Need for Accounting
An enterprise should manage its affairs in such a way as will enable it to receive more than it spends. Otherwise, it will have to meet expenses from te original amount invested by the owner for staring the business.
"Thus it can be said that profit increases the capital and loss reduces it."
Accounting, supplies the following information to businessmen :-
1. The types and amount of earnings.
2. The types and amount of expenses.
3. The Amount of loss, if any,
4. The nature and value of liabilities.
5. The nature and value of assests possessed by the business.
Definition of Accounting
" The art of recording, classifying and summarizing in terms of money transactions and events of financial character and interpreting the result thereof."
Terms or Users of Accounting in Tally
Owner :- Owner(S) refers to a person or group of persons who have supplied capital for running the business.
Investors:- Prospective investors would like to know about the part performance of the business enterprises before making investment in the concern.
Creditors :- Who is ever is extending credit or loan to a business enterprise; would like to have information can be obtained by analyzing and interpreting the financial statements of the business enterprise.
Asset :-Assets are economic resources which are owned by a business.or in other words Assets are things of value owned by a business.Asset may have definite physical character for example, building machinery etc.
Fixed Asset :- These type asset are purchased for longer run of business for example : Land an building, Machinery,
Current Asset :-Assets That are held for a short period and are meant for converting in to cash. for example cash, stock, debtors etc.
Capital:- Capital refers to the amount invested by the owner of the business. it is also called Owner’s equity
Capital= Total Asset – Total Liabilities. 
Debtors :-Debtor is a person who owes money to the business. Debtor is the customer to whom the goods/services are sold on credit. A group of debtors is called Sundry Debtors.
Creditors:- Creditor is a person to whom business owes money or creditor is any person who gives credit to the business.A group of creditors is called Sundry Creditors.
Revenue:- It refers income of recurring nature from any source related to business.
Entry :- Recording of Transaction in a books of accounts is called entry.
Expense:- Expenses are cost incurred for generating revenue. examples of expenses are Transportation,salary to employee,Stationery Expense,Traveling. Expense are of two type direct expense and indirect expenses.
Purchase :- Purchase is considered as the main expenses of a business. Purchase of goods for selling purposes to generate income is called purchase.Purchase of stationery, assets will not comes under the term “purchase”. Purchases may be cash purchase or credit purchases.
Purchase Return :- Goods once purchased , returned to supplier due to damage, inferior quality etc. Purchases return goes to purchase group and opposite entry of purchase.
Sales:- Sales is the main income source of the business,a business generates income through sales. Goods sold for the purpose of making profit is called sales.
Sales Return:-Goods once sold returned by customer due to damage, inferior quality etc. Sales return is just opposite of sale.
Bank:- Every Company have a bank account so that every transaction related to bank by cheques .
Direct Expense/Income :- Direct Expense means those expense which is related directly to our business raw material to finished goods all expense come it. Direct Income means those income related to directly our products like Sales but in Tally sales group so sales always under that.
Duties & Taxes :- All types of Taxes and Duties are comes under this group. Company and individual person paid to taxes and cess to govt. that ledger comes it.
Investment :- Investment means money invested in many scheme for future profits and earn money.like :- FD, short-term investment , long-term investments etc.
Debit :- Receiving aspect of a transaction is called debit or Dr. in short
Credit :- Giving aspect of a transaction is called credit or Cr. in Short.
Drawing :- Drawing are the amount withdrawn by the business man from his business for his personal and domestic purpose use.
Ledger :- The book of final entry where accounts of all expenses , income, loss, assests and liabilities are records.
Trial Balance :- It is a statement of all the ledger a/c balances prepared at the end of particular period to verify the accuracy of the entries made in books of accounts.
Profit :- Excess of credit side over debit side.
Loss :- When expenses over income means debit side over credit side.
Profit/loss :- It is prepared to ascertain actual profit or loss of the business in the financial year.
Trading Accounts :- In the ending of financial year business transaction records in first trading account that they know what is gross profit/loss.
Balance sheet :- To ascertain the financial position of the business. It is a statement of assets and liabilities. and Balance sheet help to know that many financial activities do or not.
see how to create a company in Tally erp 9 click here :-
See how to make Ledger click here :
No comments:
Post a Comment