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MODULE -1
INTRODUCTION TO
ACCOUNTING, JOURNAL,
LEDGER, TRIAL BALANCE
 Definitions
 1. Recording, classifying, summarising business
 transactions and interpreting the results thereof.
 2. It is an information system whose purpose is to identify ,
 collect, measure and communicate information about
 economic units to those with an interest in the units
 financial affairs. To permit judgment and decisions by
 users of the information.
Functions of accounting
 Systematic record of business transactions.
 Protecting the property of the business.
 Communicating results to the interested parties.
 Compliance with legal requirements.
Advantages of accounting
 Evidence in court.
 Settlement of taxation liability.
 Comparative study.
 Sale of business.
 Assistance to various parties.
Usefull accounting terminology
 Capital:-
 It means the amount (in terms of money or
 assets having money value) which the proprietor has
 invested in the firm or can claim from the firm.
 For the firm Capital is a liability towards the
 owner. It is so because the owner is treated to be
 separate from the business.
 Liabilities:-
 If an amount is due to be paid to any other person
 or institution other than the owner it is called as a liability.
 Liabilities can be classified into following:
 i) Long-term liabilities: These are those liabilities which are
 payable after a long term, (generally more than one year).
 Example; Long-term loans, debentures etc.
 ii) Current liabilities: These are those liabilities which are
 payable in near future ,(generally within one year).
 Example; creditors, bank overdrafts, bills payable, shortterm
 loans, etc.
 Assets:-
 Any physical thing or right owned that has a money
 value is an asset. In other words, an asset is that
 expenditure which results in acquiring of some property
 or benefit of a lasting nature.
 Assets can be classified as:
 i) Fixed Assets: Fixed assets are those assets which are
 purchased for the purpose of operating the business and
 not for resale. E.g. land, building, machinery, furniture,
 etc.
 ii) Current Asset: Current assets are those assets of the
 business which are kept for short term for converting into
 cash. E.g. debtors, bills receivables, bank balance, etc.
 Debtors:-
 A person who owes money to the firm, generally on
 account of credit sale of goods is called a debtor.
 For e.g. When goods are sold to a person on credit
 that person pays the price in future. He is called a debtor
 because he owes the amount to the firm.

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Slides accounting

  • 1. MODULE -1 INTRODUCTION TO ACCOUNTING, JOURNAL, LEDGER, TRIAL BALANCE
  • 2.  Definitions  1. Recording, classifying, summarising business  transactions and interpreting the results thereof.
  • 3.  2. It is an information system whose purpose is to identify ,  collect, measure and communicate information about  economic units to those with an interest in the units  financial affairs. To permit judgment and decisions by  users of the information.
  • 4. Functions of accounting  Systematic record of business transactions.  Protecting the property of the business.  Communicating results to the interested parties.  Compliance with legal requirements.
  • 5. Advantages of accounting  Evidence in court.  Settlement of taxation liability.  Comparative study.  Sale of business.  Assistance to various parties.
  • 6. Usefull accounting terminology  Capital:-  It means the amount (in terms of money or  assets having money value) which the proprietor has  invested in the firm or can claim from the firm.  For the firm Capital is a liability towards the  owner. It is so because the owner is treated to be  separate from the business.
  • 7.  Liabilities:-  If an amount is due to be paid to any other person  or institution other than the owner it is called as a liability.  Liabilities can be classified into following:  i) Long-term liabilities: These are those liabilities which are  payable after a long term, (generally more than one year).  Example; Long-term loans, debentures etc.  ii) Current liabilities: These are those liabilities which are  payable in near future ,(generally within one year).  Example; creditors, bank overdrafts, bills payable, shortterm  loans, etc.
  • 8.  Assets:-  Any physical thing or right owned that has a money  value is an asset. In other words, an asset is that  expenditure which results in acquiring of some property  or benefit of a lasting nature.  Assets can be classified as:  i) Fixed Assets: Fixed assets are those assets which are  purchased for the purpose of operating the business and  not for resale. E.g. land, building, machinery, furniture,  etc.  ii) Current Asset: Current assets are those assets of the  business which are kept for short term for converting into  cash. E.g. debtors, bills receivables, bank balance, etc.
  • 9.  Debtors:-  A person who owes money to the firm, generally on  account of credit sale of goods is called a debtor.  For e.g. When goods are sold to a person on credit  that person pays the price in future. He is called a debtor  because he owes the amount to the firm.