Basic Accounting Concept

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INNOVATIVE SOLUTION OVER LEAN CLOUD
 Agenda

01 Debit & Credit

02 Golden Rules of Accounting

03 Journal Entries

04 What is TDS?

05 What is GST?
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06 P2P Cycle

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 Osource Overview
Osource Global Private Limited (Formerly known as Osource (India) Private Limited), one of the leading platform
enabled business process management company, was set up in January 2004 in India. Osource being a global business
operator focuses on integrated end-to-end outsourcing solutions and delivers transformational benefits to its clients
through reduced costs, ongoing productivity improvements and process reengineering. Osource provides advanced
solutions to a wide range of large, medium-sized & small sized enterprises including many leading blue-chip multinational
firms/setups. Osource operates in India, Middle East, Australia and the United States
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To be a global leader in the innovative technology business &
outsourcing solutions delivering technology led path breaking
transformational solutions to clients emphasizing on cutting
edge next-generation outsourcing practices
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Opportunity : We embrace feedback and look for opportunities to improve and
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Excellence : To strive relentlessly, constantly improve ourselves, our teams, our
services and products to become the best
Integrity & transparency : Be ethical, honest & committed in all actions
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 Golden Rules of Accounting

• Vendor Payment • Create a Credit • Create Journal or

Accounts Payable

Genral Ledger
Accoutns Receivable
• Employee Application Proces Import Journal
Reimbursement s from Sub‐Ledger
• Uitility Payment • Send Invoices to • Review Journals
• Petty Cash Customers • Approve Journals
• Helpdesk • Establish Payment • Journals Posting
• Vendor Creation Terms and Due • Run Financial
Dates Reports
• Bank Reconcilation
• Monitoring and
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Reporting
• Recording AR
Activity

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 FAO

FA
O
GL
AP Ledger is the Principal Book of accounts.
It is also called as book of final entry

Sundry Creditors

AR
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Sundry Debtors

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 Ledger
Ledger is the Principal Book of accounts. It is also called as book of final entry. It is summarized record
which contains all the accounts e.g. Assets A/c, Liabilities A/c, Capital A/c, Revenue A/c, Expenses A/c.

Importance of Ledger
1. It is the summarized record of all the transactions in form of Asset A/c, Liabilities A/c, Expenses A/c, Income A/c
etc.
2. The ultimate object of Book-Keeping is to ascertain with the least trouble, what is the amount owed to the
supplier, what is the amount receivable from the customer and so on. In the process of posting information
collected is condensed in form of Debtors A/c ,Creditors A/c to get the ready results
3. It is necessary for preparation of Trial Balance.
4. The financial position of the business can be easily known with the help of various types of Assets A/c and
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Liabilities A/c
5. It is possible to prepare various types of income statement on the basis of balances shown by different ledger
Accounts.
6. Ledger can be used as a control tool as it shows accounts of various expenses with the balance.
7. On the basis of the results shown in the Ledger it is useful for the management to forecast or plan the future plan
of action.
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 Subsidiary Books
A small business may be able to record all transactions in single
Journal but as the business expands the number of transactions
becomes so large, that the Journal is required to be sub-divided
into Special Journals which are called Subsidiary Books.

Following are the important Subsidiary Books.

1) Cash Book.
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2) Petty Cash Book.

3) Purchase Book
4) Purchase Return Books (Return Outward Book
5) Sales Book
6) Sales Return Book (Return Inward Book)
7) Journal Proper
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 Bank Reconciliation Statement
Accounting Documents describes all the basic facts of transactions like the amount of transaction, to whom the
amount was paid, the purpose of transaction and the date of transaction. This is essential in the process of Book
Keeping as it provides evidence that a financial transaction has actually taken place. There has been a drastic
change in the functioning of modern banks. Internet and mobile banking play a prominent role in today's
business. Payments and receipts of cash through these methods generates instant and automatic proof for both
the parties. But even now a large number of transactions are made by personally visiting the bank. Payments and
receipts by cheques and drafts have not lost their significance altogether.

Definition:
“A statement which reconciles the Bank balance as per Cash Book and the balance as per
Pass Book showing all causes of difference between the two.”

“A statement showing the causes of disagreement between the balance shown by the bank
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Pass Book and the balance shown by the Cash Book under the bank column at the end of the
specific period or month, is called Bank Reconciliation Statement.”

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 Depreciation
In daily life, we use many assets which could be Tangible or Intangible. Such assets have their own life e.g.
Building, Furniture, Machinery, etc. It is necessary to spread the cost over a number of years during the useful
life of the assets. This process of spreading the cost of fixed assets is termed as ‘Depreciation’.
Definition:-
“Depreciation is the gradual decrease in the value of an asset from any cause.”
-R.N.Carter.
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 Rectification of Errors
Accuracy is assured only when there are no errors in the books of accounts. To confirm accuracy errors are
identified and rectified. Many business units have shifted from manual accounting to computerized accounting.
Yet errors in accounting are unavoidable. Hence errors are to be located and rectified to find out the real profit or
loss and financial position.

Reasons of Errors
1. Lack of Accounting Knowledge
2. Wrong Data Collections
3. Wrong Recording
4. Incorrect Arithmetical Calculations
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 Final Accounts
Every time a business transaction takes place, the
Business Transactions
details of it is made in Primary books. These
entries are then posted to the ledger. At the end of
a financial year the ledger accounts are balanced Documentation &
and closing balance of each ledger account is Recording
Journal Entries
determined. There many be a debit or credit
balance. With the help of all these balances, a
Trial Balance is prepared. This in turn helps in Classifying Ledger Accounts
preparing Trading Account, Profit and Loss
Account and Balance Sheet, which is known as
Final Accounts. Summarizing Trial Balance

Bifurcating Final Accounts

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Trading Profit & Loss Balance

Account A/c Sheet

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 TDS
Any person or company making a payment is required to deduct
TDS, if the payment exceeds a specific threshold limit,
prescribed by the income tax department. TDS is deducted on
The concept of TDS was introduced with an aim salaries, commission payments, rent & interest payments,
to collect tax from the very source of income. As consultation & professional fees
per this concept, a person (deductor) who is liable
to make payment of specified nature to any other
person (deductee) shall deduct tax at source and
remit the same into the account of the Central
Government. The deductee from whose income tax
has been deducted at source would be entitled to
get credit of the amount so deducted on the basis
of Form 26AS or TDS certificate issued by the
deductor.
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TD
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 GST is known as the Goods and Services Tax. It is GST
an indirect tax which has replaced many indirect
taxes in India such as the excise duty, VAT,
services tax, etc. The Goods and Service Tax Act
was passed in the Parliament on 29th March 2017
and came into effect on 1st July 2017.
In other words,Goods and Service Tax (GST) is
levied on the supply of goods and services. Goods
and Services Tax Law in India is
a comprehensive, multi-stage, destination-based
tax that is levied on every value addition. GST is
a single domestic indirect tax law for the entire
country.
KEY TAKEAWAYS
The goods and services tax (GST) is a tax on goods and services
sold domestically for consumption.
The tax is included in the final price and paid by consumers at
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point of sale and passed to the government by the seller.

The GST is a common tax used by the majority of countries
globally.
The GST is usually taxed as a single rate across a nation.
Governments prefer GST as it simplifies the taxation system
and reduces tax avoidance. GS
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T
 P2P

The Procure-to-Pay process is how an organization purchases the raw materials and services they need to do
business, receives and manages those purchases, processes vendor invoices, and finally authorizes payments. The
process spans procurement, operations, and accounts payable. Defining this business process and integrating the
various steps with a dedicated procurement policy will greatly benefit any company.
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