Basic accounts mainly for non accountancy students

2.  The American institute of certified public accounts has
defined the financial accounting as
 The art of recording, classifying, summarizing, in a
significant manner, in terms of money transaction and
events.

4.  PERSONAL ACCOUNTS
1. NATURAL PERSONS
2. ARTIFICIAL PERSONS
3. REPRESENTATIVE PERSONS

5. NATURAL PERSONS :
Accounts which related to individuals. For
example, mohan a/c, raju a/c ……
ARTIFICIAL PERSONS :
Group of persons firms or institution. For
example , HMT ltd.., Indian overseas bank..,
REPRESENTATIVE PERSONS :
Represent a particular persons or group of
persons. For example outstanding salary account, prepaid insurance
account , etc..

6. REAL ACCOUNTS :
Accounts relating to properties and assets
which are owned by the business concern. Real accounts included
tangible and intangible accounts..example, land, building, goodwill..
Purchases, etc.,
NOMINAL ACCOUNTS:
Accounts do not have any existence,form or
shape . They related to incomes and expenses and gains and losses
of a business concern . Example , salary account, dividend account..

7.  Journal is a date-wise record of all the transaction with details of
the accounts debited and credited and the amount of each
transactions..

8. DATE PARTICULAR L.F
DEBIT
AMOUNT.
RS.
CREDIT
AMOUNT
RS

9.  DATE
 PARTICULAR
 NARRATION
 LEDGER FOLIO
 DEBIT AMOUNT
 CREDIT AMOUNT

10.  Date wise record of all business transactions
 Journals will be provided with details of the account
debited and credited
 Adequate explanation –because Supported by the
narration
 Journal simplifies the ledger
 From legal point of view , journal is more reliable
evidence of business transactions than ledger

11.  Basic accounting equation (the foundation of all
basic accounting concepts):
 Assets = Liabilities + Owner’s Equity
 Assets are on the left side or debit side and asset
accounts such
 Liabilities and Owner’s equity are on the right side
or credit side and their accounts in the general
accounting ledger have their normal balance on the
right side.

12.  MARCH 2003
 2 Commenced business with cash 50,000
 3 Opened a bank account 10,000
 4 Purchased office furniture 2,500
 5 Bought goods from raj&co on credit 3,500
 6 Paid for postage 100
 7 Sold goods on credit to anand 2,500
 8 Paid to raj & co on account 2,000
 9 Received cash from anand 2,450
 10 Discount allowed him 50
 11 Kumar & co purchased goods from us 3,100

13. DATE PARTICULAR L.F DEBIT CREDIT
2
Cash A/C DR
To capital A/C
{Being commenced business}
50,000
50,000
3 Bank A/C DR
To cash A/C
{Being opened a bank account}
10,000
10,000
4 Furniture A/C DR
To cash A/C
{Being purchase office furniture}
2500
2500

14. DATE PARTICULAR L.F DEBIT CREDIT
5 Purchases A/C DR
To Raj & Co A/C
[Being bought goods raj&co}
3500
3500
6 Postage A/C DR
To cash A/C
[Being paid to postage}
100
100
7 Anand A/C DR
To sales A/C
[Being sold goods to anand}
2500
2500

15. 8 Raj & co A/C DR
To cash A/C
{Being raj&co on account}
2,000
2,000
9 Cash A/C DR
To Anand A/C
{Being received cash from anand}
2450
2450
10
Discount A/C DR
To Anand A/C
{Being discount allowed}
50
50
11
Purchase A/C DR
To kumar A/C
{Being purchased kumar& co}
3100
3100