(ACCOUNTING) – COMPLETE NOTES

📒 ACCOUNTING – COMPLETE NOTES

🔹 1. Meaning of Accounting

Accounting is the art of recording, classifying, summarizing, and interpreting financial transactions to provide meaningful information for decision-making.

🔹 2. Objectives of Accounting

  1. Maintain systematic records
  2. Ascertain profit or loss
  3. Know the financial position
  4. Assist in decision-making
  5. Provide information to stakeholders

🔹 3. Basic Terms in Accounting

Term Description
Capital Money invested by the owner
Assets Resources owned (cash, land, equipment)
Liabilities Debts or obligations (loans, creditors)
Revenue Income from business (sales, fees)
Expenses Costs incurred to earn revenue
Profit Excess of income over expenses
Loss Excess of expenses over income
Drawings Withdrawal of cash/goods by the owner

🔹 4. Types of Accounts & Golden Rules

Type of Account Rule Example
Personal Debit the receiver, Credit the giver Ram’s A/c, Bank A/c
Real Debit what comes in, Credit what goes out Cash A/c, Machinery A/c
Nominal Debit all expenses/losses, Credit all incomes/gains Rent A/c, Salary A/c

🔹 5. Accounting Equation

Assets = Liabilities + Capital

This equation must always be balanced after every transaction.

🔹 6. Rules of Debit and Credit

  • Assets Increase → Debit
  • Assets Decrease → Credit
  • Liabilities Increase → Credit
  • Liabilities Decrease → Debit
  • Expenses → Debit
  • Income → Credit

🔹 7. Journal Entries

The Journal is the book of original entry. Every transaction is recorded chronologically.

Format:

Date | Particulars | L.F. | Debit (₹) | Credit (₹)
----------------------------------------------------------
| A/c Debited | | Amount |
| To A/c Credited | | | Amount
| (Narration) |

🔹 8. Ledger

The Ledger is the principal book where all journal entries are posted to individual accounts.

🔹 9. Trial Balance

A Trial Balance is a statement that lists all ledger balances to test the arithmetical accuracy.

🔹 10. Final Accounts

  1. Trading Account – Calculates gross profit/loss
  2. Profit & Loss A/c – Calculates net profit/loss
  3. Balance Sheet – Shows financial position


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