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ACCOUNTANCY
ACCOUNTANCY INVOLVES: SYSTAMATIC CLALSSIFICATION OF BUSINESS TRANSACTIONS IN TERMS OF MONEY AND FINANCIAL CHARACTER. SUMMARIZING : TRAIL BALANACE AND B/S INTERPRETING THE FINANCIAL TRANSACTIONS.
PURPOSE OF ACCOUNTANCY
TO KEEP A SYSTAMATIC RECORD TO ASCERTAIN THE RESULTS OF OPERATIONS TO ASCERTAIN FINANCIAL POSITION OF BUSINESS. TO FACILITATE RATIONAL DECISION MAKING TO SATISFY REQUIREMENT OF LAW AND USEFUL IN MANY RESPECTS.
CONCEPTS OF ACCOUNTANCY.
COST CONCEPT: BUSINESS TRANSACTIONS ARE RECORDED IN BOOKS AT COST PRICE. FIXED ASSETS ARE KEPT AT COST OF PURCHASE AND NOT AT THEIR MARKET PRICE. EVERY TRANSACTION IS RECORDED WITH PRESENT VALUE AND NOT ANY FUTURE VALUE. UNREALIZED GAINS ARE IGNORED. COST OF AN ASSET THAT HAS LONG BUT LIMITED LIFE IS SYSTAMATICALLY REDUCED BY A PROCESS CALLED DEPRECIATION. BUT SUCH DEPRECIATION HAS NO RELATION TO MARKET VALUE OF ASSET.
REALISATION CONCEPT.
THIS CONCEPT TELLS US WHEN REVENUE IS TREATED AS REALISED OR EARNED. IT IS TREATED AS REALIZED ON THE DATE WHEN PROPERTY IN GOODS PASSES TO BUYER AND HE BECOMES LEGALLY LIABLE TO PAY. NO FUTURE INCOME IS CONSIDERED. GOODS SOLD ON APPROVAL WILL BE INCLUDED IN SALES BUT ON COST ONLY.
CONVENTION OF CONSERVATISM
ALL POSSIBLE LOSES TO BE TAKEN INTO CONSIDERATION AND ANTICIPTED PROFITS TO BE IGNORED. CREATION OF PROVISION FOR DOUBTFUL DEBTS. VALUE OF STOCK CONVENTION OF CONSISTENCY: METHOD OF DEPREICATION.
JOURNAL
JOURNAL RECORDS EACH AND EVERY RECORD. BUT TO FIND OUT A TRANSACTION EFFECTING A PERSON, EXPENSES ACCOUNT OR ASSET ONE HAS TO TURNOVER ALL PAGES OF JOURNAL . HENCE TRANSACTIONS ARE POSTED FROM JOURNAL TO PARTICULAR PAGES OF LEDGER. HENCE JOURNAL CONTAIN A COLUMN L.F
JOURNAL FORMAT
DATE PARTICULARS L.F DEBIT RS. CREDIT RS.
CASH BOOK
CASH BOOK KEEPS RECORDS OF ALL CASH TRANSACTIONS I.E CASH RECEIPTS AND CASH PAYMENTS. ALL RECEIPTS ARE RECORDED ON RIGHT SIDE AND ALL PAYMENTS ON LEFT SIDE. CASH BOOK IS BOOK OF ORIGINAL ENTRY.
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THANK YOU.