Accounting System
The system designed to record the accounting transaction and events of a business and account for them in that complies with its policies and procedures is called accounting system.
"Accounting system is a means of collecting summarising, analysing and reporting in monetory terms the information of Business R.N. Anthony."
Types of Accounting System
There are three methods of accounting :
Single Entry System
Indian Accounting System
Double Entry System
Accounting System
Single Entry System
Indian Accounting System
Double Entry System
1 Single Entry System
Single Entry System is a book - keeping system that only records one aspect of each transaction , i.e. a debit or a credit .
In fact, a single accounting system is the system of bookkeeping or accounting in which cash and personal accounts are kept regularly. Accounts of debtors and creditors come under personal account. Obviously, in this system real accounts or property accounts and non-real or nominal accounts are not prepared.
It may be noted that under this system both aspects of some transactions are accounted for, while in others only one side is accounted for or not at all. Therefore, the accounts kept under this system are said to be incomplete, unordered, unclear and unreliable. Nevertheless, this system is used in small business firms because this system is very simple and flexible.
2. Indian Accounting System
When the accounting of transactions is done on the basis of certain principles in the books and according to tradition in any Indian language or regional language or Mudia language, then it is called 'Indian Accounting System'.
Due to this system being prevalent in the Indian language and in India, it is known as Indian accounting system. Since the common people in India call the traders by the name of Mahajan. Therefore, the method adopted by these traders is also called 'Mahajani System of Book-keeping', usually written and prepared by the bookkeeper of this firm, hence it is also called as Accounting System. is called. This method has been described in the 'Arthashastra' of Kautilya's ancient text of India 400 years before Christ. Although deals under this system are written in Hindi, Urdu, Gujarati, Marathi, Bangla, Oriya or any other Indian language, but in this system the use of 'Mudiya' language is mostly used.
INCOME TAX- Aggregation of Income/ Clubbing of the income under INCOME TAX ACT,1961
Income of other persons to be included in the income of individual( Section 60-65)
Income received from Firm assessed as Firm And Association of Persons (Section 66-67)
Deemed Income (Section 68-69)
Transfer of Income without Transfer of Assets[Sec. 60]
Revocable Transfer of Assets [Sec. 61]
Helps the student to know about the Agricultural Income in Indian Income tax Act 1961 and also how the Tax Liability will be calculated when an Assessee have both Agricultural and Non Agricultural Income
To download -https://clk.ink/MS2T
this will lead to a google drive link./
its a ppt based on the topic no. system.
it covers all the basics of ninth class cbse.
INCOME TAX- Aggregation of Income/ Clubbing of the income under INCOME TAX ACT,1961
Income of other persons to be included in the income of individual( Section 60-65)
Income received from Firm assessed as Firm And Association of Persons (Section 66-67)
Deemed Income (Section 68-69)
Transfer of Income without Transfer of Assets[Sec. 60]
Revocable Transfer of Assets [Sec. 61]
Helps the student to know about the Agricultural Income in Indian Income tax Act 1961 and also how the Tax Liability will be calculated when an Assessee have both Agricultural and Non Agricultural Income
To download -https://clk.ink/MS2T
this will lead to a google drive link./
its a ppt based on the topic no. system.
it covers all the basics of ninth class cbse.
This slide was presented by the Maths Department of Cochin Refineries School for the Inter-School workshop conducted as a part of World Mathematics Day celebration. "Mathematics in day to day life"
JOURNEY OF MATHS OVER A PERIOD OF TIME..................................Pratik Sidhu
DESCRIBES IN DETAIL ANCIENT AGE ,MEDIEVAL AND PRESENT AGE OF MATHS AND ALSO THE FAMOUS MATHEMATICIANS.REALLY AN AMAZING ONE WITH ANIMATED SLIDE DESIGND..............
A Quick Guide to Understanding Double Entry Accounting System.pdfPay10
Double-entry bookkeeping is a fundamental concept in accounting that involves recording every financial
transaction with two corresponding entries in different accounts. This system ensures accuracy and
balance in a company's financial records, presenting a clear picture of its financial position.
This slide was presented by the Maths Department of Cochin Refineries School for the Inter-School workshop conducted as a part of World Mathematics Day celebration. "Mathematics in day to day life"
JOURNEY OF MATHS OVER A PERIOD OF TIME..................................Pratik Sidhu
DESCRIBES IN DETAIL ANCIENT AGE ,MEDIEVAL AND PRESENT AGE OF MATHS AND ALSO THE FAMOUS MATHEMATICIANS.REALLY AN AMAZING ONE WITH ANIMATED SLIDE DESIGND..............
A Quick Guide to Understanding Double Entry Accounting System.pdfPay10
Double-entry bookkeeping is a fundamental concept in accounting that involves recording every financial
transaction with two corresponding entries in different accounts. This system ensures accuracy and
balance in a company's financial records, presenting a clear picture of its financial position.
UNIT - II: ACCOUNTING PROCESS: Over view - Classification of Accounts - Double Entry
System - Books of Original Record - Journal and Subsidiary books – Ledger - Trial Balance-
Capital and Revenue Expenditure and Receipts - Final Accounts with adjustments.
Meaning and definition of Accounting, Book-Keeping, Accounting, Accountancy, difference between Accounting and Book-keeping, Systems of accounting, Characteristics of accounting, objectives of accounting, functions of accounting, process of accounting, types of accounts, golden rules of accounting. concepts and conventions of accounting.
