Transaction
It is based on events happening. For accounting in business we will take only events happen related to business and records that in easy English language to understand all of them.
Journal
} It is the primary books of accounts.
} It is a chronological (date wise) record of the transactions.
Ledger
} Ledger is the secondary books of accounts.
} Transactions relating to a particular aspect are grouped under a unique head called as ‘ledger’.
} It is an analytical record of transactions.
Trial Balance
Trial Balance is the statement containing the closing balances of all the ledger accounts.
Final Accounts or Financial Statements
v Trading Account
} It shows the result of buying and selling of goods.
} If the selling price exceeds the cost price, it is Gross Profit.
} If the cost price exceeds the selling price, it is Gross Loss.
v Profit & Loss account
The Profit and Loss Account compares the income and expenses and finally reports the end result of the business.
v Balance Sheet
} Balance Sheet is a Statement which sets out the assets and liabilities of a firm as on a given date.
} We can ascertain the financial position of the business with the help of Balance Sheet.
v Differences between Profit and Loss A/C and Balance Sheet
It is based on events happening. For accounting in business we will take only events happen related to business and records that in easy English language to understand all of them.
Journal
} It is the primary books of accounts.
} It is a chronological (date wise) record of the transactions.
Ledger
} Ledger is the secondary books of accounts.
} Transactions relating to a particular aspect are grouped under a unique head called as ‘ledger’.
} It is an analytical record of transactions.
Trial Balance
Trial Balance is the statement containing the closing balances of all the ledger accounts.
Final Accounts or Financial Statements
v Trading Account
} It shows the result of buying and selling of goods.
} If the selling price exceeds the cost price, it is Gross Profit.
} If the cost price exceeds the selling price, it is Gross Loss.
v Profit & Loss account
The Profit and Loss Account compares the income and expenses and finally reports the end result of the business.
v Balance Sheet
} Balance Sheet is a Statement which sets out the assets and liabilities of a firm as on a given date.
} We can ascertain the financial position of the business with the help of Balance Sheet.
v Differences between Profit and Loss A/C and Balance Sheet
Profit and Loss Account
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Balance Sheet
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· It relates to the operations for the entire financial period.
· It is made up of nominal accounts.
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· It relates to the status as on a given date.
· It is made up of personal accounts and real accounts.
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Diagrams – Accounting Cycles
Accounting systems (Input, Process and output)
Tit Bits:-
Kautilya’s Artha Shasthra explains about the art of book keeping in a separate Chapter.
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