CA Foundation - Principles & Practice of Accounting
Complete Study Material & Notes (India)
1. Introduction to Accounting
Definition:
Accounting is the systematic process of identifying, measuring, recording, classifying, summarising,
interpreting and communicating financial information.
Objectives:
• Record business transactions
• Ascertain profit or loss
• Determine financial position
• Facilitate decision-making
2. Basic Accounting Terms
Term Meaning
Assets Economic resources owned by the business
Liabilities Obligations payable to outsiders
Capital Owner's investment in the business
Revenue Income generated from operations
Expenses Costs incurred to earn revenue
Profit Excess of revenue over expenses
3. Accounting Principles & Concepts
Fundamental Assumptions:
• Going Concern: The business will continue to operate indefinitely.
• Consistency: The same accounting methods are applied consistently.
• Accrual: Transactions are recorded when they occur, not when cash is exchanged.
Basic Concepts:
• Business Entity Concept
• Money Measurement Concept
• Dual Aspect Concept (Assets = Liabilities + Capital)
1
Complete Study Material & Notes (India)
1. Introduction to Accounting
Definition:
Accounting is the systematic process of identifying, measuring, recording, classifying, summarising,
interpreting and communicating financial information.
Objectives:
• Record business transactions
• Ascertain profit or loss
• Determine financial position
• Facilitate decision-making
2. Basic Accounting Terms
Term Meaning
Assets Economic resources owned by the business
Liabilities Obligations payable to outsiders
Capital Owner's investment in the business
Revenue Income generated from operations
Expenses Costs incurred to earn revenue
Profit Excess of revenue over expenses
3. Accounting Principles & Concepts
Fundamental Assumptions:
• Going Concern: The business will continue to operate indefinitely.
• Consistency: The same accounting methods are applied consistently.
• Accrual: Transactions are recorded when they occur, not when cash is exchanged.
Basic Concepts:
• Business Entity Concept
• Money Measurement Concept
• Dual Aspect Concept (Assets = Liabilities + Capital)
1
