Accounts Sansaar

"The art of recording , classifying and summarizing , in a significant manner and in terms of money , transaction and events which are, in part at least, of financial character, and interpreting the result thereof."

The three important aspects of accounts have been highlighted by the above definition.

1. Account as an Art & science.

2. Accounting is done for Business transaction.

3. Accounting is a system.

Objective Of Accounting

Record business activities in a systematic manner.

Evaluate the performance of the business in terms of profit.

Know the financial position of the business.

Control business activities effectively.

Provide information to various stake holders in the business.

Commonly / Basic Terms Used While Accounting

Entity: Entity has a definite individual existence. Business Entity is an identifiable business enterprise such as Super Bazaar, etc.

Transaction: Transaction is an event involving some value between two or more entities

Assets: Assets are economic resources of an enterprise that can be expressed in monetary terms.

"Fixed Assets" are assets held on a long term basis such as land, buildings, etc.

"Current Assets" are assets held on a short term basis such as debtors, bills receivables, etc.

Profit: Profit is the excess of the revenues of a period over its related expenses during an accounting year. Profit increases the investment of the owners.

Gain: Gain is a profit that arises from events or transactions which are incidental to business such as sale of fixed assets, winning a court case, appreciation in the value of an asset.

Loss: The excess of expenses of a period over its related revenues is termed as Loss.

Discount: Discount is the deduction in the price of goods on sale.

Voucher: The documentary evidence in support of a transaction is known as Voucher.

Goods: Goods refer to the products which a business unit produces and sells, or by and sells.

Drawings: Withdrawal of money and/ or goods by the owner from the business for personal use is known as drawings. Drawings reduce the investment of owners.

Purchases: Purchases are a total amount of goods procured by business on credit and cash, for use or sale.

Stock: Stock (inventory) is a measure of something on hand - goods, spares and other items in a business. It is called 'Stock in hand.'

Debtors: Debtor's persons and / or other entities who owe enterprise money, having bought goods and services on credit.

Creditors: Creditors are persons and / or other entities who have to be paid by an enterprise for providing goods and services on credit.

Accounting Concepts|Principles

Money measurement concept: Every accounting transaction is major in terms of money.

Dual entity concept: As per this concept an accountant assume that business & businessman are two different entities.

Going-concern concept: According to this assumption while doing the accounting it is assumed that business will continue for fairly longer period of time.

Cost concept: This concept is applicable only for fixed assets accounting purpose it states that while computing the cost of fixed assets all the incidental expenditure for the acquisition of the assets should be added in cost fixed assets.

Dual-aspect concept: This is the fundamental accounting assumption which state that every transaction has too folds effect positive or negative in accounts it is dr. & cr.

Periodicity concept: Every accounting is divided in smaller periods as per this concept.

Cost attach concept: While computing the revenue earned by the organization all the incidental expenditures required to earn such a revenue should be accounted for as per this concept .

Accrual concept: As per this concept revenue or expenditure should be accounted for only on the basis of the certainty of that revenue receives or expenditure paid actual payment or receipts is irrelevant.

Legal aspect concept: When there is a conflict between laws & accounting account should follow law procedures first.