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INTRODUCTION TO ACCOUNTING
Definition of Accounting
The way of recording , Analyzing /classification ,summarizing &
presenting the financial transactions of business
Aspects in above definition:
1. Transactions
2. Recording
3. Analyzing /classification
4. Summarizing
5. Presenting
6. Financial
7. Business
Transaction
Exchange of internet between the parties
Recording
Double entry system
Analyzing /classification
Posting in corresponding ledgers
Summarizing
Preparing a trial balance
Presenting
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Preparing financial statement
Financial
Anything which can be measured in monetary (money)terms
Business
Any activity carried out by one or more than one person with the view
to earn profit
Accounting concepts
1. double entry concepts
2. separate entity concept ( Accounting viewpoint, legal viewpoint)
3. limited liability concept
Double entry concepts
Every transaction has two effects and we have to record them both
Separate entity concepts
Business has its own entity separate from owner. Business is an
artificial legal person
Limited liability concept
Liability of owner is limited up to level of his/her investment
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Type of
Business
Name of owner
Legal
viewpoint
Accounting
viewpoint
sole
proprietorship
sole proprietorship
No separate
entity
No limited
liability
Separate
entity
Partnership
Partner
No separate
entity
No limited
liability
Separate
entity
Company
Shareholder
Separate
entity
Limited
liability
Separate
entity
Recording through double entry
Accounting heads
1. Capital
2. Liability
3. Assets
4. Income
5. Expense
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INTRODUCTION TO ACCOUNTING Definition of Accounting The way of recording , Analyzing /classification ,summarizing & presenting the financial transactions of business Aspects in above definition: 1. Transactions 2. Recording 3. Analyzing /classification 4. Summarizing 5. Presenting 6. Financial 7. Business Transaction Exchange of internet between the parties Recording Double entry system Analyzing /classification Posting in corresponding ledgers Summarizing Preparing a trial balance Presenting Preparing financial statement Financial Anything which can be measured in monetary (money)terms Business Any activity carried out by one or more than one person with the view to earn profit Accounting concepts 1. double entry concepts 2. separate entity concept ( Accounting viewpoint, legal viewpoint) 3. limited liability concept Double entry concepts Every transaction has two effects and we have to record them both Separate entity concepts Business has its own entity separate from owner. Business is an artificial legal person Limited liability concept Liability of owner is limited up to level of his/her investment Type of Business Name of owner sole proprietorship sole proprietorship No separate entity No limited liability Partner No separate entity No limited liability Shareholder Separate entity Limited liability Partnership Company Legal viewpoint Recording through double entry Accounting heads 1. Capital 2. Liability 3. Assets 4. Income 5. Expense Accounting viewpoint Separate entity Separate entity Separate entity Name: Description: ...
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