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Accounting Introduction

Accounting is crucial for managers and involves financial accounting, cost accounting, and management accounting. It is done through double entry bookkeeping and tracks assets, expenses, liabilities, equity, income, and revenue using debit and credit entries according to accounting rules.

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20 views

Accounting Introduction

Accounting is crucial for managers and involves financial accounting, cost accounting, and management accounting. It is done through double entry bookkeeping and tracks assets, expenses, liabilities, equity, income, and revenue using debit and credit entries according to accounting rules.

Uploaded by

pranav1931129
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Accounting for managers

Accounting is crucial for managers. Accounting for managers is an amalgamation of

● Financial Accounting

● Cost Accounting

● Management Accounting

A company is an artificial person. Its language is Accounting.

Step 1: Journal Entries

Stationary Account . Dr 100

To Cash Account 100

Accounting is done through double entry book keeping

Debit Credit Rule

Method 1

five core types of accounts:

● Assets: Resources owned by a business which have economic value you can convert into
cash (e.g., land, equipment, cash, vehicles)

● Expenses: Costs that occur during business operations (e.g., wages, supplies)

● Liabilities: Amounts owed to another person or business (e.g., accounts payable)

● Equity: Your assets minus your liabilities

● Income and revenue: Cash earned from sales


Method 2

Three golden rules of accounting

1. Personnel A/C Rule


Debit the receiver (Artificial person A/c, Natural person a/c, Representative personal a/c)
Credit the giver.

Harsh A/c Dr 100


To Abhinav A/c 100

Debit (100) = Credit (100)

2. Real A/C Rule


Debit what comes in (Assets
credit what goes out

Air Conditioner A/c Dr 40,000


To Company Inc. A/c 40,000

3. Nominal Rule
Debit losses and expenses
credit incomes and profits

Salary a/c Dr 50,000


To Bank/cash A/c 50,000

Accounting only considers monetary transactions. An accounting event is a transaction that


is recognized in the financial statements of an accounting entity. A company must record in
its accounting records any economic event that impacts the company's finances.
Accounting Equation

Assets = Capital (owners’ liability) + Liability.

ABHINAB STARTED A BUSINESS BY INVESTING CAPITAL Rs.1,00,000.

Cash a/c dr 1,00,000

To Abhinav's capital a/c 1,00,000

Cash 1,00,000 = capital 1,00,000+ 0

Purchase goods/raw material 10,000

Purchase a/c dr 10,000

To cash a/c 10,000

Cash 90,000 + goods 10,000 = capital 90,000

Furniture Purchased

Furniture a/c dr 5000

To cash a/c 5000

Cash 85,000+ goods 10,000+ furniture 5000= capital 1,00,000+ 0

Sell 5000

Cash a/c dr 5000

To sale a/c 5000

Cash 90,000+ goods 5,000+ furniture 5000= capital 1, 00,000+ 0

Purchase goods credit 5000 Ashish

Purchase a/c dr 5000

To Ashish a/c 5000

Cash 90,000+ goods 10,000+ furniture 5000= capital 1, 00,000+ Creditor 5,000
2000 goods drawn for personal use

Drawings a/c dr 2000

To Stock/Purchases a/c 2000

Cash 90,000 + goods 8,000 + furniture 5,000 = capital 98,000 + creditor 5,000

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