LESSON-1-INTRODUCTION TO ACCOUNTING

LESSON-2-SYSTEM OF ACCOUNTING
LESSON-3 ACCOUNTING EQUATION
LESSON-4 TYPES OF ACCOUNTS AND RULES OF ACCOUNTING
LESSON–5 ACCOUNTING STANDARDS
LESSON–6 ACCOUNTING CONCEPTS-CONVENTIONS
LESSON–7 PHASES OF ACCOUNTING – “JOURNAL”
LESSON–8 PHASES OF ACCOUNTING – “LEDGER”
LESSON–9 PHASES OF ACCOUNTING – “TRIAL BALANCE”
LESSON-10 PREPARATION OF CASH BOOK
LESSON-11 PREPARATION OF PASS BOOK
LESSON-12-BANK RECONCILIATION STATEMENT
LESSON-13 FINAL STATEMENTS OF ACCOUNTS
LESSON-14 MANUFACTURING ACCOUNT
LESSON-15 TRADING ACCOUNT
LESSON-16 PROFIT AND LOSS ACCOUNT
LESSON-17 BALANCE SHEET
LESSON-18 ADJUSTMENTS AND PREPARATION OF FINAL ACCOUNTS
LESSION- 19 MANUAL ACCOUNTING SYSTEM
LESSION-20 COMPUTERISED ACCOUNTING SYSTEM

LESSION- 1- INTRODUCTION TO ACCOUNTING

Contents
1.0Aims and Objectives
1.1 Book- keeping
1.1.1 Introduction
1.1.2. Definition
1.1.3 Objectives of Book- keeping
1.2 Accounting
1.2.1 Introduction
1.2.2 Definition
1.3 Attributes and steps of accounting
1.3.1 Financial Transactions
1.3.2 Recording
1.3.3 Classification
1.3.4 Summarizing
1.3.5 Analysis and Interpretation
1.4 Objectives of Accounting
1.4.1 To keeping systematic record
1.4.2 To ascertain the results of the operation
1.4.3 To ascertain the financial position of the business
1.4.4 To portray the liquidity position
1.4.5 To protect business properties
1.4.6 To facilitate rational decision – making
1.4.7 To satisfy the requirements of law
1.5 Importance of Accounting
1.5.1. To the Owners
1.5.2. To the Management
1.5.3. To the Creditors
1.5.4. To the Employees
1.5.5. To the Investors
1.5.6. To the Government
1.5.7. To the Consumers
1.5.8. To the Research Scholars
1. 6 Functions of Accounting
1.6.1. Record Keeping Function.
1.6.2. Managerial Function
1.6.3. Legal Requirement function
1.6.4. Language of Business
1.7Advantages of Accounting
1.8 Limitations of Accounting
1.9 Let us Sum Up
1.10 Lesson-End Activities
1.11 Model answer to check your progress.
1.12 References

LESSON 2-SYSTEM OF ACCOUNTING

Contents
2.0 Aims and Objectives
2.1 Single entry system
2.1.1 Meaning
2.1.2 Definitions
2.1.3 Meaning of debit and credit
2.2 Statement of affairs
2.2.1 Meaning
2.2.2 Features of Statement of affairs
2.3 Salient features of single entry system
2.4 Defects of single entry system.
2.5 Methods of ascertainment of profit or loss under single entry system
2.5.1 Comparison method (or) Net worth method
2.5.2 Statement of profit or loss
2.5.3 Limitation of Comparison method
2.5.4 Conversion Method
2.5.5 Procedure for conversion
2.6 Double entry system:
2.6.1 Meaning
2.7 Advantages of Double entry system:
2.8 Stages of double entry system
2.9 Differences between single entry system and double entry system
2.10 Let us Sum Up
2.11 Lesson-End Activities
2.12 Model answer to check your progress.
2.13 References

