1. Meaning of accounting -: Accounting
means recording, classifying
summarising, analyzing and
interpreting the financial data .
Importance of accounting -
*Record -: Not possible for anyone to
remember all transction maintain
2. Books of accounts.
*Financial information -: useful to get
information related to P&L , assets
liabilities investment and stock etc..
*Decision making -: provides financial
information to the business for decision
making.
*Evidence -: Business needs financial
3. evidence to be produced in the court of
law in case of disputes.
Capital -: The total amount
invested into the business by
the owners is called capital
.Excess of assets over the
liabilities is also called capital . this
4. equation
Capital = Assets -Liabilities
Capital is a liability of the business as
this amount is payable by business
enterprise to the owner at the time of
closure of the business.
Drawings-:The amount of cash or
value of goods assets etc. Withdrawn
5. from the business by owner for personal
use called drawing.
Eg-: A properitor pays college fees of his
son or pays for his medical expenses
mobile bills from business.
Debtor and creditor -:
Debtor -: A person who has to pay to the
business for getting goods and
6. Service on credit is known as debtor .A
debtor is a person who owes money to
the business.
Creditor -: A person to whom business
has to pay for getting goods or services
on credit is known as creditors .A
creditor is a person who whom
business owes money 💸.
7. Bad Debts -: an irrecoverable amount
from a debtor is known as Bad Debts .It
is a revenue loss to the business.
Expenditure -: amount spent by
business for any consideration received
by business is called expenditure.
Capital expenditure -: This expenditure
8. Is incurred to acquire fixed assets or to
increase the value of fixed assets .it
gives long term benefits it is non
recurring in nature eg: purchase of
machinery , extension of building ,
purchase of computer.
Revenue expenditure -: which no future
benefits is expected but having
9. Immediate or short term benefits may
be less than one year . this is day to
day normal expenses eg+: Rent , salary
etc .
Deferred revenue expenditure
-: which is basically revenue in nature
but benefits not exhausted with in one
year is called deferred revenue
11. Trade account -: it is allowance given on
list price of goods.This discount is
allowed at time of purchase eg-: if goods
₹1000 are sold at 5%trade discount
value recorded will be ₹950 both the
purchaser and seller and not ₹1000.
12. Cash Discount -: It is amount deducted
from the final amount due to time of
receipt cash Discount is calculated after
deducting trade discount it is loss so
apper in accounts
13. Debit (Dr .)-: left hand side of
accounts is called debit side.
Credit (cr.) Right hand side of an
account is called credit side.
*Type of account -: Personal
account -: this account represent a
person.
14. Natural person -: vaibhav A/c.
Artificial person account -: Bank of
Maharashtra.
Representative personal account -:
Oustanding rent A/C, Prepaid wages.
Impersonal account -:
,*Real account -:represent Assets and
properties
15. Nominal account -: expenses, losses
income gains are called nominal
account eg-: salary A/c commission
received A/c
Golden rules -:
Personal account -:*Debit the receiver
*Credit is giver
16. Real account -: *Debit was comes in
*Credit was goes out
Nominal account -: *Debit all expenses
and losses
*Credit all incomes and gains.
17. Single entry -: It is unscientific method
and also called incomplete recording
system because it changes with the
convenience of the business for
recording transaction. This accounting
system not provide accurate
information.
Double entry -: It is scientific method of r
18. Of recording of transaction.under this
system double effect of all transction is
recorded.
One account is debited and another
account credited with same account
