TOPIC:

INTRODUCTION
TO ACCOUNTING
 Members in the group:
• Naina dwivedi Roll No.-85
• Megha Shukla Roll No.-80
• Parth Shridhar Roll No.-99
• Nitika Sharma Roll No.-83
 What Is Accounting ?
• Accounting is a system of recording information about a
business.
• The systematic recording, reporting, and analysis of financial
transactions of a business .
• The person in charge of accounting is known as an
accountant, and this individual is typically required to follow
a set of rules and regulations such as the Generally Accepted
Accounting Principles.
• Accounting allows a company to analyze the financial
performance of the business, and look at statistics such as net
profit.
Branches of Accounting

Financial Accounting

Cost Accounting

Management Accounting
 Dual
Dual Aspect
Aspect
This is one of the fundamental concept of Accounting.
It may be stated as “for every Debit there is a credit”.
Every business transaction has a dual effect and the entry
Made for the transaction is recorded on the debit and as well as
on the credit side

It may be expressed in the form of equation

Assets = Liabilities + Equity

 The
The Accounting
Accounting Equation
Equation
Assets = Liabilities + Owner’s Equity

The
The resources
resources
owned
owned byby aa
business
business
 The
The Accounting
Accounting Equation
Equation
Assets = Liabilities + Owner’s Equity

The
Therights
rightsof
ofthe
the
creditors,
creditors,which
which
represent
representdebts
debtsof
of
the
thebusiness
business
 The
The Accounting
Accounting Equation
Equation
Assets = Liabilities + Owner’s Equity

The
The rights
rights of
of the
the
owners
owners
 Accounting Equation
Assets = Liabilities + Owners’ Equity

Resources Sources of Funding

Resources Creditors’ Owners’

= claims
+ claims
to use to
generate against against
revenues resources resources
 ACCOUNTING CYCLE

Analyze each transaction and Record relevant transactions

event from source documents and events in a journal

Prepare and analyze

Post journal information
the trial balance
to ledger accounts
Accounting Cycle
 Journalizing Transactions
• Transactions are events that have an economic impact
on a business.

• Business documents are records that are evidence of

transactions.

• A journal is an accounting record in which business

transactions are entered in chronological order. It is
also called as “book of original entry”
 What is a business
transaction?

A transaction is any event that affects the

financial position of an organization
and requires recording.
 Journal Entry Process

Every journal entry involves a 3-step process:

1. Identify the accounts involved with an event

or transaction.
2. Determine whether each account increased
or decreased.
3. Determine the amount by which each
account was affected.
 DOUBLE ENTRY SYSTEM

The concept of double entry is based on the fact that every

transaction has two aspects i.e. receiving a benefit and giving a
benefit
• The accounting system that records both the aspects of
transaction in the same books of accounts is called double entry
system.
• The account that receives the benefit is debited and the account
that provides the benefit is credited.
• ‘Debit’ and ‘Credit’ are denoted by ‘Dr’ and ‘Cr’ respectively.
• The ultimate result of the system is that for every Debit (Dr)
there is an equal Credit (Cr).
 ACCOUNT
ACCOUNT

An account is a section of the ledger in which all the transactions

relating to the same activity that has taken place during a given
period are summarized and accumulated

1. When an amount is entered on the left side of the account,

it is known as debit
2. When an amount is entered on the right side of the account,
it is known as credit
DEBIT:
DEBIT:
ItItsignifies
signifiesthe
thereceiving
receivingof
ofbenefit.
benefit.In
Insimple
simplewords
words
ititis
isthe
theleft
lefthand
handside.
side.

CREDIT:
• It signifies the providing of a benefit. In simple
words it is the right hand side.
Remember:

Debits are Credits are

simply simply
entries on entries on
the left. the right.
CLASSIFICATION OF ACCOUNTS
 Personal accounts Impersonal Accounts

Account which do not

• It records transaction relates with any person
with person and firm are know as impersonal
with whom we deal. account.
It take in the form of.

• Natural person. • Real or property

• Artificial person. account
• Representative • Nominal account.
person.
 RULES FOR DEBIT & CREDIT

Debit
Debit....The
Thereceiver
receiver
Personal
PersonalAccount
Account ::
Credit
Credit....The
Thegiver
giver
Debit .. What comes in
Real account :
Credit ..What goes out

Debit .. Expenses and losses

Nominal account :
Credit .. Revenue and gain
Assets = Liabilities + Capital
Dr Cr Dr Cr
Dr Cr
+ - - +
- +
 Format of a Journal
 
Date Particulars L/F Debit Credit
Rs. Rs.
• Record the results of the transactions in a
journal.
• Journalizing provides a chronological record
of all business activities.

General Journal Entry Format:

Date Debit Entry . . . . . . . . . . . . . . .xx
Credit Entry . . . . . . . . . . . . xx
Explanation.
 POSTING IN LEDGER

Posting
Posting isis the
the process
process of
of transferring
transferring amounts
amounts
from
from the
the journal
journal to
to the
the general
general ledger
ledger

A ledger is a collection of accounts in which data

from transactions recorded in the journals are
posted, classified, and summarized

A chart of accounts lists all accounts used by the

company
 LEDGER POSTING

Dr Ledger Cr

Date Particulars J/F Amount Date Particulars J/F Amount

 Preparing a Trial Balance

• Determine the account balance for each T-

Account.
• A trial balance is a list of all accounts and their
balances.
• It provides a means to assure that debits
equal credits.
 .
Preparing Financial Statements
• A statement is a report. Financial statements are the
most important reports of a business.
• These statements are prepared from the
information in the trial balance.
• The purpose of these statements is to show the
reader the financial position, financial performance
and cash flows of a business, as well as other useful
information concerning the business.
• Financial statements are usually prepared once a
year.
• Financial statements consist of (amongst other
things) an income statement, statement of changes in
the owner’s equity, balance sheet, cash flow statement
and (where needed) an auditor’s report.
ANY QUESTIONS??