|
|
Definition: Accounting is an art of recording, classifying, summarising in a significant manner and in terms of money, transaction and events of a financial character and interpreting the results thereof.
Financial Accounting: This concept of accounting is used to ascertain the Profit and Loss and the Financial State of Affairs or Balance Sheet at the end of each financial year which normally starts from April of one year and ends on March the next year.
Cost Accounting: Cost Accounting is used to ascertain the cost incurred for carrying out various activities and to exercise cost control.
Management Accounting: Management Accounting aids the management of a company with necessary information for decision making, cost controls, budgeting.
ASSETS = LIABILITIES + CAPITAL
Classification of Accounts:
Personal: Relates to Debtors i.e. Customers, Clients, Buyers of goods and services and Creditors i.e. Suppliers, Sellers of goods and services.
Impersonal:
 |
Real: Refers to Fixed Assets like Machinery, Equipment, Furniture, Land and Building; Cash, Bank, Stock. |
|
Nominal: Refers to Income like income from sales, interest income, rental income and Expenditure like Office supplies, Rentals, Utilities, Factory Overheads, Repairs etc. |
Journal: Journal is a book of original entry. Rules for journalising are:
Personal: Debit the Receiver; Credit the Giver.
Impersonal:
|
Real: Debit what comes in; Credit what goes out. |
|
Nominal: Debit all expenses and losses; Credit all incomes and gains. |
To record an entry in Account Books:
For Assets - Debit an Increase; Credit a Decrease.
For Liabilities - Debit a Decrease; Credit an Increase.
For Capital - Debit a Decrease; Credit an Increase.
Home | AccountsBasics1 | AccountsBasics2 | AccountsBasics3 | AccountsBasics4 | AccountsBasics5 | AccountsBasics6 |
This site was last updated 06/21/06