Videos Related with Accounting

Note on Accounting

  • Note
  • Things to remember
  • Videos
  • Exercise
  • Quiz

sfd

Accounting

Accounting is a broader concept than book keeping. Book-keeping is only a part of accounting which is concerned only with the systematic record of financial transactions. But, accounting is concerned with the act of recording, classifying and summarizing the financial transactions of a business to know the actual financial position i.e. profit or loss. It is also related to the act of communicating the operating results and financial position to all concerned parties of the business.

Some of the main definitions of accounting are as follows:

"An accounting system is a means of collecting, summarizing, analyzing and reporting in monetary terms, information about the business," -R. N. Anthony

"Accounting may be seen as consisting of recording, classification, presentation and interpretation of financial information," -Lewis and Gillespie

From the above definition, we can conclude that accounting is the systematic process that is concerned with the act of recording, classifying and summarizing the financial transactions of a business which help to know the operating results and financial position and along with communicating such operating results and financial position to all the concerned parties.

sfd

Debit and Credit

Under double entry book-keeping system, every financial transaction is recorded into two account heads basically known as debit and credit accounts. One account head is recorded as a debit account and is denoted by the word 'Dr.' and another account is recorded as credit account and is denoted by the word 'Cr.'. Recording on debit account means entering the amount of the transaction on the debit side of the account. Similarly, recording on credit account means entering the amount of the transaction on the credit side of the account. The left-hand side of the account refers to the debit side and right-hand side of the account refers to the credit side. In every account, there involve two sides which are commonly known as debit and credit.

The rules for debit and credit for various types of accounts are as follows:

Accounts

Rules for Debit

Rules for Credit

Personal account

The receiver

The giver

Real account

What comes in

What goes out

Nominal account

All expenses and losses

All incomes and profits

  • Accounting is the systematic process of recording, classifying, summarizing, interpreting and communicating the financial information of a business for making financial decisions. 
  • Every transaction is recorded in two accounts under double entry system. These are known as debit and credit accounts.
  • Recording on debit account means entering the amount of the transaction on debit side of the account.
  • Recording on credit account means entering the amount of the transaction on credit side of the account.
  • The debit side is denoted by the word ‘Dr.’ and the credit side is denoted by the word ‘Cr.’
.

Very Short Questions

The following are the main objectives of accounting:

  1. To maintain permanent records of the financial transactions.
  2. To ascertain the amount of profit or loss of the business during a period.
  3. To provide information to the tax authorities for determining the amount of tax liability.
  4. To disclose true financial position of the business on a particular date.
  5. To communicate the information the information relating to operating results and financial position of the business to all concerned parties.

Accounting is broader than book keeping. Book keeping is a part of accounting. Book keeping is concerned only with the systematic record of financial transactions but accounting is concerned with the act of recording, classifying and summarizing the financial transactions of a business to know its profit or loss and financial position. It is also concerned with the act of communicating the operating results and financial position to all concerned parties of the business.The following are some of the main definitions of accounting:

According to R. N. Anthony, "An accounting system is a means of collecting, summarizing, analyzing and reporting in monetary terms, information about the business."

According to Lewis and Gillespie, "Accounting may be seen as consisting of recording, classification, presentation and interpretation of financial information."

From the above definition, it is clear that accounting is concerned with the act of recording, classifying and summarizing the financial transactions of a business to know the operating results and financial position and communicating such operating results and financial position to all concerned parties.

The rule for debit and credit for various types of accounts are as follows:

Accounts

Rule for Debit

Rule for Credit

Personal account

The receiver

The giver

Real account

What comes in

What goes out

Nominal account

All expenses and losses

All incomes and profits

0%
  • ______ is the art of recording, classifying and summarizing the transactions and events of a business and interpreting the results thereof.

    Accounting


    Auditing


    Book-keeping


    Managing


  • "An accounting system is a means of collecting, summarizing, analyzing and reporting in monetary terms, information about the business." Who gave this definition?

    M.N. Shukla


    J.R. Batliboi


    Lewis and Gillespie


    R. N. Anthony


  • "Debit the receiver, credit the giver" is the rule of which account?

    Personal account


    Nominal Account


    Real account


    Impersonal account


  • "Debit what comes in, credit what goes out" is the rule of which account?

    None of the options are correct


    Nominal Account


    Personal account


    Real account


  • "Debit all expenses and losses, credit all incomes and gains" is the rule of which account?

    Personal account


    None of the options are correct


    Real account


    Nominal Account


  • You scored /5


    Take test again

DISCUSSIONS ABOUT THIS NOTE

No discussion on this note yet. Be first to comment on this note