Lesson-3 ACCOUNTING EQUATION

Contents
3.0 Aims and Objectives
3.1 Accounting Equation
3.1.1 Meaning of Asset and Equity
3.1.2 Equation
3.2 Rules for Accounting Equation
3.2.1 Capital
3.2.2 Assets
3.2.3 Liabilities
3.2.4 Income
3.2.5 Expense
3.3 Interaction between assets and liabilities and their effect on accounting Equation
3.4 Let us Sum up
3.5 Lesson-End Activities
3.6 Model answer to check your progress.
3.7 References

Lesson -4 TYPES OF ACCOUNTS AND RULES OF ACCOUNTING

Contents
4.0Aims and Objectives
4.1 Introduction
4.2 Types of account
4.2.1 Account
4.2.2 Chart shows the various types of accounts
4.2.3 Personal account
4.2.4 Real account
4.2.5 Nominal account
4.3 Rules of accounting
4.3.1 Rule for Personal account
4.3.2 Rule for Real account
4.3.3 Rule for Nominal account
4.4 Let us Sum Up
4.5 Lesson-End Activities
4.6 Model answer to check your progress.
4.7 References

LESSON – 5 ACCOUNTING STANDARDS

5.0 Aims and Objectives
5.1 Introduction
5.2 Preface to the statements of accounting standards
5.2.1. Formation of the accounting standards board
5.2.2. Scope and functions of accounting standards board
5.2.3. Audited financial statements
5.2.4. Scope of accounting standards
5.2.5 Procedure for issuing accounting standards
5.3. Compliance with the accounting standards
5.4 Summary of the accounting process
5.5 Different levels .
5.5.1 International accounting standards (IAS)
5.5.2 Accounting standards and the institute of chartered accountants of india
5.6 Let us Sum Up
5.7 Lesson-End Activities
5.8 Model answer to check your progress.
5.9 References

LESSON – 6 ACCOUNTING CONCEPTS-CONVENTIONS

6.0 Aims and Objectives
6.1 Introduction
6.2 Principles of Accounting
6.3 Accounting concepts
6.3.1. Business Entity Concept
6.3. 2. Money Measurement Concept
6.3.3. Going Concern Concept
6.3. 4. Dual Aspect Concept
6.3.5. Periodicity Concept
6.3. 6. Historical Cost Concept
6.3.7. Matching Concept
6.3. 8. Realisation Concept
6.3.9. Accrual Concept
6.3.10. Objective Evidence Concept
6.4 Accounting Conventions
6.4.1. Consistency
6.4.2. Disclosure
6.4.3. Conservatism
6.5 Accounting Terminology
6.6 Let us Sum Up
6.7 Lesson-End Activities
6.8 Model answer to check your progress.
6.9 References

LESSON – 7 PHASES OF ACCOUNTING – “JOURNAL”

7.0 Aims and Objectives
7.1 Introductions
7.1.1 Journal
7.1.2 Journalising
7.1.3 Rules of journalising
7.2 Specimen of journal
7.2.1 Narration
7.3. Advantages of journal
7.4. Sub- division of journal
7.5 Analysis of transaction for journal entries
7.6 Important points to note at the item of recording a transaction
7.7 Let us sum up
7.8 Lesson-End Activities
7.9 Model answer to check your progress.
7.10 References

LESSON – 8 PHASES OF ACCOUNTING – “LEDGER ”

Contents
8.0 Aims and objectives
8.1 Introduction
8.1.1. Ledger
8.2 Ruling of ledger account
8.3 Sub-division of ledger
8.3.1 Debtors’ Ledger
8.3.2 Creditors’ Ledger
8.3.3 General Ledger
8.4 Posting
8.5 Procedures of Posting
8.5.1 First part of the Account:
8.5.2 Second part of the other Account
8.6 Balancing of an account
8.7 Distinction between journal and ledger
8.8 Illustrations
8.9 Let us sum up
8.10 Lesson-End Activities
8.11 Model answer to check your progress
8.12 References

LESSON – 9 PHASES OF ACCOUNTING – “TRIAL BALANCE”

