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Financial Accounting: Types of Accounts

Financial accounting involves recording, summarizing, and reporting business transactions relating to financial activities. It is an art of recording, classifying, and summarizing transactions and events in a meaningful manner in terms of money. Luca Pacioli is considered the father of accounting for documenting the early accounting principles in the 15th century. Accounting helps understand a business's profit or loss by summarizing transactions relating to a person, firm, or industry. Transactions refer to the transfer of property between individuals or entities, which can be in the form of cash or credit.

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Sunny Patel
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45 views

Financial Accounting: Types of Accounts

Financial accounting involves recording, summarizing, and reporting business transactions relating to financial activities. It is an art of recording, classifying, and summarizing transactions and events in a meaningful manner in terms of money. Luca Pacioli is considered the father of accounting for documenting the early accounting principles in the 15th century. Accounting helps understand a business's profit or loss by summarizing transactions relating to a person, firm, or industry. Transactions refer to the transfer of property between individuals or entities, which can be in the form of cash or credit.

Uploaded by

Sunny Patel
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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FINANCIAL ACCOUNTING

Que what is financial accounting ?


Ans It is a specific branch of accounting involving a process of recording
,summarizing the business transaction relating to financial activities .
Que who is Luca Pacioli ?
Ans Luca Pacioli is the father of accounting .
Que what is book keeping ?
Ans book keeping means keeping the books in a systematic way .
Que what is accountancy ?
Ans accountancy is the body of the knowledge . it is an adjective which says
how to do accounts and what principle we have to adopt .
Que what is accounting ?
Ans It is an art of recording ,classifying ,summarizing in a significant manner
in terms of money , transaction and event which are impart at least of a financial
character and interpreting the result thereof .
Que what tis an account ?
Ans summarized business transaction relating to a person, firm or industry to
know the profit or loss
Que what is transaction ?
Ans transfer of property from one person to another person.
There are two types of transaction
1 cash
2 credit

TYPES OF ACCOUNTS
1 PERSONAL ACCOUNTS
Accounts which are related to person or institutions with whom business has
dealing .
BANK IS A PERSONAL ACCOUNT
Ex:- ram’s a/c , capital /ac, loan a/c, bank overdraft a/c, drawing a/c.
2 REAL ACCOUNTS
Account related to properties ( ASSETS ).
CASH IS A REAL ACCOUNT
EX:- furniture a/c, building a/c, sales return a/c, purchase return a/c, stock
a/c .

3 NOMINAL ACCOUNTS
Account related to all income and expense of the business .
BAD DEBT IS A NOMINAL ACCOUNT
EX:- salary , wages , discount , dividend

GOLDEN RULES OF ACCOUNTANCY


1 PERSONAL ACCOUNTS

DEBIT THE RECEIVER


CREDIT THE GIVER

2 REAL ACCOUNTS

DEDBIT WHAT COMES IN


CREDIT WHAT GOES OUT

3 NOMINAL ACCOUNTS
DEBIT ALL EXPENSES AND LOSSES
CREDIT ALL INCOME AND GAINS

BASIC TERMS
1 Debtors
2 creditors
3 capital
4 drawings
5 assets
6 fixed assets
7 current assets
8 liabilities
9 long term liabilities
10 discount

ACCOUNTING CONCEPTS
1. Business entity concept
2. Money measurement concept
3. Going concern concept
4. Accounting period concept
5. Cost concept
6. Matching concept
7. Realization concept
8. Realization concept
9. Dual aspect concept
10. Accrual concept

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