What is Accounting?
Financial Accounting is the process of recording, classifying, summarizing, and
interpreting financial data to provide useful information for decision-making.
Financial Accounting is a Branch of Accounting. The Main Objective of Financial
Accounting is to know the Financial Position of a particular business & to show
the Profit & Loss made by the business.
What is Bookkeeping?
Bookkeeping refers to the Process of Recording Business Transactions
Systematically in the Books of Accounts.
What are the Types of Accounts?
1. Personal Account
2. Real Account
3. Nominal Account
Personal Account
These accounts types are related to persons. These persons may be natural persons like
Raj’s account, Rajesh’s account, Ramesh’s account, Suresh’s account, etc.
These persons can also be artificial persons like partnership firms, companies,
bodies corporate, an association of persons, etc.
For example – Rajesh and Suresh Trading Co., Charitable trusts, XYZ Bank Ltd, C
company Ltd, etc.
Real Account
These account types are related to assets or properties. They are further classified as
Tangible Real accounts and Intangible Real accounts.
, Tangible Real Accounts
These include assets that have a physical existence and can be touched.
For example; Building A/c, Cash A/c, Stationery A/c, Inventory A/c, etc.
Intangible Real Accounts
These assets do not have any physical existence and cannot be touched. However, these
can be measured in terms of money and have value.
For Example: Goodwill, Patent, Copyright, Trademark, etc.
Nominal Account
These accounts types are related to income or gains and expenses or losses.
For example: – Rent A/c, Commission Received A/c, salary A/c, Wages A/c,
Conveyance A/c, etc.
What are the Golden Rules of Accounting?
Personal Account: Debit the Receiver, Credit the Giver
Real Account: Debit What Comes in, Credit What Goes Out
Nominal Account: Debit All the Expenses & Losses, Credit the All Income &
Gains.
What is Working Capital?
Working capital is the Difference between a Company’s Current Assets and
Current Liabilities. It represents a company's short-term financial health and its
ability to meet its short-term obligations.
, What is a Double Entry System of Bookkeeping?
It is a method of book keeping under this method, the priority is given for both the
aspect [Receiving & Giving Aspect]. It considers all Personal, Real & Nominal
Account Transactions. As per this system, for every debit, there will be an equal &
corresponding credit.
What is an Accounting Equation?
The Accounting Equation is Assets = Liabilities + Owner’s Equity. This
Fundamental Equation forms the basis of the Double-Entry Bookkeeping system.
What is Depreciation?
Depreciation is the gradual decrease in the value of a Tangiable fixed asset over
period of time is called Depreciation. It is shown in Debit Side of Profit & Loss
Account & also shown in Asset side of Balance sheet by reducing Fixed Assets.
What is an Account?
Account is a statement of consolidated picture of Transaction. It is a classified
statement of Assets, Liabilities, Income, Expenses etc. It is used to classify &
summarize financial transaction of a particular type.
What are the Types of Depreciation?
1. SLM
2. DBM
SLM Cost of an Asset- Residual Value/Useful Life
What are the Three Types of Financial Statements?
1. Income Statement
2. Balance Sheet
3. Cash Flow Statement
, What is the Difference Between Revenue & Income?
Revenue is the Total Amount of Money earned from the Sales of Goods or services.
Income, often referred to as Net Income or Net profit, is the amount left after all
expenses have been subtracted from revenue.
What is a Journal Entry?
Journal Entry is the process of Recording Business Transactions in the Financial
Books. Journal Entries are made in chronological order and follow the Double-
Entry Accounting System, meaning each will have both a Credit and a Debit
Column.
What is Trail Balance?
Trial Balance is a Statement of the collection of Ledger Accounts, which is used to
check the Arithmetical Accuracy in posting & Recording.
What is Ledger?
A ledger refers to a Book of Accounts that contains Different Accounts where
Records of Transactions Pertaining to a Specific Account is stored. It is the Principal
Book of Accounts that classifies Transactions Recorded in the Journal.
What is a Balance sheet?
It is a Financial Statement that shows the Financial Position of the Company Over a
Specific Point in Time. It is also called as Statement of Financial Position.
