:
Preparing financial statements such as trading and profit and loss account, balance
sheet. Profit and loss account is prepared to ascertain the profit or loss of the
company for the accounting period and balance sheet is prepared to ascertain the
position of assets and liabilities of the company at the end of the accounting period
All the above steps are repeated again for each accounting period.
What is an Account?
An account is a summary of the relevant financial transactions of a business that took
place under a particular head during a particular period of time. Every account has
two sides- debit side and credit side.
Classification or types of accounts:-
Accounts can be classified according to the traditional method of classification or
modern method of classification which is also called as accounting equation based
method of classification.
8. Traditional method of classification of accounts:-
Under the traditional method of classification, accounts are classified into three types
which are as under:-
Personal accounts:-
Personal accounts are the accounts of persons and firms that the company deals
with. Personal accounts can be of three types:-
Natural persons account: - These are the accounts of real persons that the company
deals with. For e.g. raj’s account, jai’s account, etc.
Artificial persons account: - These are the accounts of firms and organizations that
the company deals with. For e.g. ABC company ltd’s account, IBS bank’s account,
etc.
Representative persons account: - These are the accounts which indirectly represent
a group of persons. When accounts are of similar nature and their number is large,
they are grouped under one head and a representative personal account is opened.
For e.g. if salary is due to many employees, then outstanding salary account is
opened if rent is paid in advance, then rent paid in advance account is opened, if
interest is received in advance, then interest received in advance account is opened
and so on.
Real accounts:-
Real accounts are the accounts of assets, properties and possessions of the
company. Real accounts can be of two types:-
Tangible real account: - These are the accounts of tangible assets. Tangible assets
are the assets which can be seen, touched, felt and measured. For e.g. land account,
building account, machinery account, furniture account, cash account, etc.
Intangible real account: - These are the accounts of intangible assets. Intangible
assets are the assets which cannot be seen, touched, felt but can be measured in
value. For e.g. goodwill account, trademark, copyright, patent, etc.
Nominal accounts:-
Nominal accounts are the accounts which are used in measuring the income and
expenses of the company so that the net profit or net loss for the accounting period
can be can be calculated. Nominal accounts relate to expenses, losses, income and
gains. For e.g. purchases account, sales account, salary account, rent account, loss
by fire account, discount received or allowed account, etc.
personal and real accounts form part of the balance sheet and nominal accounts
form part of the trading and profit and loss account of the company.
9. Rules for debit and credit when accounts are classified according to the
traditional method:-
According to the double entry system of book-keeping and accounting, every
financial transaction affects at least two accounts. One account has to be debited
and the other account has to be credited. Certain rule has to be followed for each
account to decide which account has to be debited and which account has to be
credited. These rules are also called as Golden rules of accounting.
Rule for personal accounts:-
Debit the receiver and credit the giver.
Rule for real accounts:-
Debit what comes in and credit what goes out.
Rule for nominal accounts:-
Debit all expenses and losses and credit all income and gains.
Let us look at some examples to understand how to apply the debit and credit
rules for financial transactions:-
Example 1
Paid cash to Mr. DK
In this transaction the two accounts affected are- cash account which is a real
account and Mr. DK account which is a personal account. As per the rule of personal
accounts, we have to debit the account of benefit receiver which in this transaction is
Mr. DK and as per the rule of real accounts, we have to credit what goes out which in
this transaction is cash.
10. Example 2
Purchased goods on credit from ACK company ltd
In this transaction the two accounts affected are- purchases account which is a
nominal account and ACK company ltd account which is a personal account. As per
the rule of personal accounts, we have to credit the account of benefit giver which in
this case is ACK company ltd as it is giving goods to the company on credit and as
per the rule of nominal accounts, we have to debit all expenses which in this
transaction are purchases.
Example 3
Paid salary to employees
In this transaction the two accounts affected are- cash account which is a real
account and salary account which is a nominal account. As per the rule of nominal
accounts, we have to debit all expenses which in this transaction is salary and as per
the rule of real accounts, we have to credit what goes out which in this case is cash.
Example 4
Sold goods for cash
In this transaction the two accounts affected are- sales account which is a nominal
account and cash account which is a real account. As per the rule of nominal
accounts, we have credit all income which in this case is sales and as per the rule of
real accounts, we have to debit what comes in which in this case is cash.
Modern method of classification of accounts:-
Under the modern method of classification, accounts are classified into five types
which are as under:-
Income accounts:-
These are the accounts of all the revenues earned by the company such as sale of
goods or rendering of services, interest received, discount received, profit from sale
of investments, etc. Income accounts appear on the credit side of trading and profit
and loss account of the company.
Expenses accounts:-
These are the accounts of all the costs and losses incurred by the company to earn
the income such as purchase of raw materials, rent paid, advertising expenses,
salaries paid, loss by fire, etc. Expenses accounts appear on the debit side of trading
and profit and loss account of the company.
11. Assets accounts:-
These are the accounts of tangible and intangible assets of the company such as
plant, machinery, land, building, goodwill, patents, copyright, etc. Assets accounts
appear on the balance sheet of the company.
Liabilities accounts:-
These are the accounts of debts and obligations of the company such as loans, trade
creditors, outstanding expenses, etc. Liabilities accounts appear on the balance
sheet of the company.
Capital accounts:-
These are the accounts of the owners of the company such as equity share capital,
drawings, etc. Capital accounts appear on the liabilities side of balance sheet of the
company.
Rules for debit and credit when accounts are classified according to the
modern method:-
Rule for income accounts:-
Debit the decrease and credit the increase.
Rule for expenses accounts:-
Debit the increase and credit the decrease.
Rule for assets accounts:-
Debit the increase and credit the decrease.
Rule for liabilities accounts:-
Debit the decrease and credit the increase.
Rule for capital accounts:-
Debit the decrease and credit the increase.
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