Principles of Accounting

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Course Objective
• To introduce the concept of Principles of Accounting

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Session Plan
• • • • • • Accounting Transaction Account Credit/Debit Double Entry Principle Types of accounts – rules of accounting

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Assumes balances
S B 0 1 0 C r C C a s h A / c 0 C r a s h = 0

A
I n it ia l S t a t e

c c o u n t s
: A s s u m e N o b a la n c e s

S B 0 1

1 0 0

C

r C a s h = 1 0 0

C

a s h

A / c

1 0 0

D

r

A c c o u n t
E v e n t : A s s u m e C r o f A p p ly t h e p r in c ip le - C N o t e : t h e 1 0 0 b y c a s h r t h e G iv e r , w it h t h e f o r S B 0 1 . D r t h e r e c e iv e r m a t c h e s t h e e n t r ie s in

p h y s ic a l c a s h

b a n k

t h

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Entries to Account for the transaction
• Cash Deposit Amount Part tran Type Cr Dr Date Particulars Account

SB-01 Bank-CashAcct

100 100

10-Aug-2004 10-Aug-2004

Cash Deposit by Customer Cash from SB-01

• Cash Withdrawal Account Amount

Part tran Type Dr Cr

Date

Particulars

SB-01 Bank-CashAcct
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100 100

10-Aug-2004 10-Aug-2004

Cash Withdrawn by Customer Cash to SB-01

Entries to Account for the transaction
• Fund transfer between two accounts Account Amount Part tran Type 100 100 Cr Dr Date Particulars

SB-01 SB-02 •

10-Aug2004 10-Aug2004

Received from SB-02 Xfer to SB-01

Payment of interest to a Term Deposit Amount Part tran Type Cr Dr Date Particulars

Account

TD-01 P&L

100 100

10-Aug-2004 10-Aug-2004

By Interest Int for TD-01

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Account Types
• Personal Account:
– These are accounts of depositors having various types of deposit accounts, those who have borrowed from the bank and those with whom the bank has dealings in any business. The rule for accounting is: – Rule : Debit the receiver and credit the giver.

Real Account:
– Cash, assets accounts like buildings, stationery, foreign currency are Real accounts. – The rule for accounting is: Debit what comes in, Credit what goes out.

Nominal Account:
– Charges or Expenses Account ,Interest, Exchange, commission, Discount and Suspense Account are Nominal Accounts. – The rule for accounting is: Credit the income, debit expenses/ losses.

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Summary
• • • • • • Accounting Transaction Account Credit/Debit Double Entry Principle Types of accounts – rules of accounting

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Thank You!
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