CA Foundation Fundamentals of Accounting Notes
Fundamentals of Accounting Notes : Takshila Learning, engaged in providing various Online Training courses for different discipline of education and life science. We have lots of professional courses for the students pursuing professional program offered by Indian as well as International Institutes in India and one of the course in this category is CA Online Classes.
Under CA Course, today we will discuss one of the important subject in CA-CPT i.e Fundamentals of Accounting.
Here we are going to discuss on Fundamentals of Accounting– Basics from a Laymen Point of view.
Let us Start :
Accounting is noting down the business transactions
- Accounting is done for a business entity.
- Transactions are anything that can be measurable in Financial terms/quantitative terms e.g. expenses, incomes, assets, liabilities.
(There is a Money measurement concept behind it)
- Transactions are noted down to track the business & keep an evidence of the transactions.
Definition : Accounting is an art of recording, classifying and summarizing the transactions and events which are of financial nature followed by interpretation of the results there of.
We are discussing the Fundamentals of Accounting Notes , Now, let us do the analysis of this definition.
- Accounting is an art :
- Art is everything which requires a special set of skills, knowledge .
- Which is performed/done in a special manner, for example Journal entries are passed in Accounts.
- An Event is the outcome of the transactions, For example Closing Stock, Profit & Loss.
- Accounting is a process (Accounting cycle) which involves steps viz,
- Identification of financial transactions and events.
- Measuring the identified transactions.
- Recording of Transactions (Journalizing), done in a book called “ Journal” – a Book of original entry.
- The recorded transactions are further Classified in Ledger (Posting) : Compiling all information related to a specific account. After the recording of Transactions, further classification & summarization is done for Interested users of Accounting.
- In the Summarization stage – A summary of all expenses, incomes , assets & liabilities in brief is presented at the end of the Accounting period.
- A list of all accounts is presented in Trial Balance.
- Trial Balance is further segregated into Final Accounts.
- Periodical Result of the business is presented in Trading & P&L Account – Summary of all expenses, losses, incomes & gains.
- Accumulated Financial position of the business is presented in Balance Sheet.
The above discussed process is the complete Cycle of Accounting .We hope you would like this discussion on “ Fundamentals of Accounting Notes”
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