Accounting cycle

Accounting Cycle:

Accounting cycle is a complete sequence beginning with recording of transactions and ending with the preparation of final account.

The followings are some of importar steps involved in accounting cycle :

a) Recording balances of previous year balance sheet.

b) Recording of current transactions.

c) Balancing and Preparation of trial balance. d) Preparation of final account.

Is Accounting Science or an Art's?

'Art' denotes the method of doing work in a systematic manner to attain specified objectives.

Accounting is an art as the book: of accounts are maintained on a system which is based on certain assumptions anc is subject to some limitations.

'Science‘ is a systematic body of knowledge based on certain principles which are universally acceptable.The principles of science are based upon experiments, observations, collection of data and its interpretation.

Accounting is a science because the items which are debited and credited are based on certain definite principles.

From the above,it may be concluded that accounting is both a science as well as an art.

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Transport layer

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Transactions

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Rules for debit & credit

SYSTEM OF RECORDING (a) Single entry system : Under this system both debit and credit aspects of transaction may not be recorded. In this system only cash and personal accounts are maintained. It is known as Accounts from incomplete records. (b) Double entry system : Double entry system is the system under which both debit and credit aspects of transactions are recorded. It is an accounting system where every debit has a corresponding credit and vice-versa is applied. RULES OF DOUBLE ENTRY SYSTEM Recording transactions under Double Entry System, there are three types of accounts called : (1) Personal accounts : Accounts relating to persons are called personal accounts. Theses person may be customers, suppliers, money lenders, owner and banks. (2) Real accounts : Accounts relating to tangible and intangible properties and possession are known as real accounts. (for e.g. cash, goods, bills receivables etc are tangible...

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