Recording of Business Transactions. Defination of Journal...Blogger
Recording of Business Transaction
Recording of Business transaction is vital to a business's financial statements and a key responsibility of the accounting department. Learn the definition of a transaction, understand the importance of recording transactions, and explore the process of double-entry accounting, with examples of credits and debits
Meaning of Journal
The journal or journal is the primary or basic book of the traders. This is the register in which all business transactions are entered date wise. In this, the accounts are made in the same order in which the transactions have taken place in the business. The word 'Journal' is derived from the French word 'Jour' which means day book, diary or 'day'. It is called 'Day' or 'Din' or 'Rose' in Hindi. By adding nal in Jour, a Journal was created, whose Hindi translation is 'Roznamcha'. Therefore, Journal or Roznamcha means daily account. Since in this the transactions are recorded from the Waste Book or the Remembrance Book (or Commemorative Book), so it is also called the Permit Book. Thus, since entries are made in it every day according to date, hence it is also called daily register or daily record.
Thus, Journal is that book in which initial accounting of both the aspects of all business transactions is done date wise and according to the rules. Therefore, according to a learned writer, “The book in which all business transactions are written in a systematic manner in the beginning, it is called journal
Definition of Journal
"The journal or 'daily record' is that book of primary entries in which date wise transactions are recorded from the memory book or the junk itself. While writing the entries, they are in the form of debit and credit. It is classified, so that later it is convenient to do correct posting in the ledger. "
Bookkeeping should not be confused with accounting or accountancy. Persons with little knowledge of accounting may fail to understand the difference between these terms and often used to mean the same thing. Therefore, it is useful to make a distinction.
This powerpoint presentation is created by Gyanbikash.com for the students of class nine to ten from their accounting NCTB textbook for multimedia class.
Methods of charging Depreciation
There are many methods of applying depreciation, some of the main methods are as follows:
(1) Fixed Instalment Method / Straight Line Method
(2) Written Down Value / Diminishing Balance Method
(3) Annuity Method
(4) Depreciation Fund Method
(5) Insurance Policy Method
(6) Revaluation Method
(7) Depletion Unit or Production Unit Method
(8) Machine Hour Method
(9) The sum of the years Digits Method
(10) The use or Mileage Method
(11) Group Depreciation Method
Here we will study only fixed installment method and amortizing method, which are most popular.
Straight Line Method or Fixed Instalment Method
There are many names of this method, such as—
(i) Straight Line Method,
(ii) Original Cost Method,
(iii) Equal Instalment Method,
(iv) Fixed Instalment Method. Fixed Instalment Method. Under this method, depreciation is calculated at a fixed percentage on the original cost of the asset every year. Obviously, there will be the same amount of depreciation each year. That is why it is called a fixed instalment or ‘prime cost’ method. If the depreciation is marked on the graph paper and all the points are joined then a straight line will be formed. That’s why it is called ‘straight line method’ or straight line method.
what is depreciation in accounting class 11Blogger
Meaning and Definition of Depreciation
In common parlance, depreciation refers to a decrease in value, but if seen from the point of view of accounting, it means a decrease in the book value of a fixed asset. Due to continuous use of fixed assets, due to passage of time or due to any other reason, its value and efficiency decreases and after some time the value remains equal to zero. A gradual (gradual) permanent decrease in the value of an asset due to any reason is called ‘depreciation’ or ‘depreciation’. J. R. According to Williams, “The gradual decay of value is due to use”. Are; Like-Wear and Tear, Effluxion of Time, Obsolescence, Accidents etc.
Meaning – Depreciation refers to permanent and continuing loss or decrease in the quality, kind or value of an asset due to wear and tear, lapse of time, obsolescence, destruction or accident.
Fixed assets provide economic benefits to the organisation or enterprise over their lifetime. Depreciation is a measure of the cost of economic benefits of a tangible fixed asset that has been consumed over an accounting period.
Depreciation reduces the book value of the asset. Hence it is an expense which is charged to Profit & Loss A/c or Statement of Profit & Loss.
Some Important Definition of Depreciation
According to Spicer and Pegler, “Depreciation is the measure of the end of the useful life of an asset for any reason over a specified period of time.
According to the Institute of Cost and Management Accountants terminology, (” Depreciation is the diminution in the intrinsic Value of the asset. ” )
According to R. N. Carter (” Depreciation is the gradual and Permanent decrease in the Value of an Asset from any cause “
According to William Pickles — Depreciation is a permanent and continuing decrease in the quality, quantity or value of an asset.
( Depreciation is a measure of wearing out, Consumption or other loss of Value of a depreciable Asset arising from use, effluxion of time or obsolescence through technology and Market changes. Depreciation is allocation so as to change a fair preparation of the depreciable amount in each accounting period during the expected useful life of the asset. )
According to the American Institute of Accountants Committee of Technology, “Depreciation Accounting is a system of accounting that is arrived at after deducting the residual value (Scrap or Salvage) from the cost of Tangible Capital Assets. distributes the remaining amount over the useful life of the asset in an orderly and prudent manner, it is not a method of valuation but of an allocation.
what is trial balance class 11
Meaning And Definition of Trial Balance
Various accounts are opened in the ledger and after recording the journal entries in it, their ‘balance’ or ‘balance’ is worked out. For the purpose of ascertaining the mathematical correctness of the accounts, ‘Trial Balance’ is prepared. Trial Balance is also called ‘Examination List’.
“A Trial Balance is a Summary of Ledger”. It is the list in which balances of all the accounts of a ledger and cash book are kept. It is considered when the sum of the amounts of debit side and credit side are equal. That the accounts are mathematically correct. In short, the reconciliation of trial balance is regarded as proof of the mathematical correctness of the books of account. It is created on a certain date.
