Accounting -Basics of accounting (Rules of Accounting)

                                    

Scope of Accounting

Accounting is essential in every field of life, from a small business to a company. Accounting is important for government or semi government                institutions as well.

Objectives of Accounting

The main objectives of accounting are following:
1  To maintain proper records of transaction and other activities related to expense in a business.
2 To keep eyes on every business assets.
3 To ascertain the financial position of a business.
4 To help the management to make decision with the help of historical data of accounting.
5 To help in designing business policies for short and long terms.

Account: A record in ledger, regarding increase or decrease of items.


Account payable:  Parties from which goods purchased on the basis of credit.


Account Receivable:  Parties to whom goods sold on the basis of credit.


Liabilities:  Amount have to be paid in future.


purchases:  It means purchase of merchandise for purpose of resale.


Revenues:  Income from sale of merchandise or services.


Accounting cycle:
The sequence of accounting procedures constitutes a complete accounting process, which is repeated in the same order in each accounting period.
The regular repetition of this standardized set of procedure is referred ta as "Accounting Cycle".
                           

        
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