ACCOUNTING PPT BHUPENDER PARTAP contains class 11 accounts

accounts class 11

1. Basic Understanding of
Accounting

2. What is Accounting?
•Accountingistheprocessofrecording,
classifying,analysing&interpretingthebusiness
transactionswhichcanbemeasuredintermsof
money.
•Thus,accountingkeepsapermanentrecordof
allbusinesstransactions.

3. What is Accounting?
•Accounting helps in knowing the true financial
position of the business.
•Accountingprovidesallvalidfinancial
informationtoowners,banks,customers,
governmentandotheroutsidepartiestomake
correctdecisions.

4. Business Transactions
Journal Entries
Ledger Accounts
Trial Balance
Final Accounts
Trading
Account
Profit & Loss
A/c
Balance
Sheet Process of Accounting

5. Basic Terms of Accounting
•Assets:
▫Assets are resources owned and controlled by the
business enterprise.
▫Eg: land, machinery, furniture, cash, bank
balance, stock, etc
•Types of assets:
▫Fixed Assets
▫Current Assets
▫Investments

6. Basic Terms
•FixedAssets:
▫Theseareassetspurchasedforalongperiodi.e.more
than1year.
▫Eg:land,building,plantandmachinery,vehicles,
furnitureandofficeequipments,etc.
▫Theseassetsformthebasicinfrastructureofthe
company.
▫Theseassetsarenotheldforsale.

7. Basic Terms
•CurrentAssets
▫Theseassetsarerequiredtocarryonthedaytoday
businessactivities.
▫Eg:
Inventories[rawmaterial,workinprogress&finished
goods]
Cashbalance
Bankbalance
Debtors
Receivables

8. Basic Terms
•Investments:
▫When a business enterprise puts its surplus funds
in shares or bonds of governments, it is known as
investments.
▫Investments generate income in form of interest,
dividends, etc.
▫They generate gains or loss when sold.

9. Basic Terms
•Liabilities:
▫Liabilitiesareobligationsofthebusinessenterprise,
payabletooutsiders&toownersofthebusiness.
▫Eg:
Owner’scapital
Borrowings
Creditors
Payables

10. Basic Terms
•Types of liabilities;
•Long term liabilities:
▫Any liability payable after a period exceeding 1
year.
▫Eg: owner’s capital, bank loans for more than a
year

11. Basic Terms
•Current Liabilities
▫Any liability payable within a year or liabilities
incurred in day to day course of business.
▫Eg: creditors, payables, bank O.D or short term
credit, etc.

12. Balance Sheet
Liabilities Amt Assets Amt
Owner’s Capital - Fixed Assets -
- -
- -
- Current Assets -
Outside Liabilities - -
- -
- Investments -
- -
- -
Total liabilities -- Total assets --

13. Financial Position
•Total Assets = Total Liabilities
or
•Assets –Outside Liabilities = Owner’s Capital
•Financial position is said to be stronger if the
assets are more than outside liabilities.

14. Basic Terms
•Income:
▫Business activities generate various types of revenues and
incomes.
▫Thus income is what the firms earns
▫Eg:
Income from sales of goods,
Fees from sale of services,
Interest and dividends on investments,
Cash discounts,
Rent received,
Gain from sale of investment

15. Basic Terms
•Expense:
▫Many expenses are incurred in the course of
business activities.
▫Eg:
Raw material purchased,
Wages and salaries,
Power and fuel,
Office rent,
Advertisement expense,
Loss on sale of investments

16. Financial Performance
•Excess of income over expenses is known as net
profit.
•Excess of expenses over income is known as net
loss.
•Every business strives to earn profits.

17. Financial Performance
•Net profit is added and net loss is deducted from
owner’s capital.
Assets-Outside Liabilities = Owner’s capital
= Capital + Net Profit
= Capital –Drawings
+ Income -Expenses

18. Accounting Process or Cycle
1.) Analysis of business transactions
2.) Documentation
3.) Recording
4.) Classifying
5.) Summarizing
6.) Bifurcating

19. Business Transactions
Journal Entries
Ledger Accounts
Trial Balance
Final Accounts
Trading
Account
Profit & Loss
A/c
Balance
Sheet
Documentation &
Recording
Classifying
Summarizing
Bifurcating

20. What is an Account?
•Anaccountisadevicetorecordbusiness
transactions.
•Therearevariousaccountspreparedforeach
asset,liability,incomeandexpenses.
•Anaccounthastwosides:

21. Dr Cr
Particulars AmountParticulars Amount

22. What is an Account?
•Theleftsideofanaccountisknownasdebit
(Dr).
•Therightsideofanaccountisknownascredit
(Cr).
•Inanyaccount,ononesideincreaseisrecorded
andonothersidethedecreaseintheitemis
recorded.

23. Types of Accounts
•Nominal / temporary accounts
▫The accounts related to all incomes and expenses.
▫Eg: Interest A/c, Rent A/c, Salary A/c, Etc.
•Personal accounts
▫Accounts of natural persons like Mr. Ramesh, Mr. Suresh, etc.
▫Accounts of legal persons like companies, banks, government,
etc.
▫These persons are generally the buyers, sellers, lenders,
investors, etc. associated with the company.
▫In short they are debtors or creditors.

24. Types of Accounts
•Real / Permanent accounts
▫These are accounts of various assets and goods.
▫Eg: Buildings A/c, Machinery A/c, debtors’ A/c,
purchase A/c, Sales A/c.

25. What is Debit and Credit?
•Debit is the left hand side of an A/c.
•Thus amounts written on the left side of an
account are called debits.
•Credit is the right side of an A/c.
•Thus amounts written on the right side of an
account are called credits.

26. Debit Balance & Credit Balance
•Every A/c has a debit balance or a credit balance.
•Debit Balance:
▫An account has a debit balance when the total of debit side
is more than the total of credit side.
▫All assets and expenses have a debit balance.
▫For assets and expenses, an increase is written on debit side
and a decrease on credit side.

27. Debit Balance & Credit Balance
•Credit Balance
▫When the total of credit side is more than the total
of debit side, it is known as a credit balance.
▫All liabilities and incomes have a credit balance.
▫For liabilities and incomes, an increase is written
on credit side and decrease is written on debit
side.

28. MADE BY
•BHUPENDER PARTAP
•XI COMMERCE A
•ROLL NO.12