What are the objectives of accounting

1. Maintenance of records of business transaction firs record, then pay, records in useful for decision making etc.

2. Calculation of profit and loss.

3. Depiction of financial position

4. Provide information to the users

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Distinction between Financial accounting and Cost and Management accounting

S.No Financial accounting Cost and Management accounting 1 It is primarily for external purpose It is primarily for internal purpose 2 It provides information about the financial performance and financial position of the business It provides information of ascertainment of cost to control cost and for decision making about the cost. 3 It classified records, presents and interprets transaction in terms of money It classifies, records, presents and interprets in a significant manner the material, labour and overheads cost 4 It shows the profit or loss of the organization It provides the details of cost and profit of each product, process etc 5 Financial statements are prepared for a definite period, usually a year Its reports and statements are prepared as and when required. ...

Define Ledger. Also write down the list of “sub-division of Ledger”

The ledger is a book which contains a classified record of all similar transactions of the business, brought from the journal or from books of original entry. Note: the record kept in ledger is called “classified record” or “condensed record”. Types of ledger Ledger accounts can be prepared in the following two ways: 1- “T” accounts form/Traditional/Standard/Conventional form (British) 2- Running Balance Form/Modern Form (American) Different names of ledger Ø Secondary book Ø Book of final entry Note: ledger is King of all books of accounts. Sub-division of Ledger: 1. Debtors’ Ledger or customers’ Ledger or sales Ledger. 2. Creditors’ Ledger or Suppliers’ Ledger or purchase Ledger 3. General Ledger or nominal Ledger.

Define the term Balance, Balancing Debit balance and Credit Balance

The difference between the totals of two sides of an account is its balance. The balance is written of the lesser side to make the two sides equal. For example: Total of Dr. Side Rs.20000 Total of Cr. Side Rs.15000 Balance Rs.5000 1. Balancing The process of equalizing the two sides of an account is known as balancing. 2. Debit balance While finding the balance if total of debit side is greater than that of credit side, the difference is named as debit balance. For example: Total of Dr. Side of an account Rs.80000 Total of Cr. Side of an account Rs.70000 Balance (Debit balance) Rs.10000 3. Credit balance While finding the balance if total of credit side is greater than that of debit side, the difference is named as credit balance. For example: Total of Dr. Side of an account Rs.35000 Total of Cr. Side of an account Rs.50000 Balance (Credit Balance) Rs.15000

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