Following are some of the major definitions of ‘Trial Balance
According of William Pickles — “Trial Balance accounts opened in the ledger at the end of the financial year or on any other date is the list of balances that is made to check whether the debit total is in fact the same as the credit total.’ ,
According to Spicer & Pegler — ” When at a given Date all the postings are complete (that is, the double entries of all the transactions are Complete), a schedule of the Balances is Prepared. This schedule is called the Trial Balance”
According to Carter — ” Trial Balance is a Statement of Debit and Credit balances derived from Ledger, including balances of Cash And Bank taken from Cash Book”
Ideal definition – “Balance is the list of debit and credit totals or account balances of various accounts of the ledger which is made for the purpose of ascertaining the arithmetical accuracy of the account on a certain date.”
The account prepared by the trader to get the information about the gross profit or gross loss from the business within a certain period (such as one year or six months) is called ‘trade account’. In fact, the meaning of trading account is such an account from which gross profit or loss is known through the purchase and sale of goods.
Acording to J.R. Batliboi — The Trading Account shows the results of buying and selling of goods. In preparing this account, the general establishment change are ignored and only the transaction in good anr included.
This explains the meaning of trading account.
According to this definition, trading account can also be called Goods Account, because only transactions related to goods are accounted for in it, such as- (i) opening stock, (ii) purchase of goods, (iii) Purchase returns, (iv) Sales of goods, (v) Sales returns, (vi) Closing stock, (vii) Cost of manufacturing the goods, (viii) Cost of purchasing the goods and bringing them to the place of business.
Theoretical Base of Accounting
Accounting is often called the language of business, because the main purpose of language is to act as a means of communication. Accounting also communicates the results of business activities to the managers, owners, investors, creditors, bankers, government, etc. Accounting as an information method is a process that identifies, measures, records, summarises, and transmits business information to the interested parties. In every business a number of parties are interested for different purposes. Accounting provides all these parties with the information required by them.
In ancient times, accounting statements were required only by the owner of the business, but now various parties having interest in the business, such as business owners, investors, creditors, government and other parties, require these. Accounting statements reveal the profitability and efficiency of the business to various parties. Therefore, it is necessary to use accounting principles and standards in accounting. Accounting principles and accounting standards have been considered as the theoretical basis of accounting. Therefore, it is necessary that the accountants or accountants establish an interrelationship between the accounting principles, practices, concepts and accounting standards.
Meaning of Accounting Principles
Accounting principles refer to the rules used by an accountant or accountant while preparing financial statements and accounts. The accountant has to follow these rules while preparing proper accounts. Based on years of experience, experiment and need, the accounting profession has evolved certain guidelines or rules which can be used to record business transactions (or transactions) and prepare the income statement / profit and loss account and Their presentation in the form of sheets is done in the form of standards. These instructions and rules are called accounting principles.
Accounting principles are known by many names, different names; Such as Concepts, Traditions, Axioms, Postulates, Assumptions, etc.
Definitions of Accounting Principles
According to R.N. Anthony “The Rules and Conventions of accounting are Commonly referred to as (accounting) principles. “
According to AICPA “The word principle is used to mean a general law of Rule adopted or professed as a guide to action, a settled ground or basis of conduct or practice. “
In short, accounting principles mean all those rules and assumptions which explain the prevailing practices, help in the selection of conventions and methods and which are used in the preparation of financial statements. It is evident. that accounting principles govern the development of accounting techniques, practices and procedures
Meaning of Financial statements class 11
Financial statement is the last step or end product of the accounting process. Financial statements mean such documents or statements in which the related financial information is described. Mainly two details are included under financial statements: (1) Income Statement, (2) Balance Sheet.
In the word of Jon N Myer. “The financial statement summarises the accounts of the business concerns and the income statement reflects the activities of a given period of time.” Financial statements can be prepared quarterly, half-yearly or annually
In the case of a sole proprietorship, the following are included in the financial statements:
1. Trading Account — It shows the gross profit or gross loss of a business enterprise for a particular period.
2. Profit and Loss Account — It shows the net profit or net loss of the business activities of the business enterprise for the accounting period.
3. Balance sheet — The balance sheet shows the financial position of the business (i.e. assets and liability) shows.
Thus these details are also called the final accounts of the business.
The following are included in the financial statements of the company
(1) Statement of Profit-Loss or Profit-Loss Account (Profit & Loss Statement or Profit & Loss Account) It is also called Income Statement.
(2) Balance Sheet and if required
(3) Cash Flow Statement, if required, with supporting comments.
Double Column Cash Book Class 11
Meaning – By Double Column or two-column cash book is meant that cash book in which there are two columns (columns) of cash in each part. For example, in the debit side of the cash book, one column is for cash and the other column is for bank. Similarly, in the credit side, one column is for cash and the other is for bank. A two column cash book may have two columns each for cash and discount or bank and discount.
Type — Double Column cash book can be of three types
(1) Cash book with cash and Bank
(2) Cash Book with cash and Discount
(3) Cash book with Cash and Discount
(1) Cash book with cash and Bank — Meaning – When two columns are made on the debit and credit side to write cash and bank related amounts in the cash book, then it is called a Double Column Cash Book or Two Column Cash Book.
entry method in Two Column cash Book
First remember that cash receipts are recorded on the debit side and cash payments on the credit side of a two-entry cash book.
