BASIC ACCOUNTING : MEANING - CYCLE - FUNCTIONS - NEEDS

ACCOUNTING

Accounting  is  the  Art  of  Recording,  Classifying,  Summarizing,  Interpreting  financial  events  and  Information  to  facilitate  decision  making.

ACCOUNTING  CYCLE  WITH  EXAMPLES

1 - Analyzing  and  recording  transactions  via  JOURNAL ENTRY
2 - posting  journal  entries  to  LEDGER  ACCOUNTS
3 - preparing  UNADJUSTED  TRIAL  BALANCE
4 - preparing  ADJUSTING  ENTRIES  at  the  end  of  period
5 - preparing  ADJUSTED  TRIAL  BALANCE
6 - preparing  FINANCIAL  STATEMENTS
7 - closing  temporary  accounts  via  CLOSING ENTRIES
8 - preparing  POST - CLOSING  TRIAL  BALANCE

FUNCTIONS  OF  BOOK  KEEPER

     Recording  the  daily  transactions  in  the  books  of  original  entry

      Posting  the  entries  in  the  ledger

     Taking  the  total  of  different  accounts  in  the  ledger

     Balancing  the  ledgers

NEED  FOR  ACCOUNTING

         
A  person  running  a  business  needs  to  know:-
What  he  owns?( what is his assets )
What  he  owes?( what is his liability )
Business  in  profit  and  loss?
Financial  position:-  Will  he  be  able  to  meet  commitments  in  near  future?

General Ledger is delivered with the five major accounting categories built right in.

(We refer to them as Accounts) They are:
· Assets (what you own),

· Liabilities (what you owe),

· Equity (the value of your business),

· Revenue (money you bring in), and

· Expenses (money you pay out)