SUBMITTED BY – SANDEEP YADAV & ARUSHA SHARMA

SUBMITTED TO MANISH JAIN SIR

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 INTRODUCTION
Accounting is the art of redcording, classyfying
and summarising in significant manner. In other
words accounting may be called as a systematic
recorded presentation of the financial activities
of a business or enterprise

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 MEANING AND DEFINITION
By ‘Accounting’ we mean an information system of
identifying, measuring an economic information
of an organisation to its users decision making

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 SYSTEMS OF ACCOUNTING
There are three systems of accounting

INDIAN SYSTEM

SINGLE ENTRY SYSTEM

DOUBLE ENTRY SYSTEM

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 INDIAN SYSTEM
This type of accouting is traditional and
convectional system of accouting in this
system accounts are prepared in regional
languages but generally prepared in hindi

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 SINGLE ENTRY SYSTEM
Under this system cash book and personal ledgers
are kept. It is adopted by small businessman it
is generally adopted where most of the
transactions are cash transactions and where it
is not necessary to know the profit or loss

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 DOUBLE ENTRY SYSTEM
Under this system every transaction has two
aspects-debit and credit because every
transaction affects two accounts. Trail
balanceTrading and profit and loss account and
balance sheet can be prepaired . It is also
called mercantile system of book-keeping

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RULES OF ACCOUNTING

PERSONAL ACCOUNTS
Debit the receiver.
Credit the giver.

REAL ACCOUNTS
Debit what comes in.
Credit what goes out.

NOMINAL ACCOUNTS

Debit all expenses and losses.

Credit all income and gains.

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ACCOUNTING CYCLE

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 JOURNAL
The word ‘journal’ is an origin of french word ‘jour’
which means a day. Hence ‘journal’ means a book of
daily record in which a businessman enters all his
transactions date-wise in chronological order in the
debit and credit sides along with narration
according to the principle of double entry system.

Format of journal

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 LEDGER
Journal does not give us complete information
therefore, all the business transactions recorded in
journal are classified under specific heads of
accounts in the ledger. Ledger is a set of accounts. It
is a book in which various accounts are opened. Ledger
or classification is the second stage of accounting.

Format of ledger
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 TRAIL BALANCE
Trail balance is a schedule or list of those debit and credit balances
which extracted from various accounts in the ledger, and if the two
sides of a trial balance are equal, then it is proved that the books of
accounts are atleast arithmatically correct.

Format of Trail Balance

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 FINANCIAL STATEMENTS
Financial statement are organised summaries of
deducted information about the financial position and
performance of an enterprise. These statements refer
to an original statements which exihibit necessary
financial information regarding a business concern.
These accounts are prepared in three parts.

TRADING ACCOUNT

PROFIT & LOSS

ACCOUNTS
BALANCE SHEET

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 TRADING ACCOUNT
Trading account is that account which is
prepared to find out the gross profit or gross
loss by gross profit and gross loss means the
profit and loss which includes expenses. In
trading account all type of expenses related to
functional unit and factory are shown.

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 PROFIT & LOSS ACCOUNTS
Profit and Loss is that account which is
prepared to find out the net profit or net loss.
By net profit and net loss means the profit and
loss which excludes expenses. In Profit and Loss
all type of expenses related to office are shown.

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 BALANCE SHEET
The trading account exhibits gross profit or gross
loss and the profit and loss account exhibits net
profit or net loss of business during a particular
accounting year but these accounts do not show a
true image of the financial position of business.
What the position of total assets and total
liabilities of business on a particular date?
Whether the assets are increased or not? Whether the
capital is enhanced or reduced? All such question
cannot be answered by trading and profit & loss
account. It is only the balance sheet which can
answer properly.

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FORMAT OF TRADING
ACCOUNT

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FORMAT OF PRPOFIT AND LOSS
ACCOUNT

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FORMAT OF BALANCE
SHEET

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THANK YOU

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