In order to record in a double entry cash book, it is necessary to pay attention to the following points.
(1) Opening Balance — (i) (Opening Cash Balance or cash in Hand) is always a debit balance, write it in the debit side of the cash book by writing To Balance b/d in the cash column
(ii) The balance of the bank account can be either a debit balance (in case of bank balance) or a credit balance (in case of overdraft). Therefore, when Bank Balance, Cash at Bank etc. is written, in the debit side of the cash book, write To Balance b/d in the description field and write the amount in the bank column. But if the bank’s overdraft balance is given, then the amount will be written in the bank account by writing By Balance b/d in the details column in the credit side of the cash book.
(Bank Overdraft) — When a person or firm withdraws/withdraws more than the amount deposited in his (bank) account, it is called bank overdraft.
•Bank overdraft is shown as credit balance. Therefore, if a firm has a credit bank balance (i.e. overdraft) at the beginning of the period, it will be written in the credit side of the cash book as ‘By Balance c/d’ and the amount will be shown in the bank account.
•Bank overdraft is a debt/liability that has to be paid. Once the payment is made, the bank overdraft position ends.
In the context of Accountancy Class 11, a cash book is a book of original entry in which all cash receipts and cash payments are recorded. It is a subsidiary book of accounts, and is maintained to record all cash transactions in a systematic and organised manner.
The cash book serves as a primary record for all cash receipts and payments, and is used to keep track of the inflow and outflow of cash in a business. It is an important tool for maintaining accurate accounting records and for financial management.
In Class 11 Accountancy, students are introduced to the concept of cash book and are taught to prepare different types of cash books such as single column cash book, double column cash book, and triple column cash book. They are also taught to record transactions in the cash book, and to prepare bank reconciliation statements using the information from the cash book.Overall, the cash book plays an important role in the study of Accountancy Class 11, and is a fundamental tool for understanding the basics of accounting and financial management.
Recording of Cash Transaction : Cash book
Meaning —- Cash Book is the book in which all the cash transactions i.e. cash receipts and cash payments are recorded. In the words of Carter, “It is a book of preliminary accounts in which receipts and payments of money are recorded.” All cash receipts are written on the debit side and all payments are written on the credit side. Bank related transactions are also written in this book.
Cash book is that book which fulfils the purpose of both journal and ledger. Since the primary entry of transactions is made in the cash book, it is also called the Book of Original Entry. The balance of the cash and bank accounts of the cash book is written in the trial balance and the balance sheet. This is the reason why a cash book is considered a principal book as well as a subsidiary book. (Cash book is both a subsidiary book and a principal book.)
Cash book is a Journal or Ledger
Sometimes the question arises whether a cash book is a journal or a ledger. It is a journal because all cash transactions are recorded in it for the first time from the source documents. These are then shown in the ledger in the respective accounts.
Cash book is also a ledger (i.e. ledger) because it also serves as a cash account. When the cash book is prepared, a separate cash account is not maintained in the ledger. As a result, a cash book is both a journal and a ledger (Cash book is a journal as well as a ledger). That’s why it can be called ‘Journalised Ledger’. In fact, the cash book is both a subsidiary book and a ledger. Since the initial accounting of all cash transactions is in the cash book, this subsidiary is the same and because the cash account is not maintained with it, it is the ledger.
Features of Cash book
The following are the features of cash book which throw light on its nature:
(1) The cash book records only one aspect of the transaction i.e. cash.
(2) Transaction
Deferred Revenue expenditure
Meaning- Sometimes any revenue expenditure is such that its amount is more and its usefulness remains for many years, such expenditure is called ‘deferred revenue expenditure’. Such expenses are not charged to the profit and loss account of the year in which they are incurred, they are charged to the profit and loss account of several years. Example- (i) Preliminary Expenses, (ii) Deduction and commission on issue of shares and debentures, (iii) Huge advertisement expenditure etc., (iv) If there is an extraordinary loss then it is considered as deferred revenue expenditure.
Features — Following are the characteristics of deferred revenue expenditure.1. It is a capital revenue expenditure.
2. Its profits are not used in the year to which they relate.
3. It is a sudden and usually large amount of money.
4. They are not written off from the profit of one year. A part of the expenses is written off in the profit and loss account of the respective year. The remaining part of this expenditure is shown in the balance sheet as miscellaneous expenditure.
Accounting Treatment
(1) Since deferred revenue expenditure yields future benefits also, its entire amount is not charged to the profit and loss account in the current accounting year, but is treated as capital.
(2) It is generally written off in 3 to 5 years.
(3) That part of deferred revenue expenditure which is written off in the accounting year is treated as ‘Expense’ and transferred to Profit & Loss A/c.
(4) That part of deferred revenue expenditure which is not written off at the end of the accounting year (which is to be written off in subsequent years), is shown in the assets part of the balance sheet.
Capital and Revenue Expenditure
Before preparing the financial statements of business organisation’s, we should get information about capital and income expenses and capital and income receipts, because having a clear knowledge of these helps in preparing the income statement and balance sheet.
At the end of the financial year, Final Accounts are prepared by every business, in which Trading and Profit & Loss Account and Balance Sheet are included. Items given in the trial balance are entered either in the trading and profit and loss account or in the balance sheet. For this, it is very important to divide the items given in the trial balance into income and capital, because all the income items given in the balance sheet ie income expenditure and income receipts are written in the business and profit and loss account, while all the capital expenditure and capital receipts are written in the balance sheet. (Position Details) are written in.
