AIMS

DEPT. ACCOUNTS ACADEMY

BUSINESS
It Involves production and Distribution of goods and services for Profit

BUSINESS

TRADING CONCERN NON TRADING CONCERN MANUFACTURING COCERN

FG FG SERVICE MOTIVE RM FG

Whole seller School Producer /Manufacturer

Retailers Hospital Whole seller

Consumer Club Retailers

Trust Consumers

BOOK KEEPING

It is an art of recording the business transactions in a systematic manner

ACCOUNTING

According to American Institute of Certified Public Accountant defined as “Accounting is the art
of recording, classifying, 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
result there off”

ACCOUNTING ACTIVITIES

1. Recording
2. Classifying
3. Summarizing
 4. Analyzing
5. Interpreting
6. Reporting

GAAP-GENERRALLY ACCEPTED ACCOUNTING PRINCIPLES

1. BUSINESS ENTITY CONCEPT:
It has a Separate legal Entity
2. DUAL ASPECT CONEPT:
a. Debit
b. Credit
Debit is the receiving aspect
Credit is the giving aspect

BASIC TERMS
GOODS

It is product or Purchased for resale

PURCHASES

The firm has to purchase goods for sale at profit or purchase raw materials for further manufacture of
articles

SALES

The Ultimate aim of the goods purchased or manufactured by the business is their sales. It includes
both cash and credit sales

PURCHASE RETURN OR RETURN OUTWARD

It is the part of purchased goods, which is returned to the supplier. Net Purchase is calculated by
deducting purchase return from purchase.

SALES RETURN OR RETURN INWARED

It is the part of sales of goods which is actually returned to us by the customers. Sales return is
deducted from sales, in order to calculate net sale.

STOCK

The goods available with the business for sale are termed as stock. In accounting, we use the term
stock widely as opening stock and closing stock.

NATURE OF ACCOUNTING
ASSET
Eg: Cash in Hand, Bank A/c, Investment, Sundry debtors, Bills payable, Closing stock, Plant and
Machinery, Land and building, Furniture, Prepaid Expenses

LIABILITY

Eg: Capital, Bank Loans, Sundry creditors, Bills Payable, outstanding Expenses

EXPENSES

Eg: Purchase, Salary, wages, carriage expenses, Rent and rates, Bad debt, Insurance, factory Expenses,
Postage and Telegram, Periodicals subscriptions, Audit fee, interest, Discount allowed

INCOME

Eg: Sales, Commission received, rent received, Bad debt received, Income from investment

GOLDEN RULE OF ACCOUNTING

Nature Debit Credit

Asset Increase Decrease
Liability Decrease Increase
Expenses Increase Decrease
Income Decrease Increase

TRANSACTION
Each and Every activities of the business is called transaction

TWO TYPES OF TRANSACTION

1. Cash Transaction
2. Credit Transaction

CASH TRANSACTION

One Aspect - Cash

Next Aspect - For What cash is paid or Received or If no answer , for whom cash is paid or for
whom cash is received.

CREDIT TRANSACTION

One Aspect - Party

Next Aspect - Dealing with the party