Class notes

Meaning of accounting cycle The accounting cycle is the complete sequence of accounting processes or procedures which begin with the recording of business transactions in the book or books of original entry and end with the preparation of final accounts, and which are repeated in the same order in each accounting period. Diagram showing accounting process of an accounting cycle: The sequential steps involved in the accounting cycle are 1.Recording the business transactions in a journal or special journals Recording the business transactions date wise in the book or books of original entry called the journal or in a number of books of original entry called the special journals or subsidiary books, as and when they occur. 2. Classifying the transactions through posting to  ledger periodically Classifying the transactions (i.e., the entries found in the book or books of original entry) by posting or transferring those entries to the appropriate accounts in the Ledger perio...

Rules of accounts Rules of accounts under English system The procedure of debiting and crediting the different kinds of accounts under English system has been summarised as under 1.Personal accounts Debit the receiver Credit the giver 2. Real or property accounts Debit what comes in Credit what goes out 3. Nominal or fictitious accounts Debit expenses or losses Credit incomes or gains Applying the rules of debit and credit under English system 1.Understand clearly the meaning of a transaction given in the problem. For example:  commenced business with ₹10000 2.Find out which two accounts affected in the above transaction. Cash a/c Capital a/c 3.Find out to which class the above two accounts belong Cash a/c belongs to Real account Capital a/c belongs to representative personal account 4.Apply the respective rules to the two accounts Cash comes in to the business , so,as per real account rule - debit what comes in will apply here. Owner is the giver and he represents personal accou...

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...

Accounting principles To maintain uniformity and consistency in accounting records, certain rules or principles have been developed which are generally accepted by the accounting profession. These rules are called by different names such as principles, concepts, conventions, postulates, assumptions and modifying principles. One such accounting principle which is generally accepted is " GAAP ". Generally Accepted accounting principles (GAAP)  refers to the rules or guidelines adopted for recording and reporting business transactions, to bring uniformity in the preparation and the presentation of financial statements.  These principles are also referred to as concepts and conventions.  The accounting principles are classified into  1.Accounting concepts 2.Accounting Conventions Basic Accounting Concepts The important concepts have been listed as below: 1. the Business entity 2. Money measurement 3. Going concerned 4. Accounting period 5. Cost 6. Dual aspect (or Duality...