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Definition
Accounting is defined by the American Institute of Certified Public Accountants (AICPA) as "the art of recording, classifying, and summarizing in a significant manner and in terms of money, transactions and events which are, in part at least, of financial character, and interpreting the results thereof."
Timely and accurate picture of performance To ascertain the financial position of the business as a whole. Generate financial reports for management, lenders, creditors Facilitate filing of tax returns
(sales and payroll taxes more important than income tax)
Types of Accounts
Personal A/c
Impersonal A/c
Real A/c
Nominal A/c
Personal A/c
1
Individual Persons
Prepaid Incomes
Types of Accounts
Personal A/c
Impersonal A/c
Real A/c
Nominal A/c
Real A/c
Types of Accounts
Personal A/c
Impersonal A/c
Real A/c
Nominal A/c
Nominal A/c
Debit all Losses and Expences
ACCOUNTING EQUATION:
Accounting equation is an extension of business Entity (or) dual aspect concept.
Business entity concept: It means of separation of owner and business Dual aspect concept: It means two, any transaction will have two aspects Accounting period concept: The period of checking the books of accounts from the beginning to end of the financial year. Going concern concept: It means continuously any person start a business new and should go on. To start a business with an intension to of earning more profits Cost concept: The total amount of expenditure which is incurred in a financial year. Money measurement concept: it means the value of every transaction should measure in terms of money Matching concept: To measure the profits for a particular period is essential to match accurately that cost associated with revenues. Realization concept: imaginary value should be anticipated but not a security have a greater value. Accrual concept: costs are recognized when they are incurred when they are not paid. Rupee value concept: it assumes that the value of a rupee constant.
ACCOUNTING CONCEPTS:
Business entity concept: It means of separation of owner and business Dual aspect concept: It means two, any transaction will have two aspects Accounting period concept: The period of checking the books of accounts from the beginning to end of the financial year. Going concern concept: It means continuously any person start a business new and should go on. To start a business with an intension to of earning more profits Cost concept: The total amount of expenditure which is incurred in a financial year. Money measurement concept: it means the value of every transaction should measure in terms of money Matching concept: To measure the profits for a particular period is essential to match accurately that cost associated with revenues. Realization concept: imaginary value should be anticipated but not a security have a greater value. Accrual concept: costs are recognized when they are incurred when they are not paid. Rupee value concept: it assumes that the value of a rupee constant.
Business
Owner
Debit
Credit
Matching Concept
To Calculate Profit
Costs
Revenues
Wrong
Right
Accrual Concept costs are recognized when they are incurred when they are not paid.
Credit Sale
There are 5 important conventions are follow under:o Convention of consistency: the formats and forum ales procedures are not changing till long period of time. o Convention of disclosure: every transaction should be recorded and nothing should be hidden o Convention of materiallity.: there must be heading and terms related to the heading can be taken at one place. o Convention of conservetism.: play safe means taking necessary steps to safeguard the cash flow. o Convention of feasability.: minimizing the expenditure and wastage should be avoided.
ACCOUNTING CONVENTIONS:
There are 5 important conventions are follow under:oConvention of consistency: the formats and forum ales procedures are not changing till long period of time. oConvention of disclosure: every transaction should be recorded and nothing should be hidden oConvention of materiallity.: there must be heading and terms related to the heading can be taken at one place. oConvention of conservetism.: play safe means taking necessary steps to safeguard the cash flow. oConvention of feasability.: minimizing the expenditure and wastage should be avoided.
ACCOUNTING CYCLE
Journals
Date Jan 1 2011 Particulars Cash A/c L.F Debit Credit No Amount Amount Dr XXXXX
To Raju A/c
(Being Cash Received From Raju
XXXXX
3.journalise
Dr
Date Particulars J.F No
Cash A/c
Amount Date Particulars J.F No
Cr
Amount
Jan 1
To Raju A/c
XXXXX
XXXXX
XXXXX
Feb 1 To balance b/d XXXXX
XXXXX
Dr
Date Particulars J.F No
Raju A/c
Amount Date Particulars J.F No
Cr
Amount
Jan 31
To balance c/d
XXXXX
XXXXX
XXXXX
Feb 1
XXXXX
by balance b/d XXXXX
Trial Balance
S.NO Particulars Debit Amount Credit Amount
1
2
Cash A/c
Raju A/c
XXXXX
XXXXX
XXXXX
XXXXX
Adjusting Entries are journal entries that are made at the end of the accounting period, to adjust expenses and revenues to the accounting period where they actually occurred.
6.Adjusting entries
Accrued revenues
Telephone Expense
Depreciation Expense Interest Expense Dividend Total
1,494 1,100
150 5,000 $217,014
$217,014
ACCOUNTING CYCLE