Accounting for managers

Accounting is crucial for managers. Accounting for managers is an amalgamation of

● Financial Accounting

● Cost Accounting

● Management Accounting

A company is an artificial person. Its language is Accounting.

Step 1: Journal Entries

Stationary Account . Dr 100

To Cash Account 100

Accounting is done through double entry book keeping

Debit Credit Rule

Method 1

five core types of accounts:

● Assets: Resources owned by a business which have economic value you can convert into
cash (e.g., land, equipment, cash, vehicles)

● Expenses: Costs that occur during business operations (e.g., wages, supplies)

● Liabilities: Amounts owed to another person or business (e.g., accounts payable)

● Equity: Your assets minus your liabilities

● Income and revenue: Cash earned from sales

Method 2

Three golden rules of accounting

1. Personnel A/C Rule

Debit the receiver (Artificial person A/c, Natural person a/c, Representative personal a/c)
Credit the giver.

Harsh A/c Dr 100

To Abhinav A/c 100

Debit (100) = Credit (100)

2. Real A/C Rule

Debit what comes in (Assets
credit what goes out

Air Conditioner A/c Dr 40,000

To Company Inc. A/c 40,000

3. Nominal Rule
Debit losses and expenses
credit incomes and profits

Salary a/c Dr 50,000

To Bank/cash A/c 50,000

Accounting only considers monetary transactions. An accounting event is a transaction that

is recognized in the financial statements of an accounting entity. A company must record in
its accounting records any economic event that impacts the company's finances.
Accounting Equation

Assets = Capital (owners’ liability) + Liability.

ABHINAB STARTED A BUSINESS BY INVESTING CAPITAL Rs.1,00,000.

Cash a/c dr 1,00,000

To Abhinav's capital a/c 1,00,000

Cash 1,00,000 = capital 1,00,000+ 0

Purchase goods/raw material 10,000

Purchase a/c dr 10,000

To cash a/c 10,000

Cash 90,000 + goods 10,000 = capital 90,000

Furniture Purchased

Furniture a/c dr 5000

To cash a/c 5000

Cash 85,000+ goods 10,000+ furniture 5000= capital 1,00,000+ 0

Sell 5000

Cash a/c dr 5000

To sale a/c 5000

Cash 90,000+ goods 5,000+ furniture 5000= capital 1, 00,000+ 0

Purchase goods credit 5000 Ashish

Purchase a/c dr 5000

To Ashish a/c 5000

Cash 90,000+ goods 10,000+ furniture 5000= capital 1, 00,000+ Creditor 5,000
2000 goods drawn for personal use

Drawings a/c dr 2000

To Stock/Purchases a/c 2000

Cash 90,000 + goods 8,000 + furniture 5,000 = capital 98,000 + creditor 5,000