Accounting
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Finance for Non-Finance Professionals
Accounting Fundamentals
1. ACCOUNTING FUNDAMENTALS
Accounting Defined Accounting has been defined by the American Institute of Certified Public Accountants, as “The art of recording, classifying and summarising in a significant manner and in terms of money, transactions and events which are, in part at least, of a financial character, and interpreting the results thereof” Books of Account Accounting transactions are recorded in a set of books. The following are referred to as the principal books of account: 1) Journal: The Journal contains details of transactions (other than those relating to receipts or payments in cash or through bank), recorded in chronological order.
Date Particulars L/F Debit (Rs.) Credit (Rs.)
Journal 2) Ledger: The Ledger contains separate accounts for every type of income, expense, asset, liability and every person/ organisation with whom any transactions have taken place. An account is a summary of all transactions taking place under that head.
Dr. Date Particulars J/F Amount (Rs.) Date Particulars J/F Cr. Amount (Rs.)
Ledger 3) Cash and Bank Book: The Cash and Bank Book combines the features of the Journal and Ledger, and records transactions involving receipts or payments in cash or through bank.
Dr. Date Particulars L/F Cash (Rs.) Bank (Rs.) Date Particulars L/F Cash (Rs.) Cr. Bank (Rs.)
Cash and Bank Book
-1-
Finance for Non-Finance Professionals
Accounting Fundamentals
General and Subsidiary Ledgers Most large organisations maintain separate Ledgers and Cash and Bank Books for different types of transactions. For example, the Ledger may be split into General Ledger, Customers’ Ledger (Accounts Receivable) and Suppliers’ Ledger (Accounts Payable), and separate books may be maintained for Cash and each Bank Account instead of the Cash and Bank Book. Subsidiary Books Generally, a set of subsidiary books is also maintained. Subsidiary books are registers in which...
Accounting Fundamentals
1. ACCOUNTING FUNDAMENTALS
Accounting Defined Accounting has been defined by the American Institute of Certified Public Accountants, as “The art of recording, classifying and summarising in a significant manner and in terms of money, transactions and events which are, in part at least, of a financial character, and interpreting the results thereof” Books of Account Accounting transactions are recorded in a set of books. The following are referred to as the principal books of account: 1) Journal: The Journal contains details of transactions (other than those relating to receipts or payments in cash or through bank), recorded in chronological order.
Date Particulars L/F Debit (Rs.) Credit (Rs.)
Journal 2) Ledger: The Ledger contains separate accounts for every type of income, expense, asset, liability and every person/ organisation with whom any transactions have taken place. An account is a summary of all transactions taking place under that head.
Dr. Date Particulars J/F Amount (Rs.) Date Particulars J/F Cr. Amount (Rs.)
Ledger 3) Cash and Bank Book: The Cash and Bank Book combines the features of the Journal and Ledger, and records transactions involving receipts or payments in cash or through bank.
Dr. Date Particulars L/F Cash (Rs.) Bank (Rs.) Date Particulars L/F Cash (Rs.) Cr. Bank (Rs.)
Cash and Bank Book
-1-
Finance for Non-Finance Professionals
Accounting Fundamentals
General and Subsidiary Ledgers Most large organisations maintain separate Ledgers and Cash and Bank Books for different types of transactions. For example, the Ledger may be split into General Ledger, Customers’ Ledger (Accounts Receivable) and Suppliers’ Ledger (Accounts Payable), and separate books may be maintained for Cash and each Bank Account instead of the Cash and Bank Book. Subsidiary Books Generally, a set of subsidiary books is also maintained. Subsidiary books are registers in which...