Principles of Accounting

Principles of Accounting   

By Prof. Wasif Naseem 
Define Accountancy.
It covers the entire body of theory and practice. E.g. Book-keeping, costing etc.
What is meant by Accounting Period?
It is a span of rime for which a business generally prepares its financial statements for knowing of profit or loss.
 Doscribe Cost Accounting.
The main objective of cost accounting os to determine the cost of goods manufactured or produced by the budiness.
Who is proprietor?
The owner of the business who invests capital in the business.
What is meant by Assets?
These are the properties and processions of a business both tangible and intangible.
What is meant by Liabilities?
The debts and obligations of a business are called liabilities.
What is meant by Capital?
It is the source of funds provided by the owner of the business.
What is meant by purchases?
The goods bought for resale is known as purchases. These goods are also known as merchandise.
What is meant by Inventory?
Goods or merchandise on hand, that is goods remaining unsold is called stock or inventory.
Who are Creditors/Account Payable?
The persons to whom the goods are been purchased on credit and to whom the amount are to be paid in future.
What is meant by Drawings?
The amount of cash or goods taken by the owner from the business for personal use is called drawings.
What is meant by Separate Entity concept?
 Accounting to this concept, business is treated as a separate entity from its owners.
What is meant by Matching Concept?
The concept of offsetting expenses against revenue on the basis of “Cause and effect” is called the Matching Concept.
What is meant by Transaction?
A business event which can be measured in terms of money and which must be recorded in books of account is called a Transaction.
What is meant by Credit Transaction?
If the value of a transaction is met in cash immediately it is called Cash Transaction.
What is meant by Paper Transaction?
When there is no question of meeting the value of a transaction, it is regarded as a paper transaction.
What is meant by Non Monetary Events?
Events which are not related with money which do not change the financial position of a position of a person are known as “Non Monetary Events”.
Explain “Accounting Equation”.
The expression of the equality of an entity’s assets with the claims against them is referred to as the accounting equation.
What is Double Entry System?
A system in which sometimes both aspects of a transaction are recorded is called double entry system.
Explain “Nominal Account”.
Accounts which are related with expenses, losses and gains are known as nominal accounts.
What do you meant by Ledger Entry?
Recording of a transaction in journal to the concerned account in ledger is called ledger entry. Also called Ledger Posting.