FINANCIAL ACCOUNTING

FINANCIAL ACCOUNTING
• FINANCIAL ACCOUNTING IS CONCERNED WITH EXTERNAL
TRANSACTIONS IT RECORDS ALL DEALINGS WITH OUTSIDE
THE CONCERN.
• Financial accounts are concerned with classifying,
measuring and recording the transactions of a
business.
FINANCIAL ACCOUNTING RECORD

PURCHASES,SALE,SERVICES ,
AND EXPENSES
 BOOK-KEEPING
• BOOK-KEEPING MAY BE DEFINED AS THE ART
AND SCIENCE OF RECORDING ALL THE DEALINGS
RALTED TO MONEY.

SYSTEM OF BOOK-KEEPING

SINGLE ENTRY DOUBLE ENTRY

SYSTEM SYSTEM
• SINGLE ENTRY SYSTEM :-
SINGLE ENTRY SYSTEM RECORDS ONLY ONE SIDE OF THE
TRANSACTON AND HENCE IT DOES NOT PROVIDE
COMPLETE INFORMATON ABOUT A TRANSACTION

• DOUBLE ENTRY SYSTEM :-

DOUBLE ENTRYSYSTEM REOCORS BOTH THE SIDES OF
THE TRANSACTION AND THUS PROVIDES COMPLETE
INFORMATON OF THE BUSINESS TRANSACTONS
 TRANSACTION

CREDIT CASH

TRANSACTION MEANS IT IS THE MONETORY ACTIVITIES

PERFORMED BY TWO OF MORE PARTIES ONE IS GIVER
AND SECOND IS TAKER.
 ACCOUNTING EQUIATIONS:-

TOTAL ASSETS =TOTAL LIABILITY

FOR EXAMPLE:-
CASH Rs.10000 +BUILDING Rs.25000=CAPITAL Rs.25000+LIABILITY Rs.10000

35000=35000
 TYPES OF ACCOUNTS:-

6.PERSONAL ACCOUNTS: - relate with individual, private

company and partnership firm etc.

RULES OF
ACCOUNTS

DEBIT THE CREDIT THE

RECEIVER GIVER
FOR EXAMPLE: - GOODS PURCHASE FROM X COMPANY Rs.1000/-
PURCHASES ACCOUNT DR------------ 1000
TO X COMPANY ACCOUNT CR 1000
2.REAL ACCOUNT: - Relate with assets like a Machinery,
Building, Land, Cash and Bank*, Stock.

RULES OF
ACCOUNTS

DEBIT WHAT CREDIT WHAT

COMES IN GOES OUT

FOR EXAMPLE: - BUILDING PURCHASE Rs.10000/-

BUILDING ACCOUNT------------DR 10000/-
CASH ACCOUNT --------------------CR 10000/-
2.NOMINAL ACCOUNT: - Relate with income and expenditure of business.
For example: - Salary, Wages, Rent, Profit, Commissions received, etc
this are example of nominal account.

RULE OF
ACCOUNT

DEBIT THE CREDIT THE

EXPENSES OR RECEIVER OR
GIVER SIDE INCOME SIDE

FOR EXAMPLE:-Salary paid Rs.1000/-

Salary Account ---------------------DR 1000/-

To Cash ------------------------CR 1000/-
THE JOURNAL AND

-Every Business Transactions Is Recorded On The Same Day In A Book

Called The Journal. Thus A Journal Is Simply A Chronological Listing Of
Transactions. The Journal Constitutes The Original Records Of
Transactions.

JOURNAL BOOK (SPACIMAN FORMAT)

DATE PARTICULAR L.F DEBIT CREDIT

THE LEDGER

-From The Journal The Transactions Related To Each Person Or Firm Is

Sorted Out Classified And Entered In A Book Called Ledger.

LEDGER ACCOUNT

DEBIT SIDE(LEFT SIDE) CREDIT SIDE(RIGHT SIDE)

J/ J/
DATE PARTICULAR F AMT DATE PARTICULAR F AMT
SOME RULES REGARDING LADGER ACCOUNT:-

• IN CASH ACCOUNT DEBIT THE RECEIVER AND CREDIT

THE GIVER.

• IN BANK ACCOUNT DEBIT THE RECEIVER AND CREDIT

THE GIVER.

• REMAIN ALL LEDGER ACCOUNTS DEBIT SIDE THE

EXPENSES OR GIVER SIDE AND CREDIT SIDE
RECEIVER OR INCOME SIDE.
 TRIAL BALANCE
THE TOTAL OF DEBIT ACCOUNTS AND TOTAL OF CRDIT ACCOUNTS IS CALLED TRAIL
BALANCE.