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Introduction to Accounting

Introduction to Accounting

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Published by Manu Dhir

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Published by: Manu Dhir on Dec 08, 2010
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03/27/2013

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 INTRODUCTION TO ACCOUNTING 
The purpose of accounting is to provide a means of recording,reporting, summarizing, and interpreting economic data. In order todo this, an accounting system must be designed. A system design serves the needs of users of accounting information. Once a systemhas been designed, reports can be issued and decisions based uponthese reports are made for various departments. Since accounting isused by everyone in one form or another, a good understanding of accounting principles is beneficial to all.
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Definitions of Accounting
Accounting is an art of recording, classifying, summarizing andinterpreting financial events and transactions in a significant manner and in terms of money 
-American Institute of Certified Public Accountants.
In general term Accounting means financial statements. It is an art of recording, classifying, summarizing and interpreting financial eventsand transactions in a significant manner and in terms of money of financial character and analyzing the results thereof. Accounting isthe art of communicating financial information about a business entityto users such as shareholders and managers. The communication isgenerally in the form of financial statements that show in moneyterms the economic resources under the control of management.
 -
by parmod gusain
Features of Accounting
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Records of Financial Transaction only: -
Only those transaction andevents are recorded in accounting which is of financial character.There are so many transactions which are so important for business but which cannot be measured and expressed in terms of money andhence such transactions will not be recorded.(2)
Recording:-
Accounting is the art of recording businesstransaction according to specific rules. In a small business where thenumber of transactions is quite small, all transaction is first of allrecorded in book called “Journal”. But in a big business where thetransactions is quite large, the Journal is sub-divided in to varioussubsidiary books such as“Cash book” for recording cash transactions.“Purchase book” for recording credit purchases of goods.“Sales book” for recording credit sales of goods.“Purchase return book” for recording return of credit purchases.“Sales return book” for recording return of credit sales.(3)
Classifying: -
After recording the transactions in journal thetransaction are classified. Classification is the process of grouping thetransaction of one nature at one place in separate accounts. The book in which various accounts are opened are called “Ledger”.
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