Accounting Procedure Terms

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Accounting Procedure Terms Suppose we Purchase Laptop from HP Computers HP Computers Bill To -My Company This Is Laptop Model No HP232 50000 Source Vocuher Total 50000 (invoice) I will Pass these entry Laptop A/c Dr There are 2 Accounts To HP Computers A/c Laptop and HP Computers One Account is Debited (Dr) Other Account is Credited (Cr) We take print out of this Entry This is called Accounting voucher I On this basis We prepare Ledgers Lapotp A/c Particulars Amount Particulars Amount HP 50000 Closing Balance 50000 Debit shown on left side HP A/c Particulars Amt Particulars Amt Closing Balance 50000 Laptop 50000 Credit shown on Right side On this basis We prepare Financial Statements Profit and Loss Expense Amt Income Amt Balance Sheet Liability Amt Assets Amt HP 50000 Laptop 50000 Note We will learn about them in detail in future classes SUMMARY What is Account It is a record of transaction under particular head Example Machine Purchases if shown under Machinery Account whose head is fixed assets Electricity Bill is shown under Electricity Account whose head is Expenses What are Books of Account Books of accounts are books in which transactions are recorded or posted Example Journal or Ledger What are Final Accounts or Final Statements They are the statements prepared at the end of accounting period They show the financial posiiton and performance of a business Example Profit and Loss Balance sheet What is Journal entry It is the first record of transaction in books of accounts One account is debited,other account is credited What is Voucher It is an evidence of transaction it is of Two types Source Voucher - It is the original bank statement or invoice received Accounting Voucher - It is the entry passed by accounts department where one account is debited and other is credited to record the transacton We will learn about these in details in next chapters