accounting terminology

Introduction of Book keeping & Accountancy

Point of discussion…

Meaning & Definition of Book - Keeping

Features of Book - keeping

Objectives of Book - keeping

Meaning & Definition of Accountancy

Branches of Accounting

Basic accounting Terminologies

Meaning & Definition…

Book keeping is a process of recording business transitions in the books of accounts in a very systematic manner

According to J.R. Batilobi : “ Book – Keeping is an art of recording business dealings in a set

of books.”

According to Nocth Cott : “ Book – Keeping is an art of recording in the books of accounts

the monetary aspects of commercial or financial transactions.”

Features of Book keeping

1、 It is the process of recording business transition

2、Monetary transactions are only recorded

3、 Recording is made in given set of books of accounts

4、 For specific period

5、 Art of recording business transactions scientifically

Objectives of Book keeping …

Permanent record

To know the P&L

To know the total amount of Capital

To know the total assets and liabilities

To know the progress of the business

To know Legal requirement and tax liabilites

Meaning & Definition of Accountancy

Accountancy includes Book keeping & classifying, summarizing and interpreting of the business transactions.

According to Kohler : “ Accountancy refers to the entire body of theory and process of

accounting.”

According to Robert N. Anthony : “ Nearly every business enterprise has an accounting system. It is

a means of collecting, summarizing, analyzing and reporting in monetary terms information about the business transactions,”

Branches of Accounting

Financial Accounting Cost Accounting Management Accounting

Journal Ledger Trial balance Final accounts

Cost Sheet Job & Contract Process Costing Operating Costing

Ratio analysis Break even point Standard Costing Analysis of financial S

Basic accounting Terminologies

Business Transaction

Entry & Narration

Goods

Profit & Loss

Assets, Liabilities & Net worth

Capital & Drawing

Expenditure and types of expenditure

Discount

Good will

Bad debts

Debtors and creditors

Solvent & Insolvent

Accounting Year

Folio, Insurance, Freight Deposit

Business Transaction

Any dealing of business that involves buying and selling of goods and services in exchange of value be called as business transaction.

Cash Transaction Credit Transactions

Entry : Recording of transaction in the proper form or method in the books of accounts is called an entry. It is a first record of any business transaction in the books of accounts

Entry, Narration & Goods

Narration : A brief explanation of the business transaction for which an entry is passed is called as a narration. It starts with a word ‘Being’ (….)

Goods: The commodities or articles in which the trader deals are called as goods for that business

Profit : Excess of income over the expenses during the accounting year is called a profitEx:…..

Profit & Loss

Loss : Excess of expenses over the income is called lossEx:…..

Assets, Liabilities & Net worth

Assets : Property of any kind owned by a businessman is called an asset, Ex……

Liabilities : Total amount payable by the business to others is known as liability Ex…..

Net Worth or owned equity : The amount of fund provided by the proprietor in the business is called as net worth or capital also

Types of Assets

Assets : Property of any kind owned by a businessman is called an asset, Ex……

Fixed Assets : Ex…..

Current Assets : Ex…..

Fictitious Assets : Ex…..

Accounting principles are those rules which are to be adopted by the accountants

Accounting concept

Accounting is the language of business. This are general guidelines for sound accounting practices

1) Reliable financial statements

2) Generally acceptable basis of measurement

3) Valid and appropriate assumptions

4) Uniformity in presentation

5) Valid and appropriate assumptions

6) Proper information to all

Accounting concepts1) Business entity

2) Money measurement

3) Cost concept

4) Consistency concept

5) Conservatism

6) Going concern

7) Realization

8) Accrual

9) Dual aspect

10) Disclosure

11) Materiality

12) Revenue recognition principle

13) Marching principle

14) Accounting standards

Double entry book system

Study of double entry book – keeping system

Methods of recording accounting information

Definition of double entry system

Principle & Advantages of DES

Conventional Accounting System

Account and it’s Classification

Debit & Credit

Rules of Accounts & rules of Debit credit

Analysis of Transactions

Italian Merchant “ Luca D Bargo Pacioli” in 1949

Double Entry book system

There are two aspects of every business transactions.

Receiver

Giver

Recording dual aspects of business transactions in the books of accounts in

terms of Debit & Credit is known as “ Double Entry System of Book –

Keeping”.

Methods of recording DES

Indian Style

Single Entry System

Double Entry System

Every business transaction has a two fold effect and that it affects two

accounts in opposite directions and if acomplete record is to be made of

each such transaction it would been necessary to debit one account and

credit another account. It is this recording of two fold effect of every

transaction that has given rise to the term double entry” – J.R. Batliboi

Definition of Double Entry System

Principles of DES

Minimum Two aspects

Two accounts

One is receiver and other is giver

One account is debited the other account must be….

Advantages of DES

1) Accuracy

2) Business Result

3) Complete Record

4) Comparative study

5) Common acceptance

Classifications of Account

Analysis of Transactions

Point of discussion…

Introduction, Meaning & specimen

Voucher – internal & external voucher

Cash & Petty cash voucher

Cash and credit memo

Receipt

Debit and credit note

Pay – in – slip

Withdrawal slip

Cheque

Bank pass book, Bank statement & Bank advice

Introduction

The document required for recording of transactions in the books of accounts are called as sources of documents.

This document is the legal proof of the transaction which is recorded in the books of accounts.

The accountant should confirm that every entry made is supported by sources documents.

The document is the base of passing the entry.

Voucher – Internal & External

Voucher : Voucher is a documentary evidence in support of a business transacting.like cash Expenses, purchases or sales etc.

It is used as a support for ascertainment of profit in transaction

It helps the auditor to perform his duties

It confirm the date of transaction, the amount and the person details

It describe the nature of transaction

Journal Voucher

Journal Voucher is basic / original Voucher

Cash Voucher

Petty cash Voucher

Cash memo

Credit memo

Receipt

Debit note / credit note

Pay in slip

Withdrawal slip

Cheque

Types of Cheque

Bank advice

In details…

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