Accountancy is related to making of final accounts and preparing of financial reports which are useful for business, debtors,

creditors, tax authorities and employees. In the British, Professional accountants have made the Consultative Committee of Accountancy Bodies. CCAB is now a limited company with six members: Definition of Accounting Concepts Accounting concepts means flow of thoughts of all wise accounting professionals of this world . It can also be interpreted as "process of understanding of accounting to make sense of universal acceptability. " In other words accounting concepts some normal rules which can be changed but which has come in to existence with so many hard work of accountants in past. These are basics thoughts of an accountant Types of Accounting Concepts 1st concept Separate entity concept Under this concept the entity of business man is separate from its business. The main reason is that owner is just giver of capital but if he withdraws without any restriction or any control. Business can dissolve within two days. So every transaction related to withdrawing money from business must be recorded by accountant. So this concept gives us basic knowledge while we are recording transactions in our books that we must know that concern has its own entity and our duty is to record every transaction even it is related to owner or not . Businessman's capital is also the liability of business and if he withdraw for personal use , it is known as drawing and it is deducted from his capital . So under this concept , accountant records every cash , goods and usage of fixed assets for personal use of businessman and while he makes balance sheet all these expenses are deducted from businessman's capital .

2nd Concept Cost Concept Under this concept we record all assets on their cost not in market value. This concept is very useful for stable recording of accounting .Because if all transaction recording will start on their market value then it create tension to accountant. Because nobody can say what will the price of your fixed asset in next day. So record all assets on their original cost. But time to time depreciation is deducted from this . But we never record all assets on their market price . 3rd Concept Matching Concept When I was doing graduate from my college, my respected teacher taught me that matching concept is very important for an accountant. It means we will compare all expenses with the incomes of business. After matching or compare, it will provide you the real result of performance of business. We can say it profit or loss . So If today you want to know profit or loss of your business, let us start match of your business incomes with your business expenses. 4th Concept Conservatism Concept This concept is made when accountant thought that it is very important to secure our business. The risk of business is called losses. So it is the basic duty of accountant to secure his business from different losses. For securing Loss he can make different provisions like provision for doubtful debts, provision for depreciation reserve for contingent liabilities. Now you are in position to understand different types of concepts for accounting profession. You are also an accountant , you can also make your accounting concepts. I hope, you will make certain new accounting concepts

which will very useful for accounting and accounting profession.

. Definition of Accounting Terminology " Accounting Terminology are such accounting words which are most suitable for describing its category. For example 'book of accounts' is general word and Ledger is proper accounting word for more suitable , so these accounting words are known as accounting terminology . " It is very necessary for that person who is related to other field like technology or medicine . Suppose if a doctor or engineer want to know the term profitability ratio or know what is financial analysis . If you told them with explaining accounting terminology , he never understand . But if you will tell him basic accounting terms with explanation like what is asset and what is liabilities or what is capital , he easily understand if you give some guidance . Here I am giving some basic accounting terminology for this benefit.

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Cash = Cash is that liquid part of money with this we can buy material goods . Money = Money may be in cash , bank cheque or any bill of exchange Material = Material means the goods which we use for production Finished product = Finished product means goods which is produced after machining process. Debit = It means , we write any amount on which have our some right suppose , Ram account is debit , it means ram gets some money or goods from us , so we have some right on ram means either we can get our money or price of goods . So accounts always given the name debit . In case of asset like furniture account debit

means , we are the owner or purchases it from any other person. In case expenses , any expenses are debit because we take some service so we pay . 6. Credit = Credit means reduce some amount if we have to given to other . Suppose Bank has to given sham 5000 . This is the liability of Bank when bank paid to customer . Bank will credit the account of customer . 7. Entry = accounting of any transaction with systematical way is called entry 8. Owner's equity = Owner's equity means the claim of owner on the assets of business. 9. Creditor's equity = Creditor's equity means the claim of creditor on the assets of business. 10. Memorandum Account = This is the account which uses just as memory record but not formal account . 11. brought down ( b/d) = It means transfer from previous balance to new page or next day or next month . 12. carried forward = It means transfer of balance to new page or next day starting point of account or next month's starting point of account's balance . Ledger folio= It is the specific number of each Book keeping and account Book keeping is just record of transaction, but accounting is huge science of recording, classification, analyze and summarizing of business transaction and interpretation of different result. 2. A book keeper always works under head accountant and book keeper is often said account assistant. 3. Calculation of tax and filling of tax return is the part of duties of accountant. But, he can take help from book keeper for tracking the total of the incomes of business. 4. Book keeping is just like machine work in which book keeper passes the vouchers into books but accounting work is fully professional and need high experience for analysis and interpretation of financial statements. 5. Most difficult part of book keeping work is to reconciliation of bank account with pass book, cash balance with physical cash in hand, stock in books with physical stock in Godown. Most difficult work of accountant is to make final account and analysis of financial statements

Journal is a day books in which bookkeeper records all the transaction first time . Transaction must be record in this book date wise and journal applies the rules of double entry system . Suppose Ram takes loan of Rs.100000 from his friend. Then what come in is cash and so cash account will be debited and His friend is giver of loan, so his friends loan account will be credited in journal Journal entry will be passed in the journal of Ram Cash Account Dr. 100000 / To Friends loan Account / 100000 In other words journal is the book of primary entry . Whenever any transaction or event occurs it is recorded in the first instance in the journal . There are various types of journal. 1. Purchase day book to record transactions relating to credit purchases. Sales day book to record transactions relating to credit sales. Purchase return book to record transactions relating to purchase returns. Cash book to record cash , bank and discount transactions . Journal Proper to record other transactions for which no specific journal is maintained .

In this theory, as the two fold aspects of each transaction are recorded, the name "double entry" has been given to this system. Every transaction involves two fold aspects e.g., an aspect of receiving and an aspect of giving. One who receives is a debtor (Dr) and one who gives is a creditor (Cr). Under the double entry system, both the aspects of giving and receiving are recorded in terms of accounts. The account which receives the benefit is debited and the account which gives the benefit is credited. It is the ultimate result of this system that every debit must have corresponding credit and vice versa and on any particular day the total of the debit entries and the credit entries on the various accounts must be equal.

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Advantages of Double Entry System:

The main advantages of double entry theory of book keeping are as follows:

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1. Trial balance can be

Definition and Explanation:

The double entry theory of bookkeeping can be defined as the system of recording transactions having two fundamental aspects - one involving the receiving of a benefit and the other to giving the benefit - in the same set of books.

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drawn up on any day to prove the arithmetical accuracy of record. The nominal sides of transactions being recorded: it is possible to prepare Trading and Profit and Loss Account from which the Gross Profit and Net Profit made by the business during a particular period can be easily ascertained. As all personal accounts of debtors and creditors as well as real accounts are kept,

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it is possible to prepare Balance Sheet. The transactions being recorded in the most scientific and systematic way gives the most reliable information of business. It prevents fraud by rendering any alteration in any account more difficult. It enables the trader to compare the different items, such as sales, purchases, opening stock and closing stock of one period with similar items of preceding period and the trader may thus know whether his business is progressing or not.

Disadvantages of Double Entry System:

The following are the main disadvantages of this system:

1. This system requires

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the maintenance of a number of books of accounts which is not practical in small concerns. The system is costly because a number of records are to be maintained. There is no guarantee of absolute accuracy of the books of accounts inspite of agreement of the trial balance.