PRESENTATION ON ACCOUNTING PROCESS

Presented by: Prachi Mittal Poorbi Tiwari

ACCOUNTING
Accounting is the art of recording , classifying and

summarising in significant manner and in terms of money , transaction and events which are, in part, at least of a financial character and interpreting the result thereof .
The function of accounting is to provide quantitative

information , primarily of financial nature, about economic entities, that is needed to be useful in making economic decision.

USERS OF ACCOUNTING INFORMATION

Accounting is of primary importance to the proprietor

and the managers. However, other person also interested in the accounting information such asProprietor II. Managers III. Creditors IV. Prospective investors V. Government VI. Employee
I.

ACCOUNTING PROCESS

Contd:
TRANSACTION-

Accounting starts with transaction. Transaction means Receipts, payments, sale, purchase etc. any give and take which has financial effects, which affects the concern.
ENTRY-

Transaction is recorded by way of an entry in the journal as per Double entry principle i.e. Debiting some accounts and crediting others with the equal amounts.

 POSTING LEDGER-

The term posting means transferring the debit and credit items from the journal to their respective accounts in the ledger. Each account will provide the complete details about the transaction.

JOURNAL

The word Journal is derived from the French word JOUR means a day. The journal records all daily transaction of a business into the order in which they occur. It is a book in which the transaction recorded first of all under the double entry system and subsequently they are posted in the ledger.

PROFORMA OF JOURNAL:
Date Particulars L.F. Debit (Rs) Credit (Rs)

(1)

(2)

(3)

(4)

(5)

CLASSIFICATION OF ACCOUNTS
In order to keep a complete and up-to-date records the

entire transaction of any business, it would be necessary to classify the accounts in following wayTYPES OF ACCOUNTS

REAL ACCOUNT

PERSONAL ACCOUNT

NOMINAL

ACCOUNT

GOLDEN RULES
Personal Account Capital, Person , Bank, Representative DEBIT- the receiver CREDIT- the giver
Real Account

Cash, Tangible Asset, Intangible Asset DEBIT- what comes in CREDIT- what goes out

Nominal Account

Income and Expenditure DEBIT- Expenses or losses CREDIT- Incomes or gains

Journal Entry
1. 2.

3.
4. 5.

Received cash from Sudesh Rs 50,000. Brought goods for cash Rs. 12000. Office rent paid Rs. 3500. Received cash from Rana Pratap Rs. 6900. Furniture purchased for cash Rs. 24000.

Contd:
Date 2005 Jan 1. 2. 3. 4. Particulars Cash A/c To Sudesh A/c Goods A/c To Cash A/c Office rent A/c To Cash A/c Cash A/c To Rana pratap Dr. Dr. Dr. Dr. Dr. L.F Debit Rs. 50,000 12000 3500 6900 24000 Credit Rs. 50,oooo 12000 3500 6900 24000

5. Furniture A/c To Cash A/c

TOTAL

RS.

96400

96400

LEDGER
Ledger is the book which contains various accounts. In

other words, ledger is the set of accounts. It contains all accounts of the business enterprise whether real, personal or nominal. It should be noted that exact names of accounts used in the journal should be carried in the Ledger. Ex: if in the journal expenses a\c has been debited, it would not be correct to debit the office expenses a\c in the ledger.

 PROFORMA OF LEDGER:
Dr
Date

Cr Particulars
J.F

Amount

Date

Particulars

J.F

Amount


Date

Sudesh A/c
Particulars To bal c/d J.F Amt 50000 Date 2001 Particulars By Cash A/c J.F Amt 50000

2001

50000

50000

Date 2001 Particulars To Sudesh A/c To Rana Pratap A\c J.f

Cash A/c
Amt 50000 6900 Date 2001 Particulars By Goods A\c By Office Rent A\c By Furniture A\c By Bal c\d J.F Amt 12000 3500 24000 34500


Date

Goods A/c
Particulars To Cash a\c J.F Amt 12000 12000 Date 2001 Particulars By Bal c\d J.F Amt 12000 12000

2001

Rent A/c
Date

Particulars To Cash A\c

J.F Amt 3500 3500

Date 2001

Particulars By Bal c\d

J.F

Amt 3500 3500

2001


Date

Rana Pratap A/c

Particulars To Bal c\d J.F Amt 6900 6900 Date 2001 Particulars By Cash A\c J.F Amt 6900 6900

2001

Date

Furniture A/c
Particulars To Cash A\c J.F Amt 24000 24000 Date 2001 Particulars By Bal c\d J.F Amt 24000 24000 2001

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