INDEX

 Business................................................................................................2

 Types of Business………………………………………………………………….………….3

 Ownership of Business…………………………………………………………….……….4

 Business terms…………………………………………………………………….…………..5

 Accounting………………………………………………………………………………….…...6

 Types of Accounting…………………………………………………………………….…..7

 Principles of Accounting……………………………………………………………….….8

 Rules of Dr and Cr……………………………………………………………………….…...9

 Heading Statement…………………………………………………………………….…..10

 How to record the transaction…………………………………………………….….11

 General Journal Definition………………………………………………………….…..12

 General Ledger Definition…………………………………………………………….…13

 (6.1) self-Balancing , T-shape………………………………………………………….14

 (6.1)Trial Balance……………………………………………………………………….…..15
Business:
Business is an economic activity that involves the exchange, purchase, sale or production of goods and
services with a motive to earn profits and satisfy customers' needs. Businesses can be profit or non-profit
organizations that function to gain profits or achieve a social cause.

Types of Business:

There are three major types of business to choose from when considering starting one. They are explained
below:

1. Service Business

A service type of business provides customers with intangible products (products that are not seen, felt or
touched). Service based firms offer professional skills, ability, advice, and other similar products. Examples
of businesses offering services are: salons, repair shops, schools, banks, accounting firms, law firms etc.

2. Merchandising Business

A merchandise buys products at wholesale price from the wholesale and sells the product at retail price to
the consumer. Merchandising businesses are "buy and sell" businesses. They make profit when they sell
the products at prices higher than their cost price. A merchandising business sells a product without
changing its original form. Examples of merchandising businesses are: grocery stores, convenience stores,
distributors, and other resellers.

3. Manufacturing Business

A manufacturing business purchases products with the aim of using them as materials to make a new
product. They usually buy capital good. Thus, the manufacturer transform the products after purchase. A
manufacturing business puts together raw materials, labor, and overhead costs in its production process.
The manufactured goods (end products) will then be sold to the wholesalers, retailers or consumers
depending on the channel of distribution used.
Ownership of Business:

The three main types of businesses are sole proprietorships, partnerships, and corporations.

Sole proprietorships:

A sole proprietorship is an unincorporated company that is owned by one individual only. While it is
the most simple of the types of businesses, it also offers the least amount of financial and legal
protection for the owner. Unlike partnerships or corporations, sole proprietorships do not create a
separate legal identity for the business. Essentially, the owner of the business shares the same
identity as the company. Therefore, the owner is fully liable for any and all liabilities incurred by the
company.

An entrepreneur may choose this option if they want to retain full control of the company.
Additionally, it is a relatively easy and inexpensive process to establish a sole proprietorship. There
are also tax benefits, as income is considered the owner’s personal income and therefore only taxed
once. Finally, there are relatively few regulation requirements for sole proprietorships.

Partnership:

As the name states, a partnership is a business owned by two or more people, known as partners.
Like sole proprietorships, partnerships are able to take advantage of flow-through taxation. This
means that the income is treated as the owners’ incomes so it is only taxed once. Owners in
partnerships are responsible for the liabilities of the firm. However, there are some nuances to this.
There are different types of partnerships: general partnerships, limited partnerships, and limited
liability partnerships.

Corporation:

Corporations are a separate legal entity created by shareholders. Incorporating a business protects
owners from being personally liable for the company’s debts or legal disputes. A corporation is more
complicated to create, as compared to the other three types of businesses. Articles of incorporation
must be drafted, which include information such as the number of shares to be issued, the name
and location of the business, and the purpose of the business.

In sole proprietorships and partnerships, if one of the owners passes away or declares bankruptcy,
the company is dissolved. Corporations exist as a legally separate entity. Therefore, they are
protected from this situation and will continue to exist even if the owner of the business passes
away.

Business terms:

Inflation: Inflation is the rate of increase in prices over a given period of time. Inflation is typically a
broad measure, such as the overall increase in prices or the increase in the cost of living in a country.
Deflation: Deflation is when consumer and asset prices decrease over time, and purchasing power
increases. Essentially, you can buy more goods or services tomorrow with the same amount of money
you have today.

Per capita Income: The per capita income of a geographical location (say, a country, state, city, or
others) measures the amount of money earned by every person in that area. It determines the average
income of a person in a country, a state, or a specific region.

Gross national product: Gross National Product (GNP) is Gross Domestic Product (GDP) plus net
factor income from abroad. Description: GNP measures the monetary value of all the finished goods and
services produced by the country's factors of production irrespective of their location.

Gross Domestic Product: GDP measures the monetary value of final goods and services—that is,
those that are bought by the final user—produced in a country in a given period of time (say a quarter or a
year). It counts all of the output generated within the borders of a country.

Poverty line: The poverty line is the minimum amount of money a person needs to fulfill the basic
necessities of life, like shelter and food. When families are below the poverty line, they qualify for help
from the government.

Petty Cash: Petty cash is a small amount of money kept on hand for small purchases or expenses. It is
typically kept in a locked box or other secure location and is often used to pay for minor office supplies,
postage, or travel expenses. Typically, a petty cash fund is established and then a custodian is assigned
to manage it.

Accounting:

Accounting is the recording of financial transactions along with storing, sorting,

retrieving, summarizing, and presenting the results in various reports and
analyses. Accounting is also a field of study and profession dedicated to carrying
out those tasks.

Types of Accounting:

Cost Accounting:

Cost accounting is referred to as a form of managerial accounting that is used by businesses to classify,
summarize and analyse the different costs with the purpose of cost control and cost reduction and
thereby helping management in making better decisions. The primary function of cost
accounting is said to be arranging, recording and identifying suitable investment allocation for investment
to determine the costs of goods and services. It also helps in presenting relevant data to the management
related to service, contract or finding shipment cost.

It also includes information related to cost of production, distribution and selling.

Financial Accounting:

Financial accounting is a branch of accounting that is concerned with the summarizing, recording and
reporting of financial transactions that take place in a business concern over a time period.Financial
accounting is used for the preparation of various financial statements that can be used by companies to
showcase their financial performance to the various users of financialinformation like creditors, investors,
customers and suppliers etc.

Accounting Principles:
Accounting principles are the rules and guidelines that companies and other bodies must follow when
reporting financial data. These rules make it easier to examine financial data by standardizing the terms
and methods that accountants must use.

Asset: