Class notes

problem on natur of account 2 problems on nature ofaccount

  Introduction Double entry is the foundation or basic principle of accounting. It provides the very basis for recording business transactions into the book of accounts. Meaning : The system of making two or double entries of equal value in two different accounts on opposite sides in the books of each of the contracting parties is known as the double-entry system of accounting. The double entry system of accounting states that every financial transaction has equal and opposite effects in at least two different accounts. It is used to satisfy the accounting equation. Double-entry keeps the accounting equation in balance. ​ Assets = Liabilities + Equity ​ In the double-entry system, transactions are recorded in terms of debits and credits. The double-entry system of bookkeeping standardizes the accounting process and improves the accuracy of prepared financial statements, allowing for improved detection of errors. Types of Accounts A business transaction is a business ...

Meaning : Accounting standards are written policy documents covering the aspects of recognition, measurement, treatment, presentation and disclosure of accounting transactions in financial statements.  An accounting standard is an authoritative statement issued by ICAI (Institute of Chartered account of India), a professional body of accounting in our country. Objectives : 1. To bring uniformity in different accounting policies to eliminate non-comparability of financial statements for enhancing the reliability of financial statements.  2. To provide a set of standard accounting policies, valuation norms and disclosure requirements.  3. To improve the credibility of accounting data. 4. To enhance comparability of financial statements of both intra and inter enterprises for assessment of firms’ performance by the users of accounting. Benefits of Accounting Standards 1. Accounting standard helps to  eliminate  variations in accounting treatment to prepare fina...