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    This document provides an overview of accounting. It defines accounting as the systematic process of recording, classifying, and summarizing financial transactions. It describes the key functions and significance of accounting, including maintaining financial records, determining profit/loss, and meeting legal obligations. The main branches and tools of accounting are also outlined, such as financial accounting, cost accounting, and management accounting. Finally, the document discusses the double-entry bookkeeping system, which ensures total debits equal total credits for every financial transaction.

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    BEFA U4(evernote)

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    This document provides an overview of accounting. It defines accounting as the systematic process of recording, classifying, and summarizing financial transactions. It describes the key functions and significance of accounting, including maintaining financial records, determining profit/loss, and meeting legal obligations. The main branches and tools of accounting are also outlined, such as financial accounting, cost accounting, and management accounting. Finally, the document discusses the double-entry bookkeeping system, which ensures total debits equal total credits for every financial transaction.

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    © All Rights Reserved
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    2 views2 pages

    BEFA U4 (Evernote)

    Uploaded by

    20bd1a6655
    This document provides an overview of accounting. It defines accounting as the systematic process of recording, classifying, and summarizing financial transactions. It describes the key functions and significance of accounting, including maintaining financial records, determining profit/loss, and meeting legal obligations. The main branches and tools of accounting are also outlined, such as financial accounting, cost accounting, and management accounting. Finally, the document discusses the double-entry bookkeeping system, which ensures total debits equal total credits for every financial transaction.

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    BEFA U4

    => ACCOUNTING
    - systematic process of recording, classifying and summarizing money in a significant
    manner

    => FUNCTIONS OF ACCOUNTING


    it tells if:
    1. it is profitable to invest in a particular company
    2. is it okay to lend funds to a company
    3. is a company paying its taxes on time or not

    => SIGNIFICANCE OF ACCOUNTING


    1. maintain financial records
    2. tells if business is in profit/loss
    3. tells business activities
    4. tells the position of the company
    5. meet legal obligations

    => USERS OF ACCOUNTING INFO


    1. owners
    2. managers
    3. employees
    4. investors
    5. govt tax ppl

    => BRANCHES OF ACCOUNTING

    1. FINANCIAL ACCOUNTING
    - purpose: to make financial statements
    - tools: journal, ledger, trial balance, subsidary accs

    2. COST ACCOUNTING
    - purpose: to find the cost of a service/product and control
    - tools: marginal cost, BAE, oppotunity costing

    3. MANAGEMENT ACCOUNTING
    - purpose: to assist in management in taking decisions
    - tools: ratio analysis, capital budgeting
    => ACCOUTING CYCLE

    => DOUBLE ENTRY BOOK KEEPING SYSTEM


    - fundamental concept in accounting
    - foundation for maintaining accurate financial records
    - "it is a system in which every transaction is recorded in 2 accounts - debit, credit"
    - one acc is debited & other is credited by an equal amount
    - this system makes sure that total debit = total credit

    => ACCOUNTING EQN:


    assets = liabilities + equity

    => WORKING OF DOUBLE ENTRY BOOK KEEPING SYSTEM


    - every transaction has 2 effects - abount is debited & credited
    - DEBIT(DR) - on the left side
    - represents increase in assets/ decrease in liability or equity
    - CREDIT(CR) - on the right side
    - represents decrease in assets/increase in liability or equity
    - For example, when a business sells a product, it debits the Accounts Receivable account
    to record the amount owed by the customer (an asset) and credits the Sales Revenue account
    to recognize the revenue (equity).
    - Journal and Ledger: Transactions are first recorded in a chronological order in a
    journal. They are then posted to individual ledger accounts, which contain the details of
    each account's activities.

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