Introduction to Accounting

“Accounting is a process of
identifying, measuring, and
communicating economic
information so that they can make
informed judgments and decisions.”
Users of Financial Information

 Management
 Shareholders
 Investors
 Lenders
 Suppliers
 Customers
 Employees
Users of Financial Information

 Government
 Academicians
 Researchers
 Analysts
Accounting Concepts

 Going concern concept

 Cost concept
 Money measurement concept
 Accounting period concept
 Matching concept
 Conservatism concept
Accounting concepts

 Materiality concept
 Consistency concept
 Realization concept
 Business entity concept
Transactions

On 2nd Jan. Purchased goods on cash. 5,000

” 4th Jan. Purchased goods from Gopal
3,000
” 5th Jan. Paid wages 500
” 8th Jan. Cash paid to Ram 7,000
” 9th Jan. Cash received from Mohan 8,000
” 11th Jan. Commission Received 9,000
Accounts

 Personal Account

 Impersonal Account

- Real Account
- Nominal Account
Personal Account

 These are the accounts of individuals,

Corporate and representative personal
account with whom a trader deals .
 These can be classified into three parts:
- Natural Person
- Artificial Person
- Representative
Personal Account (Continued)

Debit the receiver

Credit the giver
Real Account

 There are accounts of property or

possessions, i.e. accounts related to
assets such as cash, plant and
machinery, stock-in-hand etc.
Real Account

Debit what comes in

Credit what goes out
Nominal Account

These are the accounts relating to gains,

incomes, or losses, e.g. discount,
commission, rent, salary etc.
Nominal Account

Debit all expenses and losses

Credit all incomes and gain
Journal

 It is a basic book of original entry. All

transactions are recorded in the
chronological order as and when they
takes place. The recording of
transactions in the journal is called
journalizing.
Format of Journal

Date Particular L.F. Amount Amount

(Dr.) (Cr.)