Accounts basics

 The American institute of certified public accounts has
defined the financial accounting as
 The art of recording, classifying, summarizing, in a
significant manner, in terms of money transaction and
events.

 PERSONAL ACCOUNTS
1. NATURAL PERSONS
2. ARTIFICIAL PERSONS
3. REPRESENTATIVE PERSONS

NATURAL PERSONS :
Accounts which related to individuals. For
example, mohan a/c, raju a/c ……
ARTIFICIAL PERSONS :
Group of persons firms or institution. For
example , HMT ltd.., Indian overseas bank..,
REPRESENTATIVE PERSONS :
Represent a particular persons or group of
persons. For example outstanding salary account, prepaid insurance
account , etc..

REAL ACCOUNTS :
Accounts relating to properties and assets
which are owned by the business concern. Real accounts included
tangible and intangible accounts..example, land, building, goodwill..
Purchases, etc.,
NOMINAL ACCOUNTS:
Accounts do not have any existence,form or
shape . They related to incomes and expenses and gains and losses
of a business concern . Example , salary account, dividend account..

 Journal is a date-wise record of all the transaction with details of
the accounts debited and credited and the amount of each
transactions..

DATE PARTICULAR L.F
DEBIT
AMOUNT.
RS.
CREDIT
AMOUNT
RS

 DATE
 PARTICULAR
 NARRATION
 LEDGER FOLIO
 DEBIT AMOUNT
 CREDIT AMOUNT

 Date wise record of all business transactions
 Journals will be provided with details of the account
debited and credited
 Adequate explanation –because Supported by the
narration
 Journal simplifies the ledger
 From legal point of view , journal is more reliable
evidence of business transactions than ledger

 Basic accounting equation (the foundation of all
basic accounting concepts):
 Assets = Liabilities + Owner’s Equity
 Assets are on the left side or debit side and asset
accounts such
 Liabilities and Owner’s equity are on the right side
or credit side and their accounts in the general
accounting ledger have their normal balance on the
right side.

 MARCH 2003
 2 Commenced business with cash 50,000
 3 Opened a bank account 10,000
 4 Purchased office furniture 2,500
 5 Bought goods from raj&co on credit 3,500
 6 Paid for postage 100
 7 Sold goods on credit to anand 2,500
 8 Paid to raj & co on account 2,000
 9 Received cash from anand 2,450
 10 Discount allowed him 50
 11 Kumar & co purchased goods from us 3,100

DATE PARTICULAR L.F DEBIT CREDIT
2
Cash A/C DR
To capital A/C
{Being commenced business}
50,000
50,000
3 Bank A/C DR
To cash A/C
{Being opened a bank account}
10,000
10,000
4 Furniture A/C DR
To cash A/C
{Being purchase office furniture}
2500
2500

DATE PARTICULAR L.F DEBIT CREDIT
5 Purchases A/C DR
To Raj & Co A/C
[Being bought goods raj&co}
3500
3500
6 Postage A/C DR
To cash A/C
[Being paid to postage}
100
100
7 Anand A/C DR
To sales A/C
[Being sold goods to anand}
2500
2500

8 Raj & co A/C DR
To cash A/C
{Being raj&co on account}
2,000
2,000
9 Cash A/C DR
To Anand A/C
{Being received cash from anand}
2450
2450
10
Discount A/C DR
To Anand A/C
{Being discount allowed}
50
50
11
Purchase A/C DR
To kumar A/C
{Being purchased kumar& co}
3100
3100

Accounts basics

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Accounts basics