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ACCOUNTING VOLUME -I
NEED FOR ACCOUNTING
1.
2.
3.
4.
Process of Accounting
1. Recording: - Business transactions of the financial characters are
recorded in a book called Journal.
2. Classifying: - The book containing classified information is called
Ledged. This book contains diff pages E.g. Purchase, sales, rent etc.
3. Summarizing: - concerned with the preparation and presentation of
classified data through the financial statement 1. Trail balance 2.
Trading, Profit and Loss A/c 3.Balance sheet.
4. Analyzing: - concerned with the establishment of relationship
between the items of the profit and loss account and the balance
sheet.
5. Interpreting:- concerned with the explaining the meaning and
significance of the relationship so established by the analysis.
6. Communicating:- transmission of summarized analyzed and
interpreted information to the users to enable them to make sound
decision.
Book Keeping
Book keeping is the art of recording classifying and summarizing business
transaction in money or money worth. Forms of book keeping are
1. Double entry system
2. Single entry system
Accounting
The process of identifying, measuring and communicating economic
information to permit informed judgments and decisions by the users of
accounts.
BASIS OF DOUBLE ENTRY SYSTEM
Each transaction in the results of two parties coming together
1. This cannot be seller without a buyer
2. Borrower without a lender
Forms of Book keeping:1. Double Entry system: - its a record two fold aspects of every
business transaction.
2. Single Entry system: - in this method the principles of double entry
system have not been observed in all cases. It is an incomplete form of
double entry system. Under single entry only personal accounts of
debtors, creditors and cash book are maintained.
Very difficult
Do not accept
NOMINAL ACCOUNT
UNIT 2
JOURNALS
UNIT 3
LEDGERS
2. Debtors Ledger-
debtors
3. Creditors Ledgercreditors