Chapter 1 (Introduction to Accounting)

CHAPTER -1 INTRODUCTION TO ACCOUNTING  ACCOUNTING : Accounting is the process of I. II.

collecting  JOURNAL ENTRY  ENTRY # it is furthe recor!ing"i.e. recor!ing "i.e. JOURNAL furtherr !i$i!e! !i$i!e! into subsidiary books

c%sh &ourn%l purch%se &ourn%l others or cash book or purchase book  return book  "for recor!ing recor!ing "for recor!ing recor!ing sales return book, c%sh tr%ns%ction# tr%ns%ction # cre!it purch%se of payable book,   goo!s.# bills receivable book 

sales book purchase "for recor!ing recor!ing cre!it s%les#

bills

 journal proper

III. I(. I(.

(.

cl%ssif'ing!O"T#N$ into LE%$ER" o& the transaction recorded cl%ssif'ing in JOURNAL or "U'"#%#ARY 'OO(" i)e) step ##)* su))%rising"i.e. su))%rising "i.e. prep%ring trail balance tradin+ and prot - loss account balanc balance e sheet sheet. Thes These e %re %re coll collec ecti ti$e $el' l' *no+ *no+n n %s ,n%l ,n%l %ccounts or ,n%nci%l st%te)ent# %n! co)) co))un unic ic%t %tin ing g ,n%n ,n%nci ci%l %l info infor) r)%t %tio ion n TO UER.

 ACCOUNTANCY  ACCOUNTANCY :

Account%nc' is % s'ste)%tic *no+le!ge of %ccounting. i.e. it  educates how to maintain the books of accounts.

INCOME STATEMENT: Inco)e st%te)ent refers to TRA%#N$ and !RO.#T - LO""

A//OUNT. "TATEENT O/ PRO/IT 0 O  in c%se of COPANIE#. It sho+s the

prot earned or loss incurred 2' the enterprise %UR#N$ the A//OUNT#N$ YEAR)

e+) 0120324015 to 6120624017* .OR8AT O. TRA%#N$ AN% !RO.#T - LO"" A//OUNT9 TRA%#N$ A//OUNT !ART#/ULAR"  TO OPENING TOC3 

A8OUN T   8888

 TO PURCHAE

 

 TO GRO   PRO/IT"4A./IG# 5c6!7

!ART#/ULAR" 49 AE

A8OUN T   8888

8888 8888

49 COING TOC3    8888 49 GRO O"4A./IG#   8888 5c6!7

 !RO.#T - LO"" A//OUNT !ART#/ULAR"

A8OUN T

!ART#/ULAR"

A8OUN T

8888

 TO GRO O "26!#  TO AAR9  TO DEPRECIATION  TO TA// :E/ARE E8PENE  TO EECTRICIRT9 4I

       

8888 8888 8888 8888

 

8888

8888

49 GRO PRO/IT"26!#

49 DI(IDEND

  8888

8888

49 NET O"4A./IG#

 TO NET PRO/IT"4A./IG#

OSITION STATEMENT : Position st%te)ent refers to 'ALAN/E ":EET  +hich sho+s the ,n%nci%l position of the enterprise ON A !ART#/ULAR %ATE)

e+) 61st ;arch 4017* 4ANCE HEET A" AT 61st 8arch 4017

L#A'L#T#E"

A8OU NT

OPENING CAPITA ADD; PRO/IT DURING THE 8  9EAR 8 E; DRA:ING COING CAPITA 8 OAN 8 CREDITOR PRO(IION /OR TA8E 8

A""ET"

A8OUN T

888 .#
8888   8888   8888   8888

888 /URRENT A""ET" Closing toc* De2tors 888 C%sh 2%l%nce 4%n* 2%l%nce

       

888 8 888

8888 8888 8888 8888

8

!"ANC# O$ ACCOUNTING:  Three t'pes of 2r%nch of %ccounting

.inancial accountin+

/ost accountin+

Discusse! %2o$e

It %scert%ins the cost of   pro!ucts )%nuf%cture! or ser$ices ren!ere! %n! helps the )%n%ge)ent in !ecision)%*ing"s%' price ,<%tion# %n! e
8ana+e;ent accountin+ It is )ost recentl' !e$elope! 2r%nch of  %ccounting. i)pl' s%' it is useful for single user group i.e. the )%n%ge)ent.

%i&e'ence b(w !ook kee)in* and accountin* : •

 These t+o ter)s %re often consi!ere! %s s%)e. 4ut it is not so. These ter)s %re !istinct fro) e%ch other. Accounting is +i!er concept th%n 2oo* *eeping. Accountin+ includes 'ook (eepin+) Accounting

4oo*3eeping

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4oo* 3eeping is % p%rt of %ccounting.

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4OO3 3EEPING

ACCOUNTING

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'A"#" t%ge O2&ecti$e

N%ture of &o2 Perfor)%nce peci%l s*ills cope "rec%ll !e,nition of %ccounting# "i)pl' s%' it is !e,nition of %ccounting#

'OO( (EE!#N$ Pri)%r' st%ge To )%int%in s'ste)%tic recor!s of ,n%nci%l tr%ns%ctions.

A//OUNT#N$ econ!%r' st%ge  To %scert%in net results of  oper%tions %n! ,n%nci%l position %n! to co))unic%te to the intereste! p%rties. Routine in n%ture An%l'tic%l %n! !'n%)ic in n%ture. =unior st%> perfor)s this enior st%> perfor)s this function. function. Not re?uire! Re?uire!. 4oo* *eeping is Accounting is concerne! concerne! +ith +ith "u;;arisin+ the i!entif'ing recorded ,n%nci%l transactions, tr%ns%ctions i)e) preparin+ e%suring the) in trial balance, )one' tradin+ and !-L Recordin+ account, balance  journal entry sheet* or subsidiary Interpreting the) books*the) in %n! 2oo*s of %ccounts co))unic%ting the An! /lassi&yin+ results. the;)postin+ into led+ers*, •

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