Therefore, before preparing the final accounts, it is very necessary to divide the items of trial balance into capital and income. Due to wrong classification of any item into capital and income, the amount of profit or loss reported by the profit and loss account will be wrong and the balance sheet will also not give the correct and proper financial position as on that date.
Classification of Expenditure
Expenses can be divided into three categories :
Expenditure
1. Capital Expenditure
2. Revenue Expenditure
3. Deferred Revenue Expenditure
To erro is human. This is the reason that in spite of being careful and sometimes due to carelessness, different types of errors are made by the accountant. Some inaccuracies or errors are such that they do not affect the total of trial balance; But there are some errors which affect the sum of trial balance. In order to reveal the true position of the business, it is necessary that errors are detected and necessary accounts are made for correction. This action is called ‘correction of inaccuracies or errors’.
The procedure followed to rectify the errors committed in the book of accounts and to set right accounting records is called Rectification of Errors.
In fact, some people think that by erasing the errors with an eraser, a clean account should be made in their place, or by cutting out the error, making a clean account in its place and signing it there, but by doing this, the accounts get mutilated and dirty. will go and the accounts will not be reliable, so it would be appropriate that Accounting Entries should be made for the correction of errors. The adverse effects of errors can be neutralized and cancelled by accounting entries
Basic Accounting Terms Class 11
In accounting, an asset refers to any resource that a company or individual owns or controls, which is expected to provide future economic benefits. These resources can be both tangible and intangible.
Thus assets are those sources which provide benefits in future. For example,
Machine, Land, Building, Truck, Cash, etc. These are shown in the assets section of the balance sheet.
Types of Assets : There are two types of assets
1. Non current Assets -- Tangible Assets -- Intangible Asset
2. Current Assets -- Liquid Asset
Liabilities :
The money that the business enterprise owes to others is called a liability; Such as creditors, bills payable, loans and overdrafts, etc. Thus, "liabilities are liabilities, these are amounts that are payable to creditors in the future." In other words, liabilities are financial liabilities that do not involve owner's funds.
Capital :
That amount of money or goods is called capital which the owner of the business invests in the business. Business is started with this amount. Capital is the liability and claim of the owner on the assets of the business. Hence, it is shown in the liabilities side of the balance sheet.
Meaning of secret Reserve
A secret reserve is created by intentionally hiding the actual net profit or showing net profit less than actual in the balance sheet of the organisation. secret means hidden, that is, which is present but not visible. Secret reserve means such reserve which exists but does not appear in the balance sheet.
According to the — De Paula A secret reserve is a reserve that is not disclosed in the Balance sheet so that the financial position is in fact, better than appears from the Balance sheet.
According to the — Spiced and peglar A Secret reserve may be defined as a reserve, existence and /or amount of which is not disclosed on the face of the Balance Sheet.
Basic Ledger. Definition Of Ledger,Types & Example Of LedgerBlogger
Basic Ledger
After making entries of the transactions in the ‘Ledger‘ and the subsidiary books, the transactions are written in the ‘Ledger‘, classifying them into different accounts.
Meaning and Definition of Ledger
The ‘ledger‘ is the principal book of the business and the merchant, in which all the transactions taking place in the business are summarised and classified. In this, the transactions related to each party for a certain time are written at one place, which is called the account of that party. The purpose of doing this is to get information about the status of transactions related to an account at a given point of time. In short, ledger presents a summary of business transactions relating to a given period of time. Life
All personal, real and non-real accounts are kept in the ledger. In the traditional ledger, usually one page is maintained for each account, but if the business is large, two or more pages can be kept for one account as required. Conversely, multiple accounts can be created on the same page if the number of articles is small.
Generally, the ledger is in the form of a bound book or loose sheet book or register. The page number is printed on each of its pages. An index is maintained on the first pages of the register, which tells which account is on which page, where the computer is being used, the location of the ledger, floppy diskettes or CDs or It has been replaced by RCDs or DVDs or other similar technology.
Types of Ledger Sub – decision of Ledger
When the transactions are more and more extensive, it becomes necessary to sub-divide the ledger into several books. The sub-division of the ledger depends on the nature and size of the business entity
Posting means transferring the entries from the Journal to the Ledger accounts.
Meaning
When the entries made in 'Journal' or 'Roznamche' are dropped or transferred to 'Ledger' or 'Ledger', then this process is called 'Khatauni' or 'Khatiyana' (posting). Mr. J. R. According to Bottleboy, "The process of transferring the transactions which have been recorded in the Journal into the appropriate accounts in the ledger is called posting." In short, the recording of transactions in the ledger is called 'Khatauni'.
To know the status of various accounts, the balance of all the accounts is usually drawn at the end of the year or on a certain date. In other words, to get information about how much cash balance is in the business, how much money is in the bank, what is the position of debtors and creditors, how much assets are there, etc., it is necessary to calculate the balance of accounts. By the balance of accounts we mean the difference between the sum of the amounts on the debit side and credit side of the particular account. In this way, by adding the amounts of Jay Devit and Credit side, it is found that which side is bigger and than how much amount, then this process is called closing the account and withdrawing the balance. By Machinery.
