accounting basics

ACCOUNTING: AN INTRODUCTION

PRESENTED BYTITTY BENJAMIN

SHERRY RITHA ANTONY

ACCOUNTING

MEANING OF ACCOUNTINGDEFINITION OF ACCOUNTING ACCORDING

TO AICPA

OBJECTIVES MAINTENANCE OF RECORDS OF

BUSINESSCALCULATION OF PROFIT OR LOSSDEPICTION OF FINANCIAL POSITIONMAKING INFORMATION AVAILABLE TO

VARIOUS GROUPS

SOME BASIC TERMS1) ASSETSa) FIXED ASSETSb) CURRENT ASSETS

2) LIABILITIESa) SHORT TERMb) LONG TERM

3) CAPITAL

4) REVENUES

5) EXPENSESa) CAPITAL EXPENDITUREb) REVENUE EXPENDITURE

6) PURCHASES7) SALES8) STOCK9) DEBTORS10)CREDITORS11)DRAWINGS12)BUSINESS TRANSACTIONS

THEORY BASE OF ACCOUNTING GAAP 1) ACCOUNTING CONCEPTS 2) ACCOUNTING PRINCIPLES 3)MODIFYING PRINCIPLES

ACCOUNTING CONCEPTSACCOUNTING ENTITYGOING CONCERNMONEY MEASUREMENTVERIFIABLE OBJECTIVEACCOUNTING PERIOD

ACCOUNTING PRINCIPLESREVENUE REALISATIONEXPENSE OR COSTMATCHING PRINCIPLEFULL DISCLOSUREDUAL ASPECT

MODIFYING PRINCIPLESPRINCIPLES OF MATERIALITYPRINCIPLE OF CONSISTENCYCONVENTION OF CONSERVATISMTIMELINESSPRACTICE IN INDUSTRYCOST BENEFIT PRINCIPLEPRUDENCE

ORIGIN AND RECORDING OF TRNSACTION

ACCOUNTING EQUATION

ASSETS=LIABILITIES

ACCOUNTS AN ACCOUNT IS DEFINED AS A FORMAL

RECORD OF ALL TRANSACTIONS RELATING TO CHANGES IN A PARTICULAR ITEM

UNDER THE ENGLISH APPROACH, ACCOUNTS ARE:

a)PERSONAL ACCOUNT b)REAL ACCOUNT c)NOMINAL ACCOUNT

PERSONAL ACCOUNTS

DEBIT THE RECIEVER CREDIT THE GIVER

EXAMPLE

#RAM PAID RAJU RS 10000

#DEVIKA RECEIVED RS 5000 FROM MALAVIKA

REAL ACCOUNTS

DEBIT WHAT COMES IN CREDIT WHAT GOES OUT

EXAMPLE#FURNITURE WORTH RS 25000 BOUGHT FOR

CASH#MACHINERY WORTH RS 40000 SOLD FOR

CASH

NOMINAL ACCOUNTS

DEBIT ALL EXPENSES AND LOSES CREDIT ALL INCOMES AND GAINS

EXAMPLE#SALARY RS 5000 PAID#RENT RS 2500 RECIEVED