Fundamentals of Accounting

Accounting is the art of Recording, classifying and summarizing, in terms of money Transactions and events which are in part at least of a financial character Interpreting the results thereof, To provide quantitative, information, Primarily financial in nature and About economic entities that is intended to be useful in making economic decisions.

Users of Accounting Information
1.   Management
2.   Investors
3.   Creditors
4.   Employees / Unions
5.   Government Agencies / Regulatory bodies

Classification of Accounting
1.   Financial accounting
2.   Managerial accounting / cost accounting
3.   Auditing (public / internal)
4.   Governmental accounting
5.   Income Tax accounting

Journal Book
It is a book containing chronological record of financial transactions taking place in an organization

Recognizing Gains and Losses
Often investments and non-current assets are sold for more or less than the amounts at which they are carried on the balance sheet.
In such cases a gain or loss must be recognized.

Ledger
Ledger is an accounting record that summarizes the financial affairs of a business under various business heads.It contains details of assets, liabilities, capital as well as income & expenditure

Categories of Ledger accounts
1.   Asset account
2.   Liabilities account
3.   Capital account
4.   Revenue account
5.   Expense account

Types of Ledger
1.   Permanent Ledger a/c
2.   It has both opening & closing balance
3.   Temporary Ledger a/c
4.   It doesn’t have opening & closing balance

Trial Balance
It is the listing of all the accounts & their balances Here, the debit & credit balances are extracted from the ledger account

Objectives
1.   Confirms arithmetical accuracy
2.   Forms the basis of financial statements

3.   Summarizes Ledger a/c