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Accounting is a process Recording  Classifying Ledgers T-Accounts  Summarizing  Interpreting to communicate  Business transactions of Money  Nature for meaningful results. Book Keeping Books of Original Entry All term that we record in accounts should have monitor value currency value for business & outsider. Book Keeping: Book keeping is considered as art on act of recording business Transactions. Books of Original Entry: Books of original Entry is set of books were business transactions are initially Records. Books of Prime Entry Original Entry

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General Journal Cash Books Special Journal General Journal: General Journal were we record all kind of transactions Cash Book: Any transaction whatever we received and pay through cash or Cheque. Special Journal: Credit Transactions of goods or Merchandise Merchandise: Things which are bought for resell Assets: The things that we buy for run our business is Assets.  Goods Things that we purchase for resell.  Business (Trading , Services, Manufacturing)  Productions (Goods or Services)

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Head of Accounts (Pillars of accounting) Rules of Debit & Credit Monitor value.

It is not just capital it include profit & drawing. Those sources can be owners or Creditors. [I OweLiability You] • Revenue or Income The price of good s sold and services rendered • Owners Equity or Capital Owners represent owner rite and it shows your claims that you have for Business. on credit is called Liabilities. Debit 2. Credit What is Debit? Recording on Left side of Accounting What is Debit? Recording on Right side of Accounting . Accounting Equation (i) Assets = Capital (ii) Assets = Capital + Liabilities Why do we say Assets = Capital + Liability? Resources in the business = Resources supplied by sources. rent). Double Entry System ISA: International Standards Accounting (a) Dual Aspect Concept: These concept stats that every Transaction has two effects 1.Head of Accounts (Pillars of accounting) • Assets • Expense • Liabilities • Revenue • Owners Equity / Capital • Assets Assets are economics resources that a business own and uses for future operations • Expense Expenses are the cost of goods consumes and services availed for production purpose. For Example: (I have to pay some amount to you) IOU against Purchasing. services bowring. • Liabilities That we purchase (Goods. Merchandise) or use (services.

Assets Expenses Revenue Liability Owners Equity Current Assets: Increase (Debit) / Decrease (Credit) Increase (Credit) / Decrease (Debit) Assets Up and down in value in accounting period. 5. Insurance Payable Borrowing Loan Payable Depreciation: Decline in the value of Fixed Assets due to consumption. 4.Rules of Debit & Credit 1. Prepaid balance. Causes Fixed Assets These two expanses we hot pay Depreciation Expenses (Debit) Allowance for Depreciation (Credit) Expenses men good of or thing consume Contra Assets Account. Advance Parliaments. (All Fixed Assets & depreciated) Allowance for Bad Debts: Credit Sales  Doubtful Customers & debtors  A for B  bad debts Estimated life set on man made things. 2. 3. Depreciation charge on man made thing. Merchandise: Any thing for Resell Liability Purchasing Just account Payable Services Rent. .

2009 Date Description / Particulars P/R Debit XXX XXX ( Narration) Credit XXX XXX ( Narration) XXX XXX ( Narration) XXX XXX ( Narration) XXX XXX ( Narration) XXX XXX ( Narration) .Format of General Journal ABC Company General Journal For The Month of Dec.

Time Interval Concept: Its states that a firm has to prepare its fixed accounts at the end of an accounting period i. This means there should not be frequent changes in accounting methods over a given time period. Money Measurement Concept: According to this concept that all business transaction must have monitory value to be recorded in books of account. usually of one year Historical Concept: It states that all fixed assets in final accounts are recorded at cost price (Even after 5 and Ten Years of use) Business Entity Concepts: It’s States that owner personal transitions are separate from Business Transactions and a firm becomes a legal entity where it carries out transaction with its name. Financial Statement / Final Accounts • • • Income Statement Balance Sheet Cash Flow Statement .e. Consistency Concept: According to this concept a business should follow same accounting methods for up coming accounting period.

Sales Less Sales Return Net Sales Less Cost of Goods Sold Merchandise Inventory (opening) Add Purchases Add Carriage Inwards Rs. Rs.FORMAT OF INCOME STATEMENT ABC Company Income Statement For The Year Ended Dec. 2009 Rs. Expense Total Operating Expense Net Profit . xxx (xxx) xxx xxx xxx xxx xxx (xxx) xxx xxx (xxx) xxx xxx xxx xxx xxx xxx (xxx) xxx Less Purchases Returns Net Purchases Cost of Goods Available For Sale Less Merchandise Inventory (Ending) Cost of Goods Sold Gross Profit Less Operating Expense Rent Expense Utility Expense Salary Expense Misc.

000 For Rent Rent Expense 80.000 Rent Expense was Rs. 72.000 Cash 80.000 Dec 31.000 Initially Recoded as Prepaid Jan 01 Paid Cash Rs 80.000 Prepaid Rent expired by Rs.000 .000 Dec 31.Adjustment General Entries Adjusting Entries 1.000 8.000 Prepaid Rent was recorded as Rs. Expenses  Initially Recorded as Expense  Initially Recorded as Prepaid 2. Rent Expenses for the year has been @ 6.000 Dec 31. Prepaid Rent Rent Expense 8.000 Cash 80.8.000 For The Year Dec 31.72. Revenue:  Initially Recorded as (Earned) Revenue  Initially Recorded as (Unearned) Revenue Initially Record as Expense Jan 01 Paid Cash Rs 80. Rent Expense Prepaid Rent 8.000 For Rent Rent Expense 80. Rent Expenses for the year has been @ 6.000 8.

000 for Advance Service Cash 100. 100.000 was Earned. 90. 500 . 90.000 3. Service Income reduce to Rs.000 Service Income 100. 500 Allowance for Bad Debts. Withdrawal Bad Debts Estimated Allowance for bad debts @ 5% of Account receivable. 90.000.000 Service income for The Year was Rs.000 Dec 31.000 8. Allowance for Bad Debts.000 Service Income 100. Unearned Service Income Service Income 90. Rs. Increase to Rs. Increase by Rs.000 90. 10.000 for Advance Service Cash 100. Bad Debts (Increase by / Increase To) 7.000. Accrued Income / Receivable [ Receivable (Debit) / Income (Credit) ] 5. 10.000 Dec 31. Unearned Service was recorded at Rs. Dec 31.000.Initially Recoded as Earned Revenue Jan 01 Received Cash Rs 100. Outstanding Expense / Accrued / Payable / Unpaid 4.000 Dec 31. 90.000 Initially Recoded as Unearned Revenue Jan 01 Received Cash Rs 100.000 Unearned Service Income was reduce as Rs. Depreciation [ Depreciation Expense (Debit) / Allowance for Depreciation (Credit) ] 6. Service Income Unearned Service Income 8. Out of Rs. Service Income was recorded Rs.

Rent Wages Interest Profit BALANCE SHEET FORMAT Fixed Assets & Depreciation: • Long Lasting • Definite Value • Depreciation as per time period they are used.Revenue Revenue has four Factors. 2. 3. 4. • Physical existence / may not have physical existence • Copy Right . 1.