Financial Accounting is the process of recording, classifying, summarizing, and
interpreting financial data to provide useful information for decision-making.
Financial Accounting is a Branch of Accounting. The Main Objective of Financial
Accounting is to know the Financial Position of a particular business & to show
the Profit & Loss made by the business.
What is Bookkeeping?
Bookkeeping refers to the Process of Recording Business Transactions
Systematically in the Books of Accounts.
What are the Types of Accounts?
1. Personal Account
2. Real Account
3. Nominal Account
Personal Account
These accounts types are related to persons. These persons may be natural persons like
Raj’s account, Rajesh’s account, Ramesh’s account, Suresh’s account, etc.
These persons can also be artificial persons like partnership firms, companies,
bodies corporate, an association of persons, etc.
For example – Rajesh and Suresh Trading Co., Charitable trusts, XYZ Bank Ltd, C
company Ltd, etc.
Real Account
These account types are related to assets or properties. They are further classified as
Tangible Real accounts and Intangible Real accounts.
, Tangible Real Accounts
These include assets that have a physical existence and can be touched.
For example; Building A/c, Cash A/c, Stationery A/c, Inventory A/c, etc.
Intangible Real Accounts
These assets do not have any physical existence and cannot be touched. However, these
can be measured in terms of money and have value.
For Example: Goodwill, Patent, Copyright, Trademark, etc.
Nominal Account
These accounts types are related to income or gains and expenses or losses.
For example: – Rent A/c, Commission Received A/c, salary A/c, Wages A/c,
Conveyance A/c, etc.
What are the Golden Rules of Accounting?
Personal Account: Debit the Receiver, Credit the Giver
Real Account: Debit What Comes in, Credit What Goes Out
Nominal Account: Debit All the Expenses & Losses, Credit the All Income &
Gains.
What is Working Capital?
Working capital is the Difference between a Company’s Current Assets and
Current Liabilities. It represents a company's short-term financial health and its
ability to meet its short-term obligations.
, What is a Double Entry System of Bookkeeping?
It is a method of book keeping under this method, the priority is given for both the
aspect [Receiving & Giving Aspect]. It considers all Personal, Real & Nominal
Account Transactions. As per this system, for every debit, there will be an equal &
corresponding credit.
What is an Accounting Equation?
The Accounting Equation is Assets = Liabilities + Owner’s Equity. This
Fundamental Equation forms the basis of the Double-Entry Bookkeeping system.
What is Depreciation?
Depreciation is the gradual decrease in the value of a Tangiable fixed asset over
period of time is called Depreciation. It is shown in Debit Side of Profit & Loss
Account & also shown in Asset side of Balance sheet by reducing Fixed Assets.
What is an Account?
Account is a statement of consolidated picture of Transaction. It is a classified
statement of Assets, Liabilities, Income, Expenses etc. It is used to classify &
summarize financial transaction of a particular type.
What are the Types of Depreciation?
1. SLM
2. DBM
SLM Cost of an Asset- Residual Value/Useful Life
What are the Three Types of Financial Statements?
1. Income Statement
2. Balance Sheet
3. Cash Flow Statement
, What is the Difference Between Revenue & Income?
Revenue is the Total Amount of Money earned from the Sales of Goods or services.
Income, often referred to as Net Income or Net profit, is the amount left after all
expenses have been subtracted from revenue.
What is a Journal Entry?
Journal Entry is the process of Recording Business Transactions in the Financial
Books. Journal Entries are made in chronological order and follow the Double-
Entry Accounting System, meaning each will have both a Credit and a Debit
Column.
What is Trail Balance?
Trial Balance is a Statement of the collection of Ledger Accounts, which is used to
check the Arithmetical Accuracy in posting & Recording.
What is Ledger?
A ledger refers to a Book of Accounts that contains Different Accounts where
Records of Transactions Pertaining to a Specific Account is stored. It is the Principal
Book of Accounts that classifies Transactions Recorded in the Journal.
What is a Balance sheet?
It is a Financial Statement that shows the Financial Position of the Company Over a
Specific Point in Time. It is also called as Statement of Financial Position.
