![]() ![]() While all of these terms are independent of each other, they are always confused to be one and the same. Very useful: Generally Accepted Principles of Accounting for SSC! Understanding Bookkeeping, Accounting, & Accountancyīookkeeping, Accounting, and Accountancy are commonly used important terms in the world of accounting. These accounts are related to revenues, gains, losses, and expenses of the firm.ĭebit All Expenses and Losses, Credit all Incomes and Gains.It allows to reset the balances to zero and start the new accounting year afresh.An account in which all the accounting transactions are recorded for an accounting year by transferring balances to permanent accounts at the end of the accounting year.It is a general ledger account related to persons, whether individuals or artificial persons like companies.These accounts usually involve assets, liabilities, and equity.ĭebit what Comes In, Credit what Goes Out.The carried forward amounts then become the opening balances of the next year.The closing balance is retained and carried forward at the year end.The golden rules of accounting is one of the most important concepts not only for exams but for practical knowledge as well. Read here: Entry Concepts of Accounting notes! Golden Rules of Accounting In order to understand accounting, it is necessary to understand all the aspects of accounting. Hence, people who are directly involved in the business are expected to be thoroughly familiar with a good understanding of the basics of accounting. The American Institute of Certified Public Accountants (AICPA) defines accounting as the “art of recording, classifying, and summarizing in a significant manner and in terms of money, transactions, and events, which are, in part at least, of financial character, and interpreting the results thereof.”Īccounting or maintaining accounting records is undertaken by all kinds of businesses in today’s world. Accounting or preparing of accounts is primarily undertaken to help the management of a company to take effective decisions with the help of financial statements of the business. Let’s understand the fundamentals and basics of accounting by first looking at the meaning and definition of accounting.Īlso check: Financial Accounting for SSC CGL study material! Definition of AccountingĪccounting is defined as the process of reporting, recording, interpreting, and summarizing financial transactions of any business entity. The following Basics of Accounting theory notes are prepared by Testbook experts with an intent to guide accounting aspirants with useful and most relevant information for exam preparation.Īccounting aspirants are advised to bookmark this page and read through the following Basics of Accounting study notes before gearing up for Bookkeeping or Accounting exams. ![]()
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