Please know about bookkeeping in accounts

 

Please know about bookkeeping in accounts

eEvery person doing business is interested to know trading results of his business. Further, he would also like to know his Financial Position (assets and liabilities) at a given date. In addition to proprietor, other persons who have some stake in the business need accounting information. Accounting is the language of business. various persons. In addition to business undertakings accounting is needed by Government also.

  

Accounting has three main branches : 

(a) Bookkeeping and financial accounting.

 b) Cost accounting. Cfet Management accounting.

. 

There are two Systems of Accounting: 

(a) Cash system accounting. communicates the desired information to ) Accrual system of accounting. 04 befine Accounting. 

 Accounting is- the art of recording, classifying and summarising in a significant manner and in terms of money, transactions and events which are, in part at least, of a financial charaçter, and interpreting the results thereof. 

The main features of Accountancy are : 

(a) Recording. 

(b) Classification. 

(c) Summarising. 

(d) In terms of money. 

(e) Transactions and events.

 

 Following are the four objectives of accounting: 

(a) Maintaining proper record of business.

 (b) Calculation of profit and loss

. (c) To show the financial position

. (d) To communicate the information to the users.

 Following are the five advantages of accounting: 

(a) Replace money. 

(b) Give assistance to management.

c) Acts as legal evidence. 

(d) Helps in taxation matters.

 (e) Facilitates sale of business.

 

Four basic principles of accounting are fo Verifiability, objectivity and evidence. fJ Revenue recognition principles. t9 Convention to full disclosure. OT Dual aspect

 

. Three limitations of accounting are Ta) Representing the valueless assets. Unsuitable for forecasting Ignorance about the present value of business.

 

Nearly every business enterprise has accounting system. It is a means of collecting analysing and reporting monetary terms information about the business.

 

Bookkeeping is that branch of knowledge that tells us how to keep a record of financial transactions. It is mainly concerned with record keeping or maintenance of accounts in a systematic manner It is restricted to journal, subsidiary book and ledger account only. 

Four activities of bookkeeping are:

 (a) Identifying financial transactions and events.

 (b) Measuring transactions in terms of money. 

(c) Classifying them into ledger accounts. 

(d) Recording of transactions in the book of original entry.

 

Proprietor is the main user ofaccounting, through accounts he ascertains operating result of his business. Further, he knows his financial position (assets and liabilities). He uses accounting information to know amounts due to others and due from others.

 

 Measurement in accounting has traditionally meant the assignment of numerical values to objects or events related to an enterprise and obtained in such a way that they are suitable for aggregation (such as total valuation of assets) or disaggregation as required for specific situations.

 

Top, middle and lower level of management executives are the internal users of accounting information. They need it for making their decisions. These users are interested in the profitability, efficiency and financial soundness of the business. 

.

Goods :The articles or things purchased for sale or for use in the manufacture of certain other goods as raw materials are called as goods. 

Revenue : It refers to the amount charged by business entity for the goods sold or service rendered or by permitting others to use its resources.Bookteeping and Basic 

The management uses accounting information to arrive at many decisions such as determination of selling price, investments to be made, cost controls and reduction etc. 

statements are True or False:

 (a) Accounting is the language of business.

 (b) Accounting can be useful only for recording business transaction.

 (c) Accounting records have only those transactions which are of a financial character. 

(d) Bookkeeping and accounting are synonymous terms. 

(e) Accounting is as old as money itself. Ans. (a) True. (b) False, (c) True, (d) False, 

 (a) Accounting principles are rules of action or conduct which are adopted by the accountants universally while recording accounting transaction.

 (b) Itis on the basis of going concern concept that assets are always valued at market price.

 (c) The convention of disclosure implies that all material information should be disclosed in the accounts. 

(d) The convention of conservation takes into account all prospective profits but leave all prospective losses. 

(e) Since the life of the business is assumed to be indefinite, the financial statement of business should be prepared only when it goes into liquidation. () In accounting all business transactions are recorded as having a dual aspect

. 

Sales book is used for recording credit sales of goods dealt in by the firm. Hence, cash sale of goodand sale of any other assets, eg. sale of machinery etc. are not recorded in this book. 

 The profit and loss account shows the profit or loss of a business over a given period of time es months, 1 year etc. In contrast, the balance sheet is like a photograph taken at an instant in time giving a picture of what the business owns and what the business owes at that moment in time As we shall see it will always balance because what the business owns is financed by what the búsiness (2013) owes One of the most important objectives of a business is to make a profit. The profit and loss account shows the extent to which it has been successful in achieving this objective.