BASIC ACCOUNTING NOTES PDF
An accountant is a person who does the basic job of maintaining information or external use (financial accounting function). Write short notes on a). OBJECTIVES. To gain comprehensive understanding of all aspects relating to financial statements, principles, procedures of accounting and their application to . CFI's Principles of Accounting book is free, available for anyone to download as a PDF. Read about bookkeeping, accounting principles, financial statements.
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DIPLOMA IN INSURANCE SERVICES. MODULE - 1. Notes. Basic Accounting Principles. Business Environment. 5. BASIC ACCOUNTING PRINCIPLES. Accounting is the system a company uses to measure its financial .. The most common liabilities are notes payable and accounts payable. Accounts payable is . MODULE - 1 Ledger Basic Accounting Notes 6 LEDGER You have learnt that business transactions are recorded in various special purpose books and journal .
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So a ledger is a book of account; in which all types of accounts relating to assets, liabilities, capital, expenses and revenues are maintained.
It is a complete set of accounts of a business enterprise. Notes Ledger is bound book with pages consecutively numbered.
It may also be a bundle of sheets. Features of ledger l Ledger is an account book that contains various accounts to which various business transactions of a business enterprise are posted.
It is also called the Principal Book of Accounts. Format of a ledger sheet The format of a ledger sheet is as follows : Title of an Account Dr.
You must have noticed that the format of a ledger sheet is similar to that of the format of an Account about which you have already learnt. It depends upon the number of items related to that account to be posted. Importance of Ledger Notes Ledger is an important book of Account. It contains all the accounts in which all the business transactions of a business enterprise are classified.
At the end of the accounting period, each account will contain the entire information of all the transactions relating to it. Following are the advantages of ledger.
While finding out business results the revenue and expenses are matched with each other. Hence, you can get the information about the Book value of any asset whenever you need.
It also helps the management in keeping the check on the performance of business it is managing. From this we can judge the financial position and health of the business.
The ledger accounts provide this information at a glance through the account receivables and payables.
Types of Ledger In large scale business organisations, the number of accounts may run into hundreds. It is not always possible for a businessman to accommodate all these accounts in one ledger. They, therefore, maintain more than one ledger.
Assets Ledger : It contains accounts relating to assets only e. Machinery account, Building account, Furniture account, etc. Liabilities Ledger : It contains the accounts of various liabilities e. Revenue Ledger : It contains the revenue accounts e. Sales account, Commission earned account, Rent received account, interest received account, etc.
Expenses Ledger : It contains the various accounts of expenses incurred, e. Wages account, Rent paid account, Electricity charges account, etc.
Tally Notes and Basic Accounting notes
Debtors Ledger : It contains the accounts of the individual trade debtors of the business. Creditors Ledger : It contains the accounts of the individual trade Creditors of the business.
General Ledger : It contains all those accounts which are not covered under any of the above types of ledger. Fill in the blanks with a suitable word or words : i Ledger contains various The process involved in this exercise is called posting in the ledger.
This procedure is adopted for each account. To take the items from the journal to the relevant account in the ledger is called posting of journal. Following procedure is followed for posting of journal to ledger : 1.
Open the two accounts in the ledger. Write the page number of the journal from which the item is taken to the ledger in Folio column and write the page number of the ledger from which account is written in L.
Basic Accounting Books
Now take the second Account and give the similar treatment. State the meaning of ledger posting Following are the steps of posting of journal to ledger but are not in proper order. Write them in correct order : a Write the page number of journal in the JF column of ledger and that of ledger on which account has been taken from journal. If debit side total is more than the credit side, the account shows a debit balance. Similarly, the balance will be credit if the credit side total of an account is more than the debit side total.
This process of ascertaining and writing the balance of each account in the ledger is called balancing of an account.
An account has two sides : debit and credit. Items by which this account is debited are entered on its debit side with their amounts and items by which this account is credited are entered on its credit side with their amounts so all items related to an account are shown at one place in the ledger.
But then you would like to know the net effect of this account i. Those principles are nice but they're theoretical and don't form the backbone of how to actually do accounting. When I'm talking about the Basic Accounting Concepts, I'm talking about the fundamentals of the subject - which will enable you to really understand accounting and actually put this subject into action.
I'm talking about the fundamentals. The basic stuff. The stuff you really need to know to practice as an accountant - to record transactions correctly, prepare financial reports, etc.
This is also the stuff which - if you didn't get it down early on in your accounting studies - you'd be screwed! No matter how hard you studied for your exams - you'd fail Or instead of accounting making sense and being easy - you'd become a total accounting parrot! This might be even worse than failing an exam - please don't become an accounting robot or parrot!!! That's why this section is so crucial.All Liability accounts are balanced.
There are grounds to elucidate the significance of financial accounting. Notes l Ledger is a permanent record of business transactions which are classified according to various accounts to which they pertain. Fill in the blanks with a suitable word or words: It contains the revenue accounts e. All these accounts have a credit balance.
This process of ascertaining and writing the balance of each account in the ledger is called balancing of an account. Enumerate the various types of ledgers which may be maintained by a business.