OVERVIEW

OVERVIEW

1. DEFINITION OF ACCOUNTING

   • “the art of recording, classifying and summarizing in a significant manner "

2. OBJECTIVES AND SCOPE OF ACCOUNTING

   • To ascertain profitability:
   • To fulfill compliance of Law
   • To keep systematic records:
   • To assist in decision-making:
   • To ascertain the financial position of the business:

3. Accounting Process

   • Posting of Adjustment Entries
   • Adjusted Trial Balance
   • Preparation of Trial Balance
   • Preparation of Financial Statements
   • Collecting and Analyzing Accounting Documents
   • Posting in Journal
   • Posting in Ledger Accounts
   • Post-Closing Entries

4. Accounting Concepts

   • Business Entity Concept
     • According to this concept, the business and the owner of the business are two different entities. In other words, I and my business are separate.
   • Money Measurement Concept
     • "We can book only those transactions in our accounting record that can be Measured in monetary terms "
   • Dual Aspects Concept
   • Cost Concept
     • The cost concept stops any kind of manipulation while taking into account the net realizable value or the market value.
   • Going Concern Concept
     • Our accounting is based on the assumption that a business unit is a going concern. We record all the financial transaction of a business in keeping this point of view in our mind that a business unit is a going concern; not a gone concern.
   • Accounting Period Concept
     • The end of each year
   • Matching Concept
   • Accrual Concept
     • me service, then that becomes our point of revenue generation irrespective of whether we received cash or not. The same concept is applicable in case of expenses
   • Objective Evidence Concept
     • According to the Objective Evidence concept, every financial entry should be supported by some objective evidence

5. Accounting Conventions

   • Convention of Consistency
   • Convention of Disclosure
   • Convention of Materiality
   • Conservation of Prudence

6. Classification of Accounts

   • Personal accounts
     • Personal accounts may be further classified into three categories:
   • Nominal accounts
     • An account related to any individual like David, George, Ram, or Shyam is called as a Natural Personal Account.
   • Real accounts
     • Tangible accounts
       • assets are touchable assets such as plant, machinery, furniture, stock, cash, etc.
     • Intangible accounts
       • assets are non-touchable assets such as goodwill, patent, copyrights, etc

7. Accounting Systems

   • Single Entry System
     • The simple system is a system in which entrepreneurs open only the personal accounts and maintained by the company
   • Double Entry System
     • Under the double entry system of account, every entry has its dual aspects of debit and credit. It means, assets of the business always equal to liabilities of the business.

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