Rules of Debit and Credit
Introduction
We know that accounting is the art of accounting, classifying, summarising and drawing conclusions from the results of financial transactions and events. We also know that every transaction has two aspects - the 'Give aspect' or 'Giving the benefit aspect' and the 'Take aspect' or ' Receiving the benefit aspect. In dual accounting system, every business transaction affects two accounts and is accounted for in at least two accounts. To account for a transaction, one account is debited and another account is credited. Under the double accounting system, an equivalent credit key is made for every debit and an equivalent debit is made for credit. ' ( Every debit has an equal credit and every credit has as equal debit ) . It is also worth noting that the accounting of transactions in the books is done on the basis of 'Rules of Debit and Credit'. Therefore, in this chapter we will discuss the 'laws of debit and credit'. But before discussing the rules of debit and credit, we would like to discuss 'Account' and Classification of Accounts so that we can understand the rules of debit and credit easily.
Account
Meaning of Accounting
A concise and systematic record of all the business transactions relating to any person, organization or thing is called 'Khata'.
An Account is a summarised and systematic record of all the business transactions relating to a particular person or item or thing at one place .
A ledger is a formal record of all changes that take place with respect to a specific item.
The account contains a brief description of all the transactions related to any one item. Obviously, in accounting, a separate account of every person / organization, property, liability, capital, income and expenditure is kept. For example, all the transactions related to Ram will be written in the account of Ram and all the transactions related to cash will be written in the Cash Account.
There is a practice of writing 'Account' in abbreviated form A / c or a / c. account also means accounts maintained by a bank or building society in which depositors' moneys are kept; Such as - Current Account (Current A / c), Savings Account (Savings A / c), or Fixed Deposit Account (Fixed Deposit A / c) etc. Each account has two sides or two aspects - the left side is called the debtor side or debit side and the right side is called the deposit / rich part or credit side. Generally the account is in T form.
Rules of Debit and Credit
classification of Types of Accountings
There are many types of accounts. They can be classified in two ways
A। Traditional Classification
B l Modern Classification
A। Traditional Classification
Traditionally, accounts are mainly divided into three categories:
1. Personal Account
2. Real Account
3. Nominal Account
Real accounts and nominal or non-real accounts are also called impersonal accounts.
Basic Accounting equation , Meaning of Accounting equation.Blogger
Basic Accounting equation In this article you can read Basic Accounting System, Meaning of Accounting equation . some example of Balance Sheet etc....
Meaning of Basic Accounting equation
The entire recording of business transactions is based on the 'Accounting Equation' and the accounting equation is based on the 'Dual Aspect Concept' of accounting. According to the bilateral concept, there are two sides to every business transaction and these behavior have equal and opposite effects on both sides. One side is 'Debit' and the other side is 'Credit'. These practices affect the property on the one hand, while on the other they affect the capital and liabilities against the property. As a result, the number of both sides of the letter is the same. If more than two accounts are affected by any transaction or transaction, then even in such a situation the sum of all the accounts on the debit side is equal to the sum of all the accounts on the credit side, the writing of the debit and credit sides of the transaction. can be expressed by the equation. This equation itself is called 'Accounting Equation' in the language of accounting.
The meaning of 'equation' in the dictionary is "a statement that two things are equal or the same". Confirms the equality of two expressions, which is added by the sign ' = ' (is equal to ). Therefore the equality of assets on one side and capital and liabilities on the other side is called 'Basic Equation of Accounting'. It is also called as Balance Sheet Equation.
In the form of equation it is written as :
( i )
Assets (A) = Liabilities (L) + Capital (C)
Or
Assets (A) = Equity (E) + Outside Liabilities (O.L.
Or
Total Assets (A) = Total Equities (Total Claims) (E)
Or
Asset = External Equities + Internal Equities
From the above equation, we also know the following equations:
( ii )
Capital = Assets - Liabilities
( iii )
Liability = Assets - Capital
Accounting refers to accounting, classifying, summarising and presenting transactions (or transactions) of financial nature in such a way that they can be analysis and interpreted. Summary in accounting means to prepare Trial Balance and the basis of
and interpretation are Final Accounts, under which Business Account, Profit and Loss Account and Statement or Balance Sheet are prepared.
Accounting is the art of recording , classifying and summarising in a significant manner and in terms of money transactions and events which are , in part or at least of a financial character and interpreting the results. Accounting is the most important in Business. Accounting is the art or a Science.
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1. Double entry system in class 11
Intro
Accounting System
The system designed to record the accounting transaction and events of a business and
account for them in that complies with its policies and procedures is called accounting
system.
"Accounting system is a means of collecting summarising, analysing and reporting in
monetory terms the information of Business R.N. Anthony."
Types of Accounting System
There are three methods of accounting :
Single Entry System
Indian Accounting System
Double Entry System
Accounting System
Single Entry System
Indian Accounting System
Double Entry System
1 Single Entry System
Single Entry System is a book - keeping system that only records one aspect of each
transaction , i.e. a debit or a credit .
In fact, a single accounting system is the system of bookkeeping or accounting in which
cash and personal accounts are kept regularly. Accounts of debtors and creditors come
under personal account. Obviously, in this system real accounts or property accounts and
non-real or nominal accounts are not prepared.
It may be noted that under this system both aspects of some transactions are accounted
for, while in others only one side is accounted for or not at all. Therefore, the accounts kept
under this system are said to be incomplete, unordered, unclear and unreliable.
Nevertheless, this system is used in small business firms because this system is very simple
and flexible.
2. Indian Accounting System
When the accounting of transactions is done on the basis of certain principles in the books
and according to tradition in any Indian language or regional language or Mudia language,
then it is called 'Indian Accounting System'.
