FIRST OF ALL A VERY GOOD MORNING AND ALL THE VERY BEST TO ALL RESULT SEEKERS....TODAY I AM GOING TO DIVERT ALL OF UR KIND ATTENTION TOWARD A VERY VITAL TOPIC " ACCONTANCY - A MAJOR ISSUE " ....INSPITE OF STUDYING ACCOUNTANCY FROM THE 11 TH CLASS,STILL MANY OF US LACK IN THIS SUBJECT.....SO WHERE DOES THE PROBLEM LIES....??? I WILL TELL ALL OF YOU....THE PROBLEM LIES IN THE BASICS OF ACCOUNTS WHICH WE IGNORED THINKING THEY ARE USELESS.....

SO TODAY I WILL TAKE ALL OF U BACK TTO 11 TH CLASS,SO THAT WE ALL MAKE OUR BASICS STRONG IN ACCOUNTANY....PLEASE TAKE IT SERIOUSLY AS MANY OF US STILL DONT KNOW ABOUT THE LOGICS BEHIND MANY TRANSACTIONS IN ACCOUNTS....WE ALL JUST TRY TO CRAME IT....

I HOPE MY SMALL INNOVATIVE INNITIATIVE WILL HELP MANY OF US.............!!! SO LETS START WITH IT.........

                 ACCOUNTANCY - A MAJOR ISSUE

1...GOLDEN RULES OF ACCOUNTANCY

   REAL ACCOUNT - RULE " DEBIT WHAT COMES IN AND CREDIT WHAT GOES OUT "

IT INCLUDES TANGIBLE AS WELL AS INTANGIBLE ASSETS OF THE FIRM ( EXCLUDING DEBTORS )....for eg...land,building,p and m,etc.

 PERSONAL ACCOUNT - RULE " DEBIT THE RECIEVER  AND CREDIT THE GIVER ...

ACCOUNTS WHICH RELATES TO PERSONS,i.e INDIVIDUALS,FIRM,COMPANIES,ETC..DEBTORS,CREDITIRS,RAM AND CO.A CREDIT CUSTOMER..

  NOMINAL ACCOUNT - RULE " DEBIT ALL THE EXPENSES AND LOSSES AND CREDIT ALL THE INCOMES AND GAINS..

IT RELATES TO EXPENSES,LOSSES,GAINS,INCOMES i.e  TRADING AND P AND L ACCOUNT ITEMS..

CONCLUSION - DONT JUST LEARN THEM BUT TRY TO FIND OUT THE LOGIC BEHIND THEM...

2... SOME IMPORTANT FACTS IN ACCONTANCY...........

A...REAL AND PERSONAL ACCONTS ARE ALWAYS CARRIED FORWARD.WHEREAS NOMINAL ACCOUNTS ARE ALWAYS CLOSED DOWN.....IT MEANS THAT  NOMINAL ACCONTS WILL ALWAYS BE CLOSED DOWN THROUGH P and L ACCONT.

B...PROVISIONS AGAINST LOSSES CAN BE MADE ONLY IF FOLLOWING 2 CONDTIONS ARE SATISFIED....

1...LOSS IS LIKELY TO BE INCURRED

2... AMOUNT OF LOSS CAN BE CALCULATED WITH REASONABLE ACCURACY.

C...AS PER PRUDENCE CONCEPT CONNTINGENT GAINS ARE IGNORED IN ACCOUNTS.

D... VOUCHING REFERS TO WRITEN LEGAL DOCUMENT,WHICH ACT AS A EVIDENCE FOR A TRANSACTION 

3... JOURNAL ENTERIES > LEDGER > TRIAL BALANCE > BALANCE SHEET...

4...There are eight steps in the accounting cycle:

1. Transactions: The process starts with financial transactions. These can include the sale or return of goods, the purchase of goods or supplies, the payment of salaries — essentially any time cash changes hands or the promise of payment is made a transaction has occurred.

2. Journal entries: The first thing you do after a transaction has occurred is prepare a journal entry so you can record it in the books.

3. Posting: After preparing the journal entry you post it to the books.

4. Trial balance: At the end of an accounting period you’ll test the books to see if they are in balance.

5. Worksheet: Often on the first try you’ll find the books are not in balance. A worksheet is used to figure out the problem.

6. Adjusting journal entries: After you figure out what is wrong, you make adjustments to the books using Adjusting Journal Entries.

7. Financial statements: Financial statements are prepared using the corrected trial balance.

8. Closing: At the end of an accounting period you close the books and get ready for the next accounting period.

9...Debits and Credits vs. Account Types

Account         Type Debit          Credit

Assets             Increases          Decreases

Liabilities         Decreases          Increases

Income            Decreases          Increases

Expenses         Increases          Decreases

 

Notice that for every increase in one account, there is an opposite (and equal) decrease in another. That's what keeps the entry in balance. Also notice that debits always go on the left and credits on the right.

Let's take a look at two sample entries and try out these debits and credits:

In the first stage of the example we'll record a credit sale:

Accounts Receivable          $1,000

Sales Income                     $1,000

If you looked at the general ledger right now, you would see that receivables had a balance of $1,000 and income also had a balance of $1,000.

Now we'll record the collection of the receivable:

Cash                                 $1,000

Accounts Receivable          $1,000

Notice how both parts of each entry balance? See how in the end, the receivables balance is back to zero? That's as it should be once the balance is paid. The net result is the same as if we conducted the whole transaction in cash:

Cash                     $1,000

Sales Income         $1,000

SO TRY MAKING STRONG UR BASICS...AND U WILL HAVE A GOOD COMMAND OVER ACCOUNTS.

THANKING YOU