ACCOUNTANCY WORKSHEET 1

A brief introduction of myself. You know me as Maria Mam the co-ordinator for
Academics. But I will also be teaching you Accountancy. It is a new subject for
you but a very scoring subject if you learn to love this subject from the
beginning. To score high in this subject you need to practice it everyday starting
from Day 1.

Now for some general instructions. You will maintain a fair register for
Accountancy. I don’t believe in rough work. So everything will be done only
once and that in your fair register. This register will not contain any work on any
other subject except Accountancy. Your name should be written on the first
page of the register. Note I say REGISTER not the usual copies you are used to
writing in. It has to be a long register. Now whatever paragraphs where I
mention WRITTEN NOTES you will write neatly in your Register. If I write the
word EXPLANATION you need not write it in your Register. You will only read it
twice and understand it .

If you do not understand anything you can WhatsApp me along with your name
to 9911022782. I might not answer your query immediately, but will definitely
give you a solution as soon as possible. So here we start with the first chapter.
Write down the name of the chapter in your Register.

INTRODUCTION TO ACCOUNTING

WRITTEN NOTES:
Definition of Accounting : Accounting is the art of recording and classifying
business transactions which are of a financial character and the art of
summarising, analysis and interpretation of these transactions and
communicating the results to persons who need them to make decisions.

EXPLANATION:
At this point you need not learn the above definition by heart but instead learn
the spellings of some of the important words underlined. You will be able to
learn the definition after the doing the Characteristics of Accounting which is
the next part.
WRITTEN NOTES:
Characteristics of Accounting:
1.Identifying Financial transactions only : Accounting will take into account only
those transactions which are of financial character i.e. transactions which can be
converted into money.
2.Recording of Accounting transactions : Once the Accounting transactions are
identified they are then recorded in a book called JOURNAL as per specified
rules.3.Classifying : After recording of business transactions in the journal, they
are then classified in a book called LEDGER. This is a process of grouping of
transactions of similar nature at one place.
4.Summarising :All the classified data of ledger is then presented to the
Management and other Users of Accounting in an understandable and useful
manner. This involves making of the following Financial Statements :
(a)TRIAL BALANCE
(b)TRADING AND PROFIT & LOSS ACCOUNT
(c)BALANCE SHEET
5.Analysis and Interpretation : All the data in the above Financial Statements is
then analysed and interpretedin a meaningful manner to the Management,
Bankers, Creditors, Proprietor, etc. so that they can make meaningful decisions
on the basis of this ANALYSIS AND INTERPRETATION.

EXPLANATION: Everything that happens in our life day to day are transactions
but Accounting will take into account only those transactions that can be
converted into money. For example Saying Hello to your friend every morning is
a transaction but Accounting will not identify it as an Accounting transaction
since it cannot be converted into money. But if you lend this same friend Rs.100
because he needs it, this will be an Accounting transaction since it can be
converted into terms of money. After you identify the Accounting transactions
you need to record it in a book called JOURNAL . Notice the spelling and the
reason why we need to record everything in Accounting because of the simple
reason that we cannot always depend on our memory to remember all the
transactions.
The next step after Recording is Classifying the recorded transactions in a book
called LEDGER. Again notice the spelling though while pronouncing the word the
‘D’ is silent. Classifying means grouping all transactions of a similar nature under
one heading. For example all transactions relating to Travelling Expenses taking
place on different days will be grouped under one heading Travelling Expenses
in one place in the ledger so that we can calculate the total amount spent on
this heading at the end of the year.
You have heard of the word Summary at the end of every chapter. The next step
in Accounting relates to it. We need to summarise all the data in the Ledger into
Statements which are known as Financial Statements. Learn the three Financial
Statements given with their spellings. You will be learning about these
statements in Class XI. The last step Analysis and Interpretation means making
all the data in the Financial Statements useful to the users of the Accounting
data so that they can make meaningful decisions based on this data.

ASSIGNMENT (1) TO BE DONE IN THE REGISTER.

List five transactions each which are of Financial Character and which are not of
Financial Character relating to the time you get up in the morning to the time
you arrive in the school in the morning on any regular school day.

WRITTEN NOTES :
Steps in an Accounting Process:
1.Identifying Finanacial Transactions.
2.Recording of Financial Transactions.
3.Classifying the Transactions.
4.Summarising.
5.Analysis and Interpretation.

EXPLANATION :The explanation for the above steps is already given under
characteristics so the same matter has to be written in case you are asked about
any particular step of the Accounting Process. Only thing you have to remember
is that you cannot change the order of the steps of the Accounting Process. For
example 5th step of the Accounting Process will always be Analysis and
Interpretation. The 3rd step will always be Classifying the Transactions.
WRITTEN NOTES :
Difference between Accountancy and Accounting:
(1)Accountancy refers to the entire body of the subject theory whereas
Accounting deals with the practice part of Accountancy.
(2)Thus, Accountancy is a broader term and it includes Accounting.

EXPLANATION :
We usually tend to mix up both these terms Accountancy and Accounting. But
they are both different terms. We can say if we are talking about one of the
subjects of Commerce we have to use the term Accountancy and if we are
solving some numericals in Accountancy then the task of solving these
numericals will be called Accounting.

WRITTEN NOTES :
Objectives of Accounting :
1.Accounting keeps a systematic record of business transactions so that it is
easy to prepare from these records the Financial Statements.
2.Accounting helps to calculate the profit or loss made by a business during an
Accounting period. This is done with the help of the Trading, Profit & Loss A/c.
3.Accounting also shows the financial position of a business with the help of the
Balance Sheet.
4.Accounting helps the Management to take proper decisions in order to help
the business to function properly.
5.There are certain Users who need the Accounting information to decide
whether they will be able to do any dealings with the business. Accounting
helps them with this information.
6.Accounting helps in making inter-firm comparison i.e. comparison of the firm
with similar firms in order to know whether the firm’s performance is good as
compared to other similar firms.

EXPLANATION : The above points are self-explanatory and needs no

explanation. Following is an Assignment which has to be completed in your
Register.
ASSIGNMENT (2)

1.Arrange the steps of Accounting Process:

(a)Recording. (b)Summarising. (c)Identifying the financial transactions
(d)Classifying (e)Analysis and Interpretation.
2.Fill in the Blanks:
(a)The book where recording of Financial transactions is done is called as---------
(b)Ledger is the book where recorded transactions are -----------
(c)The different Financial Statements prepared are -----------------------, ---------------
----------------- and--------------------------
(d)----------------------------- is where the different Financial Statements are
prepared.
(e)The fifth step of the Accounting Process is ------------------------------
(f)Accountancy deals with the ------------ theory whereas Accounting deals with
the---------------- part.3.Mention any three objectives of Accounting.
4.MCQs
(1)We record ----------------------- in the books of accounts.
(a)Financial transactions (b)Non-financial transactions
(c)Both financial & non-financial transactions (d)None of these
(2)Which of the following will not be recorded in the books of accounts?
(a)Purchase of goods (b)Sale of asset
(c)Selection of staff (d)Expenses of firm.