This document provides an overview of accounting principles including: - A brief history of accounting from 4th century India to the development of double-entry bookkeeping in 1494. - Definitions of bookkeeping and accounting as the recording and summarizing of business transactions. - An explanation of key accounting concepts like the accounting equation, realization principle, and matching principle. - Descriptions of different types of accounts like personal, real, and nominal accounts and the golden rules for debit and credit. - An outline of accounting conventions regarding materiality, full disclosure, conservatism, and consistency.

1. Present By,
Mr. V. GURUMOORTHI
Assistant Professor
Department of Commerce.
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2. PRINCIPLES OF ACCOUNTANCY
05.07.2016
TUESDAY.
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3. Contents….
1. History of Accounting
2. Book keeping
3. Accounting Meaning
4. Steps of Accounting
5. Types of Accounting
6. Golden Rules
7. Accounting Cycle
8. Accounting concepts & Conventions
9. Journal
10. Ledger
11. Trial Balance
12. Final Accounts
Slides
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4. History:
 It has evidence in 4-th Century in
Artha Sasthiram Wrote by Gowdilya.
 After 14-th Century, Established certain
procedures in Accounting system by
Italian Merchant Luca Pecioli.
 He Introduced Double Entry System
at 1494.
 He is a Father of Accounts.
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5. BOOK KEEPING
 It is concerned with the Recording
of Business Transaction in a
systematic manner.
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6. 6
ACCOUNTING

7. Meaning:
 Accounting, the term refers “art of recording, classifying and
summarizing and interpretation of the business
transaction in a significant manner and in terms of money”.
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8. 8

9. 9

10. TYPES OF ACCOUTS
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Real A/c
Nominal
A/c
PERSONAL IMPERSONAL
Natural
person
Artificial
person
Representative
person
Tangible
Assets
Intangible
Assets
Expenses
Incomes

11. I. Personal Accounts:
 Accounts of persons with whom with business has
dealings are known as personal accounts.
 A) Natural Persons: Owner, Debtors(Customer),
Creditors(Suppliers).
 B) Artificial Persons: Bank, Institution, Company,
Government.
 C) Representative Persons: Out Standing(O/s),
Prepaid Expenses.11

12. II. IMPERSONAL ACCOUNTS
 Other than the personal accounts known as
Impersonal Accounts.
Real Accounts: All assets of the company.
 Tangible Assets: It can be see, touch, feel. Such as, Land,
Building, Cash, Bank balance.. ect.,
 Intangible Assets: It can’t see, touch, feel. Such as, Copy Right,
pattern rights, Good will, Trade mark.
Nominal Accounts: All Expenses and Incomes. Such
as, Salary paid, Rent paid, Interest received.
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13. GOLDEN RULES
ACCOUNTS DEBIT
ASPECTS
CREDIT
ASPECTS
Personal
Account
Receiver Giver
Real
Account
What
comes in
what
goes out
Nominal
Account
Expenses/
Losses
Incomes/
Gains
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14. OBJECTIVES OF ACCOUNTING
 To maintain accounting records.
 To Ascertain true profit or loss.
 To Find out correct financial positions.
 To provide information to Users.
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15. ADVANTAGE OF ACCOUNTING
 Maintaining Systematic records
 Preparation of financial statements
 Assessment of progress
 Aid to decision making
 Full fill Statutory requirements
 Information to interested groups
 Evidence in courts
 Taxation Problems
 Merger of firms.
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16. Accounting Concepts and
Conventions
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17. ACCOUNTING CONCEPT
 The term ‘concept’ is used to connote accounting
postulate, that is necessary assumptions and
conditions upon which accounting is based.
These are the theories on how and why certain
categories of transactions should be treated in a
particular manner.
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18. Such as,
1. The entity Concept
2. The money measurement concept
3. Going concern concept
4. Dual aspect concept
5. Accounting period concept
6. Realization concept
7. Cost concept
8. Matching concept
9. The accounting Equation Concept
10. Objective evidence concept
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19. • The business and its owner(s) are two
separate entities
1. BUSINESS ENTITY CONCEPT

20. Capital (Liability)
Drawings (Asset)
The Books Of Accounts are prepared
from the point of view of the
business…… Hence,

21.  It is assumed that the entity is a going
concern, i.e., it will continue to operate
for an indefinitely long period in future
and transactions are recorded from this
point of view.
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2. GOING CONCERN CONCEPT

22.  In accounting, a record is made only of
those transactions or events which can be
measured and expressed in terms of
money.
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3. MONEY MEASUREMENT CONCEPT

23. Non monetary transactions are not
recorded in accounting.
Attitude Experience
Innovativeness
Honesty
Team work
Passion
skill

24. For measuring the financial results of a
business periodically, the working life of
an undertaking is split into convenient
short periods called accounting period.
4. ACCOUNTING PERIOD CONCEPT

26. An asset acquired by a concern is
recorded in the books of accounts at
historical cost (i.e., at the price actually
paid for acquiring the asset). The market
price of the asset is ignored.
5. COST CONCEPT

27. Historical
Cost Of
Market Value
Of

28. For Every Debit,
there is a Credit
Every transaction should
have a two- sided effect to
the extent of same
amount..
6. DUAL-ASPECT CONCEPT

29. • Cash Account Rs. 10,000
• Sales Account Rs. 10,000
For Example:
Cash Sales Rs. 10,000

30. Profit is earned when goods or
services are provided/
transferred to customers. The
The revenue should be
recognized only when it is
legally due and realizable.
7. REALISATION CONCEPT

31. The matching principle ensures that
revenues and all their associated
expenses are recorded in the
same accounting period.
Hence, the Outstanding and prepaid
expenses and incomes have to be
properly adjusted.
8. MATCHING CONCEPT

32. 9. ACCOUNTING EQUATION CONCEPT

33. 33
10. OBJECTIVE EVIDENCE CONCEPT
All accounting entries must be based on
objective evidence. It refers, verifiability,
reliability and absence of bias.

34. Accounting
Conventions

35. ACCOUNTING CONVENTIONS
 Accounting Conventions are the common
practices which are universally followed in
recording and presenting accounting
information of business. It helps in
comparing accounting data of different
business or of same units for different periods.
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36. Such as,
 Convention of Materiality
 Convention of Full Disclosure
 Convention of Conservatism
 Convention of Consistency
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37. Only those transactions,
important facts and items
are shown which are useful
and material for the
business. The firm need
not record immaterial
and insignificant items.
1. MATERIALITY

38. Financial Statements and
their notes should present
all information that is
relevant and material to
the user’s understanding of
the statements.
2. FULL DISCLOSURE

40. Anticipate No Profits but
Provide for all Losses..
Accountant should always
be on side of safety. FOR
uncertainty
3. CONSERVATISM

41. For Example
• Making Provision for Bad and
Doubtful Debts
• Showing Depreciation on Fixed
Assets, but not appreciation…

42. The accounting practices and
methods should remain consistent from
one accounting period to another.
Whatever accounting practice is
followed by the business enterprise,
should be followed on a consistent basis
from year to year.
4. CONSISTENT

43. For
Example
2009-10
• Straight
Line
Method
2010-11
• Written
Down
Value
Method
2011-12
• Units of
Measure
Method
Year
Method of
Depreciation
followed