Due to this system being prevalent in the Indian language and in India, it is known as
Indian accounting system. Since the common people in India call the traders by the name of
2. Mahajan. Therefore, the method adopted by these traders is also called 'Mahajani System of
Book-keeping', usually written and prepared by the bookkeeper of this firm, hence it is also
called as Accounting System. is called. This method has been described in the
'Arthashastra' of Kautilya's ancient text of India 400 years before Christ. Although deals
under this system are written in Hindi, Urdu, Gujarati, Marathi, Bangla, Oriya or any other
Indian language, but in this system the use of 'Mudiya' language is mostly used.
In this system, long books are used for accounting.
At the end of the accounting year, profit and loss account and balance sheet are prepared.
This system is also similar to the double accounting system.
3. Double entry system
The history of the dual system of accounting is more than five hundred years old, although
bookkeeping is being used in the world since ancient times. Fra Lucas Pacioli of Italy is
considered the father of modern bookkeeping (or accounting). In 1494, a book of his was
published under the name "Summa De Arithmetica Geometrica Proportioni at Preportiona
lita" in which there was a chapter called De Computiset Scripturis. In this chapter Pacioli laid
down both the aspects of each transaction according to the rules. The method of writing was
explained. Later it was translated into English and other languages
and it came to be called
double accounting method because in this method each transaction is divided into two parts
Debit and Credit. It is to be noted that this book gave the form of science and art to
bookkeeping.Before its publication the double accounting system was in scattered form.
we will discuss the double accounting system in detail.
Meaning of Double entry system
Double accounting system is the most important and popular system of book-keeping or
financial accounting. This system is basically based on the principle that every transaction
has two forms or aspects. For example, one, the beneficiary and the other, the beneficiary or
one, the taker and the other, the giver. Similarly, when one thing comes, another thing goes
in return. Therefore, both the aspects of a transaction or transaction should be accounted for
but it should not be taken to mean that each transaction is written twice. In fact, under this
system, one side of every transaction is credited (Debit) and the other side is credited.
The system of accounting in which both the forms or aspects of each transaction are
recorded in place is called double accounting system.
3. Stanley W. Roland rightly wrote that "the double accounting system, which is believed to
have originated in the 15th century, is the system of recording each transaction in both
forms. In short, it means that every debit and every credit is debited.'
Defination of Double entry system
Double accounting system is also called 'double-notation system' or 'double-entry
system'.
1. In Double Entry System every transaction comprises two aspects , the one aspect is
receiver and the other is giver , the account of the receiver is debited and that of the giver is
credited . " -William Pickles
2.. Spicer and Pegler state that "The dual accounting system of book-keeping is a system of
recording transactions assuming that there are two forms of each transaction - the payee
and the payee". The account which fetches the value is debited and the account which gives
the value is credited."
Proper Definition - "Double Accounting System" means that system of accounting in which
one of the two aspects of each transaction is debited (Debit or Dr.) and the other is credited
(Credit or Cr.) on certain rules. on the basis of that."
explanation by example
1. ₹ 1,500 was received from Abhay. In this deal Abhay is going to give Rs. There are two
aspects to this - (i) the cash (cash) coming, and (ii) the unfavorable giver. Therefore their
accounts will be made in cash account and Abhay's account. As per rules, Cash will be
debited (Dr.) and Abhay will be credited (Cr.). (The rule is explained further.
2. Gave ₹ 100 to Shailesh. In this transaction, Shailesh receives Rs. While Rs. is given to
Shailesh. Hence, the two sides are as follows- (i) cash going, and (ii) cash received by
Shailesh. Therefore their accounts will be made in cash account and Shailesh's account. As
per rules, Shailesh will be debited (Dr.) and cash will be credited (Cr.).
Why is it Called Double entry system
After studying the meaning and definitions of Double Accounting System, it is easy to
explain why it is called 'Double Accounting System'? It is called double accounting system
because of the following reasons.
(1) The effect of every transaction falls on two accounts - in each transaction one is the
giver and the other is the receiver. It is impossible to be a giver without a giver and a giver
without a taker, as if Ram sold goods worth ₹ 500 to Shyam on credit, then Ram is the giver
4. and Shyam is the taker. Both the parties shall record the transaction in their respective
books. Therefore, two accounts in Ram's books - Shyam's account and purchase account
will be affected. Similarly in Shyam's books also two accounts - Ram's account and sales
account will be affected.
(2) There are two sides to every account - According to the double accounting system,
“every account has two sides. One is called the debtor side or debit side or debit side and
the other is called deposit side or integration side or credit side.
(3) Each transaction is accounted for at two places in the books of a trader on the opposite
side - according to the double accounting system, each transaction is accounted for in the
debit side of one account related to it, and the credit side of the other account (Debit side).
Credit side). In the above example, in the books of Ram, Shyam's account will be on the
debit side/accounts/debtor (Dr.) side and the sales account will be credited (Cr.) side.
Similarly, in the books of Shyam, the account of this transaction will be in the debtor side of
the purchase account and on the credit side of Ram's account. Therefore, if the account of
the transaction is in the debtor side of the first account related to it, then it will be in the credit
side of the second account related to it. That is why it is called double accounting system of
bookkeeping.
Features or Characteristics of Double Entry System
The following are the characteristics of double accounting system
1. System to be fair - Dual accounting system is fair, because in this both the forms of all
transactions or transactions are accounted for. One account is debited and the other
account is credited.
2. Accounts according to the rules - In the double accounting system, the accounts of all the
transactions are done according to a certain rule. In other words, one side of the transaction
is debited and the other side is credited. There are definite rules for debit and credit
3. Accounting of personal and impersonal aspects- Both the parties to a transaction may be
personal or one party may be personal and the other side may be impersonal or both the
parties may be impersonal. In double accounting system, both personal and impersonal
parties are accounted for. Hence Carter says, "Dual accounting system refers to the
accounting of both personal and impersonal transactions."
