Sei sulla pagina 1di 15

Professor & Lawyer

Puttu Guru Prasad


M.B.A., M.Com., M.Phil., PGDFTM., APSET., DFTM.,
PhD at JNTUK.,
Introduction of accounting
Function of accounting
Classification of accounting
Accounting is the art of recoding ,
classifying and summarizing in a
significant manner and in terms of
money.
Transaction and its events which are ,
in part at least, of a financial
character and interpreting the result
thereof
1. RECORDING : Accounting is the art of
recording business transaction according to
some specific rules. In a small business where
the number of transaction is quit small , all
transaction are first of all recorded in
Journal But in a big business , where the
number of transaction is large , the journal is
sub divided into various books :
1. Cash Book : for recording only cash
transaction.
2. Purchase Book : for recording only credit
purchase of goods
3. Sales Book : for recording only sales
4. Purchase Return Book : for recoding credit
purchase of goods for return.
5. Sales Return Book : for recording the
transaction the return of credit sales.
6. Bill Receive Book : for bill receive
transaction
7. Bill payable : All bill payable
transaction
8. Journal Proper : in this , which can
not be recorded in any other books.
(e.g., Drawing )
Classifying is the process of
grouping the transaction of one
nature at one place , in a
separate account. The book in
which various account are
opened is called Ledger.
Summarizing is the art of presenting the
classified data in a manner which is
understandable and useful to
management ad other users of such
data.
Balance the ledger account and the
preparation of trial balance with the
help of such balances :
Financial Statement : Trading account for
calculate gross profit and gross loss during
the financial year.
Profit & Loss Account : Calculate the net
profit and net loss during the financial year.
Balance Sheet : To present the financial
position of the business and the particular
data.
In accounting the result of the business
are presented in a such manner that the
parties interested in the business such as
proprietors managers , banks ,
creditors , employees etc , can have full
information about the profit ability and
the financial position of the business.
There are three types of account :

Personal Account
Real Account
Nominal Account
The account which relate to an individual , firm , company ,
institution , account of university.
Rule : Debit : the receiver
Credit : the giver
Types of Personal Account :
1. Natural Personal Account : Account of natural person , means
the account of human beings. E.g., Mohan a/c
2. Artificial Personal Account : in this a/c do not have physical
existence as human beings but they work as personal a/c. e.g.,
Any firm a/c , LTD co. a/c
3. Representative Personal Account : when an account represent a
particular person or group persons.
e.g., salaries outstanding a/c
The account of all those things whose values can be
measured in terms of money and which are the properties of
business are termed as real account.
Rule : Dr. = what comes on
Cr. = what goes out
Types of Real account :
1. Tangible Real A/C : This a/c of those things which can be
touches , felt , measured , purchased sold etc. e.g., cash a/c
2. Intangible Real A/C : This a/c represent such things which
can not be touch , but there values can be measured in
terms of money. E.g., goodwill a/c
These account include the a/c of the all
expenses and incomes. e.g.,
Expenses : salary , rent paid
Income : commission , interest
Rule : Debit : All Expenses
Credit : All Income