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Principles of Accounting

This document provides an introduction to principles of accounting. It outlines the session plan which includes an overview of accounting, transactions, accounts, credit/debit entries, and the double-entry principle. It then demonstrates examples of entries to account for cash deposits, withdrawals, fund transfers between accounts, and payment of interest. Finally, it describes the different types of accounts - personal, real, and nominal - and the rules for accounting for each type.

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507 views9 pages

Principles of Accounting

This document provides an introduction to principles of accounting. It outlines the session plan which includes an overview of accounting, transactions, accounts, credit/debit entries, and the double-entry principle. It then demonstrates examples of entries to account for cash deposits, withdrawals, fund transfers between accounts, and payment of interest. Finally, it describes the different types of accounts - personal, real, and nominal - and the rules for accounting for each type.

Uploaded by

javs1525
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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Principles of Accounting

Maximize Opportunity. Minimize Risk.


Course Objective
• To introduce the concept of Principles of Accounting

Win in the flat world


Session Plan
• Accounting
• Transaction
• Account
• Credit/Debit
• Double Entry Principle
• Types of accounts – rules of accounting

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Assumes balances
S B 0 1 0 C r
C a s h = 0

C a s h A / c 0 C r

A c c o u n t s

I n it ia l S t a t e : A s s u m e N o b a la n c e s

S B 0 1 1 0 0 C r
C a s h = 1 0 0

C a s h A / c 1 0 0 D r

A c c o u n t
E v e n t : A s s u m e C r o f 1 0 0 b y c a s h f o r S B 0 1 .
A p p ly t h e p r in c ip le - C r t h e G iv e r , D r t h e r e c e iv e r

N o t e : t h e p h y s ic a l c a s h w it h t h e b a n k m a t c h e s t h e e n t r ie s in t h

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Entries to Account for the transaction
• Cash Deposit
Account Amount Part Date Particulars
tran
Type
SB-01 100 Cr 10-Aug-2004 Cash Deposit by Customer

Bank-Cash- 100 Dr 10-Aug-2004 Cash from SB-01


Acct

• Cash Withdrawal
Account Amount Part Date Particulars
tran
Type
SB-01 100 Dr 10-Aug-2004 Cash Withdrawn by
Customer
Bank-Cash- 100 Cr 10-Aug-2004 Cash to SB-01
Acct
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Entries to Account for the transaction
• Fund transfer between two accounts
Account Amount Part Date Particulars
tran
Type
SB-01 100 Cr 10-Aug- Received from SB-02
2004
SB-02 100 Dr 10-Aug- Xfer to SB-01
2004
• Payment of interest to a Term Deposit
Account Amount Part Date Particulars
tran
Type
TD-01 100 Cr 10-Aug-2004 By Interest
P&L 100 Dr 10-Aug-2004 Int for TD-01

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Account Types
• Personal Account:
– These are accounts of depositors having various types of deposit accounts, those
who have borrowed from the bank and those with whom the bank has dealings in
any business. The rule for accounting is:
– Rule : Debit the receiver and credit the giver.
• Real Account:
– Cash, assets accounts like buildings, stationery, foreign currency are Real accounts.
– The rule for accounting is: Debit what comes in, Credit what goes out.
• Nominal Account:
– Charges or Expenses Account ,Interest, Exchange, commission, Discount and
Suspense Account are Nominal Accounts.
– The rule for accounting is: Credit the income, debit expenses/ losses.

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Summary
• Accounting
• Transaction
• Account
• Credit/Debit
• Double Entry Principle
• Types of accounts – rules of accounting

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Thank You!

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