Contents
9.0. Aims and objectives
9.1. Introduction
9.1.1. Meaning
9.1.2. Definition
9.2. Objectives of preparing a Trail Balance
9.3. Features of Trail Balances
9.4. Limitations of Trail Balance
9.5. Methods of preparing Trail Balance
9.5.1. Total method
9.5.2. Balance Method
9.6 Ruling of a trail balance
9.7 Errors disclosed by the Trial Balance
9.8. Errors not disclosed by the Trail Balance
9.9 Let us sum up
9.10 Lesson-End Activities
9.11 Model answer to check your progress
9.12 References

Lesson 10 PREPARATION OF CASH BOOK

Contents
10.0 Aims and Objectives
10.1 Introduction
10.2 Kinds of Cash Book
10.3 Preparation of cash book
10.3.1Single or Simple Column Cash Book
10.3.2Tow Column Cash Book
10.3.3 Three Columnar Cash Book
10.3.3(a) Contra Entries
10.3.4 Cash Book with Bank and Discount Columns
10.3.5 Petty Cash Book
10.2.5 (a)Columnar Petty Cash Book or analytical Petty Cash Book
10.4 Illustrations
10.4 Let us Sum Up
10.5 Lesson-End Activities
10.6 Model answer to check your progress.
10.7 References

Lesson 11 PREPARATION OF PASS BOOK

Contents
11.0 Aims and Objectives
11.1 Introduction
11.2 Preparation of pass book
11.3 Specimen of pass book
11.4 Items appearing in the customer’s account
11.4.1 on the debit side
11.4.2 on the credit side
11.5 Balancing of pass book
11.6 Illustrations
11.7 Let us Sum Up
11.8 Lesson-End Activities
11.9 Model answer to check your progress.
11.10 References

Lesson 12-BANK RECONCILIATION STATEMENT

Contents
12.0 Aims and objectives
12.1 Introduction
12.2 Purpose of preparing a bank reconciliation statement
12.3 Causes of difference between cash book and pass book balance
12.3.1 Cheques issued but not presented for payment
12.3.2 Cheques deposited but not credited
12.3.3 Direct payment by a customer to the bank
12.3.4 Interest on deposit credited by the banker
12.3.5 Interest, dividend, rent etc. collected by bank
12.3.6 Payments made for standing instructions
12.3.7 Bank charges debited in the pass book
12.3.8 Bills discounted but dishonoured
12.3.9 Interest on over draft debited in pass book
12.3.10 Credit instruments recorded in the pass book
12.3.11 Cheques failed to deposit
12.3.12 Errors in cash book and pass book
12.4 Preparation of the Bank Reconciliation statement .
12.4.1 Specimen
12.5 Overdraft
12.5.1Specimen:
12.6 Method of preparation of bank reconciliation statement
12.6.1 Performa of a bank reconciliation statement
a) If we take cash book balance or overdraft as per pass book as the starting point:
b) If we take pass book balance or overdraft as per cash book as starting point
12.7 Bank balance to be shown in balance sheet
12.7.1 Adjustments in the cash book
12.8 Illustration
12.9 Let us Sum Up
12.10 Lesson-End Activities
12.11 Model answer to check your progress.
12.12 References

Lesson-13 FINAL STATEMENTS OF ACCOUNTS

Contents
13.0 Aims and Objectives
13.1 Introduction
13.2 Objectives of financial statements
13.3 Functions of the financial statements
13.4 Consists of financial statements
13.4.1 Manufacturing account
13.4.2 Trading account
13.4.3 Profit and loss account
13.4.4 Balance sheet
13.5 Let us Sum Up
13.6 Lesson-End Activities
13.7 Model answer to check your progress.
13.8 References

