Introduction to Accounting

The basic terms

Two kinds of expenditure

• revenue expenditure — its benefit is used up within the year (wages, repairs, carriage on goods)
• capital expenditure — its benefit lasts several years (buying a machine, building a shop, the cost of installing a machine)

Two kinds of discount

• trade discount — a reduction in the list price, given at the time of sale to traders; it is never recorded in the books
• cash discount — allowed for prompt payment; it is recorded, as a loss to the seller and a gain to the buyer

The trap: trade discount never enters the books, while cash discount always does — the invoice is simply written at the reduced price.

मूल शब्द

Accounting principles — the theory base

The rules on which all accounts are built are called Generally Accepted Accounting Principles (GAAP).

Bases of accounting — the cash basis records only cash received and paid; the accrual basis records income when earned and expenses when incurred, whether or not cash has moved. Businesses use the accrual basis.

Accounting standards — the Accounting Standards Board of the ICAI was set up in 1977; Ind AS, converged with international standards (IFRS), apply to larger companies in phases from 2016.

The trap: conservatism is why closing stock is valued at cost or market price, whichever is lower — an unrealised gain is ignored, but an expected loss is recorded.

लेखांकन सिद्धांत — सैद्धांतिक आधार

जिन नियमों पर सारे खाते बनते हैं, उन्हें सामान्यतः स्वीकृत लेखांकन सिद्धांत (GAAP) कहते हैं।

The accounting equation — a worked case from Darbhanga

> Assets = Liabilities + Capital, or Capital = Assets − Liabilities

Every transaction changes at least two items, but the equation always balances — this is the dual aspect principle at work.

Worked example — Meena opens a stationery shop in Darbhanga:

At every step, assets equal liabilities plus capital.

What changes capital — capital rises with fresh capital brought in and with profit (revenue above expense); it falls with drawings and with losses and expenses. So:

> closing capital = opening capital + additional capital + profit − drawings

Three kinds of effect

• both sides rise — buying goods on credit (stock up, creditors up)
• both sides fall — paying a creditor (cash down, creditors down)
• one asset up, another down — buying furniture for cash; the totals do not change

The trap: drawings reduce capital, not expenses — they are not a business cost, so they never appear in the profit and loss account.

लेखांकन समीकरण — दरभंगा से एक हल किया मामला

> परिसंपत्तियाँ = दायित्व + पूँजी, या पूँजी = परिसंपत्तियाँ − दायित्व

हर लेन-देन कम से कम दो मदें बदलता है, पर समीकरण सदा संतुलित रहता है — यही द्विपक्षीय सिद्धांत का काम है।

हल किया उदाहरण — मीना दरभंगा में स्टेशनरी की दुकान खोलती है:

Points to Remember

• AICPA 1941 — recording, classifying, summarising, interpreting · Luca Pacioli, 1494 — double entry, father of accounting
• book-keeping — recording only · accounting — also analysis and interpretation · accountancy — the whole body of knowledge
• internal and external users · reliability, relevance, understandability, comparability
• capital — a liability to the owner · drawings reduce capital
• assets and liabilities — non-current and current · revenue, expense, gain
• revenue expenditure — benefit within the year · capital expenditure — benefit over years
• trade discount never recorded · cash discount recorded
• business entity, money measurement, going concern, accounting period, historical cost, dual aspect
• revenue recognition — when earned · matching · full disclosure · consistency · materiality · objectivity
• conservatism — no anticipated profit, provide for all losses; stock at cost or market, whichever is lower
• cash basis vs accrual basis
• ICAI Accounting Standards Board 1977 · Ind AS from 2016
• A = L + C · Darbhanga shop — every step balances at ₹1,30,000 to ₹1,35,000
• closing capital = opening + additional + profit − drawings
• Exam tip: for any transaction in an equation question, name the two items it touches before writing a number — if you can name only one, you have missed an effect

स्मरणीय बिंदु

• AICPA 1941 — अभिलेखन, वर्गीकरण, सारांश, व्याख्या · लूका पैसियोली, 1494 — दोहरा लेखा, लेखांकन के जनक
• बहीखाता — केवल अभिलेखन · लेखांकन — विश्लेषण और व्याख्या भी · लेखाशास्त्र — संपूर्ण ज्ञान
• आंतरिक और बाह्य उपयोगकर्ता · विश्वसनीयता, प्रासंगिकता, बोधगम्यता, तुलनीयता
• पूँजी — स्वामी के प्रति दायित्व · आहरण पूँजी घटाता है
• परिसंपत्तियाँ और दायित्व — ग़ैर-चालू और चालू · आगम, व्यय, अभिलाभ
• आगम व्यय — वर्ष के भीतर लाभ · पूँजीगत व्यय — वर्षों तक लाभ
• व्यापारिक छूट कभी नहीं लिखी जाती · नक़द छूट लिखी जाती है
• व्यावसायिक इकाई, मुद्रा माप, चालू व्यवसाय, लेखा अवधि, ऐतिहासिक लागत, द्विपक्षीय
• आगम मान्यता — अर्जित होने पर · मिलान · पूर्ण प्रकटीकरण · एकरूपता · सारता · वस्तुनिष्ठता
• रूढ़िवादिता — लाभ का पूर्वानुमान नहीं, सब हानियों का प्रावधान; स्टॉक लागत या बाज़ार, जो कम हो
• नक़द आधार बनाम उपार्जन आधार
• ICAI लेखांकन मानक बोर्ड 1977 · Ind AS 2016 से
• A = L + C · दरभंगा की दुकान — हर चरण ₹1,30,000 से ₹1,35,000 पर संतुलित
• अंतिम पूँजी = प्रारंभिक + अतिरिक्त + लाभ − आहरण
• परीक्षा टिप: समीकरण प्रश्न में हर लेन-देन के लिए कोई संख्या लिखने से पहले वे दो मदें बताइए जिन्हें वह छूता है — यदि केवल एक बता सकें, तो आपसे एक प्रभाव छूट गया है