Definition :

“The art of recording, classifying and

summarizing in a significant manner and in
terms of money transactions and events,
which are in part at least, of a financial
character and interpreting the results
thereof.”-
AICPA
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 Singleentry system
 Double entry system
 Each and every Transactions

 Receiving(incoming ) ----- debit

 Giving (going ) ----- credit

 Example

•XYZ firm purchased plant worth of

rs5000/-
Here XYZ receiving plant and giving cash

o XYZ firm sold plant worth of rs 10,000/-

Here XYZ receiving cash and giving plant
 Account

impersonal Personal

Natural a/c
Real account Nominal
account Artificial a/c
 Ex:Gopal’s A/C, SBI A/C, Nagarjuna
Finanace Ltd.A/C,krishna A/C
Rule: “Debit----The Receiver
Credit---The Giver”
Suppose Goods sold on credit to Sunil
Suppose Goods purchased on credit from
thulasi
Sunil ------ receiver----debit
Thulasi -----giver -----credit
 Ex: LandA/C, BuildingA/C, Furniture
A/C, Cash A/C , Goodwill,A/C etc.
 Rule :
Debit what comes in,
Credit what goes out

goods are sold to Mr. Sunil for cash

Goods ---credit
Cash -----debit
 Ex: Salaries
A/c, Rent A/cCash A/c,
Commission A/c discount A/c etc

 Rule:Debit Expenses and Losses

Credit Incomes and Gains.
Salary paid rs 10000,, rent received rs
2000
salary ---expenses ----debit
rent -----income ----credit
SoleProprietorship
A business owned and run by a single
person.
Partnership
A business owned and run by more than
one persons.
Limited Company
A large organization with separate legal
status.
 Translating every transaction in terms of money
does not always mean that the money changes
hands the same time at which the transaction
takes place. It may be paid before or after the
goods are exchanged.
 When the money value of an item being
purchased is paid at the same time the item is
exchanged the transaction is said to be a cash
transaction.
 On the other hand if the payment is delayed to a
future date the transaction is termed as a credit
transaction.
 Cash brought in by proprietor as capital Rs. 30000
 Goods purchased on credit from Madan Lal Rs. 5,000
 Furniture purchased for cash Rs. 10000
 Goods sold on credit to Dev Raj Rs. 1600
 Goods purchased for cash Rs. 4500
 Goods sold for cash Rs. 2100
 Rent paid for shop to landlord 3000
 Commission received in cash 2000
 Cash deposited into bank 5000 .
 Cash drawn by proprietor from business for personal
use Rs. 3000
 Cash withdrawn from bank for office use Rs. 2000
 Goods given as charity Rs. 1000
 Interest allowed on capital Rs. 600
 Interest charged on drawings Rs. 500
 Loan taken Rs. 1,00,000
 Cash sales Rs. 15,000
 The word Journal is derived from the Latin
word ‘journ’ which means a day
 Day-to-day business transactions are
recorded in chronological order
 The record of all the transactions in the
books of original entry
 The process of recording a transaction in
the journal is called “JOURNALISING”. The
entries made in the book are called “Journal
Entries”.
Date Particular L.F Debit credit
 Write Journal Entries for the transactions
 10th April : Commenced business with a capital of Rs. 1,00,000
11th April : Purchased goods from Veeru for Rs. 20,000
13th April : Purchased Goods for Cash Rs. 15,000
14th April : Purchased Goods from Abhiram for cash Rs. 9,000
16th April : Bought Goods from Shyam on credit Rs. 12,000
17th April : Bought Goods from Shyam on credit Rs. 12,000
19th April : Bought Goods from Shyam on credit Rs. 12,000
20th April : Sold goods worth Rs. 15,000 to Tarun
21st April : Sold goods for cash Rs. 20,000
22nd April : Sold goods to Utsav for cash Rs. 6,000
23rd April : Sold goods to Pranav on credit Rs. 17,000
25th April : Returned goods to Veeru Rs.3,000
26th April : Goods returned from Tarun Rs. 1,000
27th April : Goods taken by the proprietor for personal use Rs. 1,000
28th April : Bought Land for Rs. 50,000
28th April : Purchased machinery for cash Rs. 45,000
29th April : Bought computer from Intel Computers for Rs. 25,000
30th April :Cash sales Rs. 15,000
 30th april : Cash purchases Rs. 22,000
 30 th april : Bought furniture for proprietor's residence and paid cash Rs.
10,000
 Ledgeris a main book of account in
which various accounts of personal, real
and nominal nature, are opened and
maintained

A ledger is a book which contains

various accounts.” The process of
transferring entries from journal to
ledger is called “POSTING”.
Date Particular J.F Am Dat Particular J. F amo
ount e unt