4. Knowledge of Arithmetic Accuracy - Since one side of the transaction is debited and the
other side is credited, the sum of the debit side is equal to the sum of the credit side. This
comparison gives knowledge of arithmetic accuracy. Arithmetic correctness can be checked
by making Trial Balance. In fact, trial balance is a major feature of the single accounting
system.
5. 5. All accounts have two parts - the left side is called the 'debit side' and the right side is
called the 'credit side'.
Advantages of Double entry system
Following are the major advantages of double accounting system:
1. Scientific System - The books kept according to the double accounting system are
considered complete, accurate, authentic and scientific. Since in this the accounts are done
on the basis of certain rules and principles, hence it is called scientific method.
2. Entry of both Aspects - In the double accounting system, both sides of each transaction
are accounted for.
3. Verification of Arithmetical Accuracy - Every transaction is accounted for in two accounts.
Therefore, their correctness can be easily checked by making a trial balance.
4. Little Possibility of Fraud - Due to the account of each transaction in two accounts, the
possibility of forgery and fraud is reduced.
5. Personal and Impersonal - In dual accounting system, both personal and impersonal type
of accounts are done. On the basis of these accounts personal, real and nominal accounts
are opened in which any necessary information can be found, therefore this system of
bookkeeping is considered complete.
6. Preparation of Trading and Profit & Loss Account ( Preparation of Trading and Profit &
Loss Account ) In the double accounting system, making a trading account, gross profit
(Gross Profit) or gross loss (Gross Loss) and net profit (Net) Profit) or Net Loss can be
determined.
6. 7. Knowledge of Financial Position - By making Balance Sheet at the end of the year,
knowledge of the economic condition of the business / organization can be done. It gives
information about the capital, liabilities and assets of the business.
8. Comparative Study - Due to this method, the progress or downfall of the organization can
be easily detected by making a comparative study of profit-loss account, balance sheet,
income-expenditure, etc. of different years.
9. Various Informations - Due to this system, different types of information are easily
available; Like ( i ) how much total money is to be received from the debtors or debtors ? (ii)
What is the total amount to be paid to the moneylender or creditors? ( iii ) What is a closing
stock ? (iv) What was the total amount of purchases and sales in a certain time? And so on .
Many important facts continue to emerge from this information.
10. Rectification of Errors - Any kind of error in the bookkeeping can be easily detected and
corrected.
11. Flexible - This system is flexible. Each trader can maintain accounts as per his
requirement and capacity.
12. Suitability and Popularity This system is very simple and useful, hence it has become
popular in all countries.
Disadvantages of Double entry system
1 This system of accounting is quite complex.
2. If the rules of debit and credit are not followed properly, the accounts become wrong.
3. Many books of account are kept under this system. Hence it is an expensive system.
7. 4. This system is not suitable for small and illiterate traders. Despite the above defects,
double entry system or double accounting system is considered to be the best, scientific and
just system of accounting.
Different stager of Double entry system
The following are the steps in the double accounting system of bookkeeping.
1. Identifying and recording of the transaction in Journal or other subsidiary books.
2. Classifying transaction by posting them to the appropriate accounts .
3. Summarizing -
(a) Closing the Books
(b) Preparation of Trial Balance
(c) Preparation of Final Accounts Financial Statements
Trading and Profit & Loss Account ( Statement of Profit and Loss ) ] ( Statement of Profit
and Loss )
Balance sheet
Principles of Double entry system
Following are the main principles of double accounting system
1. Double Aspect - The double accounting system is based on the 'two-party' concept of
transactions. So each deal affects two accounts. One side is the giver and the other side is
the giver. In this system one party is 'debited' and the other party is 'credited' so for each
debit the same amount is credited to one or more accounts.
2. Rule-Based Principle - The principles of double accounting system are based on 'Rules'.
This is the reason that every transaction of business is debited and credited on the basis of
certain rules. The rules for debiting and crediting are based on the nature of transactions and
accounts. The rules of debit and credit are discussed in the next chapter.
8. 3. Entry in Two or More Accounts - Each transaction is recorded in at least two accounts -
one on the debit side of the account and the other on the credit side of the account. Thus
every business transaction has an impact on at least two accounts.
4. Expressed in Monetary Terms - According to this system, only those transactions or
transactions are recorded which can be expressed in money.
5. Transactions between Business and Others - Another principle of double accounting
system is that all the transactions of business are done with the business firm and others
and not with the owner of the business. with .
6. Accounting Period - Accounting period means the period for which the business prepares
its accounts. In other words, it is the period for which the business prepares necessary
accounts to ascertain its profit, loss and financial position. Internally, accounts can be
prepared quarterly and half-monthly. But accounts should be prepared for 12 months to
know the results and financial position of the business in the true sense. In conclusion, the
accounting period is generally of one year. This period is determined on the basis of the
nature of business or as per the convenience of the owner of the business or as per the
rules of the government.
( Fundamental Principle of Double Entry System )
For every debit , there is corresponding credit.
Books of Accounts under Doudle entry system.
1. ( Primary Book )
1. Books of original entry -
• Journal
・Cash Book and other subsidiary books:
9. ➢ Purchases Book
➢Sales Book
➢Purchases Returns Book
➢Sales Returns Book
➢Bills Receivable Book
➢ Bills Payable Book
➢Journal Proper
2. ( Ledger ).