Accounting.docx

1. Definition of accounting:  “the art of recording, classifying and summarizing 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 there of”. 2. Book keeping: It is mainly concerned with recording of financial data relating to the

 business operations operations in a significant significant and orderly manner. manner. 3. Concepts of accounting: A. Separate entity concept B. oing concern concept !. "oney measurement concept #. !ost concept $. #ual aspect concept %. Accounting period concept . &eriodic matching of costs and revenue concept '. (ealization concept. 4 Conventions of accounting: A. !onservatism B. %ull disclosure !. !onsistency #. "ateriality 5. Systems of book keeping: A. single entry system B. double entry system 6. Systems of accounting:

A. !ash system accounting B. "ercantile system of accounting. 7. !incip"es of accounting: A. &ersonal a)c* #ebit the receiver  !redit the giver 

B. (eal a)c* #ebit what comes in !redit what goes out !. +ominal a)c* #ebit all epenses and losses !redit all gains and incomes

#. $eaning of %ou!na": -ournal means chronological record of transactions.

&. $eaning of "e'ge!:  edger is a set of accounts. It contains all accounts of the

 business enterprise whether real, nominal, personal. 1(. osting: It means transferring the debit and credit items from the /ournal to

their respective accounts in the ledger. 11. )!ia" ba"ance: 0rial balance is a statement containing the various ledger

 balances on a particular date. 12. C!e'it note: 0he customer when returns the goods get credit for the value of

the goods returned. A credit note is sent to him intimating that his a)c has been credited with the value of the goods returned. 13. Debit note: 1hen the goods are returned to the supplier, a debit note is sent to

him indicating that his a)c has been debited with the amount mentioned in the debit note. 14. Cont!a ent!y: 1hich accounting entry is recorded on both the debit and credit

side of the cashboo2 is 2nown as the contra entry. 15. etty cas* book: &etty cash is maintained by business to record petty cash

epenses of the business, such as postage, cartage, stationery, etc. 16. !omiso!y note:  an instrument in writing containing an unconditional

underta2ing signed by the ma2er, to pay certain sum of money only to or to the order of a certain person or to the barer of the instrument. 17. C*e+ue: A bill of echange drawn on a specified ban2er and payable on

demand. 1#. Sta"e C*e+ue: A stale che3ue means not valid of che3ue that means more than

si months the che3ue is not valid. 2(. Bank !econci"iation statement:  It is a statement reconciling the balance as

shown by the ban2 passboo2 and the balance as shown by the !ash Boo2. 4b/* to 2now the difference 5 pass necessary correcting, ad/usting entries in the boo2s. 21. $atc*ing concept: "atching means re3uires proper matching of epense with the revenue. 22. Capita" income: 0he term capital income means an income which does not grow out of or pertain to the running of the business proper. 23. ,evenue income: 0he income, which arises out of and in the course of the regular business transactions of a concern. 24. Capita" e-pen'itu!e: It means an ependiture which has been incurred for the  purpose of obtaining a long term advantage for the business. 25. ,evenue e-pen'itu!e: An ependiture that incurred in the course of regular  business transactions of a concern.