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Accounting is the art of recording, classifying , summarizing in the significant manner and in terms of money, transactions and events , which are, in part at least, of financial character, and interpreting the result thereof. ---- American Institute of Certified Public Accountants.
Characteristics of Accounting 1. Recording of Financial Transactions only:2. Recording
ACCOUNTING CYCLE
Transacti ons
Journal
Trial Balance
Ledger
Accountancy
It refers to a systematic knowledge of accounting concerned with the Principles and techniques which are applied in accounting. It tell us how to prepare the books of accounts, how to summaries the accounting information and how to prepare the books of accounts, how to summarize the accounting information and how to communicate it to the interested parties.
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Anything which is in possession or is the property of a business enterprise including amount due to it from others.
Current Asset An asset that is expected to be converted to cash, sold, or consumed during the next 12 months, or within the business normal operating cycle. Ex:- Stock, Debtors, Cash in hand and at Bank, etc. Fixed Assets:- It refers to those assets which are held for continued use in the business for the purpose of producing goods and services and are not meant for resale. Ex:- Land and Building, Plant and Machinery, Furniture etc.
Tangible and Intangible Assets:- TA are those assets which can be seen and touched. Or which have physical existence such as Land and Building, Plant and Machinery, Furniture, Stock, Debtors, Bill Receivable. IA are those assets which can not be seen and touched. Or which do not have physical existence such as Goodwill, Copyright, etc . Liability:- It refers to the amount which firm owes to outsiders . Assets - Capital = Liabilities Fixed Liability;- It refers to those liability which fall due for payment in a relatively long period. Ex:- Long term loan, Debenture etc.
Current Liabilities It refers to those liabilities which are to be paid in near future or within one year. Ex:- Accounts Payable, Creditors , Outstanding expenses etc.
Capital:- It refers to the amount invested in the business enterprise. It is the amount with the help of which goods and assets are purchased in the business. Capital = Assets Liabilities
Expenses :- It is the cost incurred in producing and selling the goods and services.
Income:- Income is different from revenue. Amount received from sales of good is called Revenue and cost of good sold is called Expenses. Surplus of revenue over expenses is called Income.
Capital Expenditure :- Any expenditure which is incurred in acquiring or increasing the value of a fixed assets is called as Capital Expenditure. Revenue Expenditure:- Any expenditure, the full benefit of which is received during one accounting period is termed as revenue expenditure . Bad debt :- It is the amount owing from a debtors which is not expected to be received.
Debtors:- It represent those person and firm to whom goods and services are sold on credit and payment has not been received from them. They still owe some amount to the business. Creditors:- It represent those person and firm from whom goods and services have been purchased and payment has not been made to them.
Rules for these accounts:Debit the receiver and Credit the giver.
are a/c s of Assets and Properties such as land, Building Plant, machinery, Cash, stock, etc.