Lesson-14 MANUFACTURING ACCOUNT

Contents
14.0 Aims and Objectives
14.1 Introduction
14.1.1 Meaning
14.1.2 Purpose of manufacturing account
14.2 Features of manufacturing account
(A) Debit side
14.2.1. Raw material consumed
14.2.2 Partly finished stock (work-in-progress)
14.2.3 Direct wages and direct expenses
14.2.4 Factory expenses
14.2.5 Scrap
(B) Credit side
14.2.6 Closing work in progress
14.2.7 Cost of production
14.3 The specimen of manufacturing account
14.4 Illustration
14.5 Let us Sum Up
14.6 Lesson-End Activities
14.7 Model answer to check your progress.
14.8 References
Lesson 15 TRADING ACCOUNT
Contents
15.0 Aims and objectives
15.1 Introduction
15.2 Method of preparation of trading account
15.2.1 items shown on the debit side of trading account:
i) opening stock
ii) purchase
iii) direct expenses
15.2.3 items appearing on the credit side of trading account:
i) sales
ii)closing stock
15.3 Specimen of trading account
15.4 Illustration
15.5 Let us Sum Up
15.6 Lesson-End Activities
15.7 Model answer to check your progress.
15.8 key words
15.9 References

Lesson -16 PROFIT AND LOSS ACCOUNT

Contents
16.0 Aims and objectives
16.1 Introduction
16.1.1Meaning
16.1.2 Definition
16.2 Method of preparation of profit or loss account
16.2.1 Items shown on the debit side of profit or loss account:
i) Gross loss ii) operating expenses, iii) non operating expenses
16.2.3 Items appearing on the credit side of profit or loss account:
i)Gross gain ii) operating incomes, iii) non -operating incomes
16.3 Specimen of profit or loss account
16.4 Purpose of preparing profit and loss account
16.5 Principles of preparing profit or loss Account
16.6 Journal entries for the preparation of profit or loss Account
16.7 Illustration
16.8 Let us Sum Up
16.9 Lesson-End Activities
16.10 Model answer to check your progress.
16.11 key words
16.12 References

Lesson 17 BALANCE SHEET

Contents
17.0 Aims and objectives
17.1 Introduction
17.1.1 Meaning
17.1.2 Definitions
17.2 Classification of assets and liabilities
17.2.1 Assets
17.2.2 Liabilities
17.3 Examples for assets
17.4 Examples for liabilities
17.5 The specimen of balance sheet
17.6 The purpose of preparing balance sheet
17.7 Illustration
17.8 Let us sum up
17.9 Lesson-End Activities
17.10 Model answer to check your progress.
17.11 Reference

Lesson -18 ADJUSTMENTS AND PREPARATION OF FINAL ACCOUNTS

Contents
18.0 Aims and objectives
18.1 Introduction
18.2 List of adjustments
18.3 Accounting treatments for each adjustments
18.4 Illustration
18.5 Let us Sum Up
18.6 Lesson-End Activities
18.7 Model answer to check your progress.
18.8 References

LESSION- 19 MANUAL ACCOUNTING SYSTEM

Contents
18 19.0 Aims and Objectives
19.1 1Introduction
19.2 Accountant
19.3 Categories of accountant
19.4 Advantages of manual accounting system
19.5 Limitations of manual accounting
19.6 Let us Sum Up
19.7 Lesson-End Activities
19.8 Model answer to check your progress.
19.9 References

LESSION-20 COMPUTERISED ACCOUNTING SYSTEM

Contents
20.0 Aims and Objectives
20.1 Introduction- computer
20.2 Memory unit
20.2.1 Main memory
(a) ram (b) rom
20.2.2 Secondary memory
(a) Hard disk (b) floppy disk(c) optical disks (cd-roms)
20.2.3 Advantages of computer
20.3 Computer-based accounting systems
20.4 Use of computers in accounting
20.4.1 Spreadsheets,
20.4.2 General ledger
20.4.3 Accounts receivable
20.4.4. Accounts payable
20.4.5. Inventory control
20.4.6. Point of sale
20.4.7. Purchasing and receiving
20.4.8. Time and billing module
20.5 Software packages for accounting
20.6 Advantages of using the computer in accounting
20.7 Disadvantages of using the computer in accounting
20.8. Old methods and machines used in accounting
20.8.1 Relationship to manual accounting
20.8.2 Differences between manual and computerized accounting systems
20.9 Accounting as a system
20.10 Let us sum up
20.11 Lesson-End Activities
20.12 Model answer to check your progress
20.12 References