Plus one
Accountancy
Notes
, Kollam District Panchayat & General Education Department
Chapters
Sl. No. Name of Chapter
1 Introduction to Accounting
2 Theory Base of Accounting
3 Recording of Transactions-I
4 Recording of Transactions-II
5 Bank Reconciliation Statement
6 Trial Balance and Rectification of Errors
7 Depreciation, Provisions and Reserves
6 VIDHYAPOSHINI 2023-2024
, Chapter-1
Accountancy
Introduction to Accounting
Meaning of Accounting:-
Accounting is the art of recording, classifying, summarising, analysing and interpreting the
financial transactions and communicating the results to the interested persons.
Functions of Accounting:-
Recording, classifying, summarising, Analysis and interpretation, communication
Economic Events: Economic events can be internal or external. Internal event is an economic
event which takes place entirely within the organisation
Eg. Issue of raw materials from stores department to production department.
External event involves transfer or exchange of something of value between two or more entities.
Eg. Purchase of goods from a supplier
Interested users of Accounting
Users of accounting information can be classified in to two. Internal users and external users.
Internal users include:-
Owners, Management, General Manager, Chief Executive Officer, Vice President, Employees.
External users include:-
Banks, Creditors, Cash Investors, Government, Labour unions, Tax authorities etc.
Qualitative characteristics of Accounting information
Reliability:- Accounting information must be free from bias and it must be verifiable.
Relevance:- Accounting information must be avaitable in time.
Understandability:- Accounting information should be understandable to its users
Compairability:- Accounting reports should be comparable.
7
, Objectives of Accounting
t Tomaintain records of business
t Calculation of profit or loss
t Depiction of financial position
t Provide information to interested users
Basic Terms in Accounting
1 Business Transaction:- Exchange of something of value between the business and
) others. Financial Statements:- Profit and Loss account and Balance sheet Profit and Loss
2 account is prepared to find out the result of business Balance sheet is prepared to find out
) the financial position Assets:- Material things or properties owned by the business a) Fixed
3) assets - Assets which are acquired for long term use Eg. Land, Building, Machinery etc. b)
Current assets - Assets which are held for a short period, usually with in one year. Eg.
Cash, Inventories (stock) Debtors etc.
Classification of Fixed Assets:
a) Tangible assets - Assets having physical existence
Eg. Building, Machinery etc.
b) Intangible Assets - Assets having no physical existence.
Eg. Goodwill, Patent etc.
4) Liabilities:- Obligations or claims of outsiders against the business.
a) Fixed or long term liability - Liabilities which are payable after a long period of time (ie.
more than one year)
Eg. Long term loan.
b) Current Liabilities - Liabilities which are due and payable with in a short period, usually with
in one year.
Eg. Creditors, Bill payable etc.
5 Capital: Investment made by the owner in to the business.
) Drawings:- Cash or goods withdrawn by the owner for personal use.
6 Revenue:- The amounts that the business earns by selling its products or providing services
) to its customers.
7
8 Expense:- The cost incurred by a business in the process of earning revenue.
) Profit:- Excess of income over expenses (Revenue)
10)Loss:-
9 Excess of expenses over revenue.
)
8
Accountancy
Notes
, Kollam District Panchayat & General Education Department
Chapters
Sl. No. Name of Chapter
1 Introduction to Accounting
2 Theory Base of Accounting
3 Recording of Transactions-I
4 Recording of Transactions-II
5 Bank Reconciliation Statement
6 Trial Balance and Rectification of Errors
7 Depreciation, Provisions and Reserves
6 VIDHYAPOSHINI 2023-2024
, Chapter-1
Accountancy
Introduction to Accounting
Meaning of Accounting:-
Accounting is the art of recording, classifying, summarising, analysing and interpreting the
financial transactions and communicating the results to the interested persons.
Functions of Accounting:-
Recording, classifying, summarising, Analysis and interpretation, communication
Economic Events: Economic events can be internal or external. Internal event is an economic
event which takes place entirely within the organisation
Eg. Issue of raw materials from stores department to production department.
External event involves transfer or exchange of something of value between two or more entities.
Eg. Purchase of goods from a supplier
Interested users of Accounting
Users of accounting information can be classified in to two. Internal users and external users.
Internal users include:-
Owners, Management, General Manager, Chief Executive Officer, Vice President, Employees.
External users include:-
Banks, Creditors, Cash Investors, Government, Labour unions, Tax authorities etc.
Qualitative characteristics of Accounting information
Reliability:- Accounting information must be free from bias and it must be verifiable.
Relevance:- Accounting information must be avaitable in time.
Understandability:- Accounting information should be understandable to its users
Compairability:- Accounting reports should be comparable.
7
, Objectives of Accounting
t Tomaintain records of business
t Calculation of profit or loss
t Depiction of financial position
t Provide information to interested users
Basic Terms in Accounting
1 Business Transaction:- Exchange of something of value between the business and
) others. Financial Statements:- Profit and Loss account and Balance sheet Profit and Loss
2 account is prepared to find out the result of business Balance sheet is prepared to find out
) the financial position Assets:- Material things or properties owned by the business a) Fixed
3) assets - Assets which are acquired for long term use Eg. Land, Building, Machinery etc. b)
Current assets - Assets which are held for a short period, usually with in one year. Eg.
Cash, Inventories (stock) Debtors etc.
Classification of Fixed Assets:
a) Tangible assets - Assets having physical existence
Eg. Building, Machinery etc.
b) Intangible Assets - Assets having no physical existence.
Eg. Goodwill, Patent etc.
4) Liabilities:- Obligations or claims of outsiders against the business.
a) Fixed or long term liability - Liabilities which are payable after a long period of time (ie.
more than one year)
Eg. Long term loan.
b) Current Liabilities - Liabilities which are due and payable with in a short period, usually with
in one year.
Eg. Creditors, Bill payable etc.
5 Capital: Investment made by the owner in to the business.
) Drawings:- Cash or goods withdrawn by the owner for personal use.
6 Revenue:- The amounts that the business earns by selling its products or providing services
) to its customers.
7
8 Expense:- The cost incurred by a business in the process of earning revenue.
) Profit:- Excess of income over expenses (Revenue)
10)Loss:-
9 Excess of expenses over revenue.
)
8
