Definition of accounting:
“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 a financial character and interpreting the results there of”.

Book Keeping:
It is mainly concerned with recording of financial data relating to the business operations in a significant and orderly manner.

Concepts of accounting:

A. separate entity concept

B. going concern concept

C. money measurement concept

D. cost concept

E. dual aspect concept

F. accounting period concept

G. periodic matching of costs and revenue concept

H. realization concept.

Systems of book keeping :

A. single entry system

B. double entry system

Systems of accounting :

A. cash system accounting

B. mercantile system of accounting.

Principles of accounting :

a. Personal a/c : debit the receiver

Credit the giver

b. Real a/c : debit what comes in

credit what goes out

c. Nominal a/c : debit all expenses and losses

credit all incomes and gains

Meaning of journal:
Iournal means chronological record of transactions.

Meaning of ledger:
Ledger is a set of accounts. It contains all accounts of the business enterprise whether real, nominal, personal.

Posting:
It means transferring the debit and credit items from the journal to their respective accounts in the ledger.

Trial balance:
Trial balance is a statement containing the various ledger balances on a particular date.

Credit note:
When customer returns the goods back, Get credit for the value of the goods returned. A credit note is sent to him intimating that his a/c has been credited with the value of the goods returned.

Debit note:
When the goods are returned to the supplier, a debit note is sent to him indicating that his a/c has been debited with the amount mentioned in the debit note.

Contra entry:
Accounting entry is recorded on both the debit and credit side of the cashbook is known as the contra entry.

Petty cash book:
Is maintained by business to record petty cash expenses of the business, such as postage, cartage, stationery, etc.

Promisory note:
An instrument in writing containing an unconditional undertaking signed by the maker, to pay certain sum of money only to or to the order of a certain person or to the barer of the instrument.

Cheque:
A bill of exchange drawn on a specified banker and payable on demand.

Stale Cheque:
Means the cheque has a validity of six months, After that the cheque is called as stale cheque. (Which is not valid).

Bank reconciliation statement:
It is a statement reconciling the balance as shown by the bank passbook and the balance as shown by the Cash Book.

Objectives:
To know the difference & pass necessary correcting, adjusting entries in the books.