Professional Documents
Culture Documents
Every transaction involving money or moneys worth has a two fold aspect, the receiving of a
value on the one hand and giving of the same value on the other. This two-fold nature in all
transactions must be recorded in the books and this gives to the term Double Entry Book-
Keeping.Munro and Palmer
Every business transaction has a two fold effect and that it affects two accounts in opposite
direction and if a complete record were to be made of each such transaction, it would be
necessary to debit the account and credit another account. It is this recording of the two fold
effect of every transaction that has given rise to the term double entry.J.R.Batliboi
In double entry system, for every debit there has to be a corresponding credit. It is very
pertinent to follow that corresponding does not mean that there should only be one account to
be debited and credited. It simply means that the amount to be debited and credited has to be
the same, the number of accounts may be one each/more. For example when goods amounting
to say, Rs.1,000 are purchased and whole of the amount is paid instantly, purchases a/c will be
debited with this amount , credit being given to cash with the same amount. If say, only Rs.400
is paid and the balance of the amount is to be paid afterwards, cash a/c will be credited with
Rs.400 and suppliers a/c will also be credited with Rs.600.
In spite of all the problems and limitations, this system is in vogue in almost all the countries of
the world. This system being based on dual system is free from many ambiguities.
ACCOUNTING FUNDAMENTALS
Todays accountant focuses on the ultimate needs of decision makers who use accounting
information, whether those decision makers are inside or outside the business. Accounting is
not an end in itself but is an information system that measures, processes and communicates
financial information about an identifiable economic activity.--Belverd R. Needles, Jr.
There are a number of persons and parties, who are interested in accounting information to
make their decisions rational and invincible. In the absence of necessary and timely information
the decisions are likely to be based on remnants. Accounting may be defined as an information
system, as it satisfies all its characteristics. It has a set of inputs and the outcome, called outputs,
is in the form of large volume of accounting ledgers/precise condensed reports. It has
standardized and almost universally accepted principles, which when applied to the inputs,
produce the relevant reports.
Users of accounting information:
(3)Management
(4)Employees
(5)Customers
(8) Researchers
(9)Public
To maintain the books of accounts so that they give a true and fair view
To act as a liquidator
To act as an arbitrator
To act as a receiver
It can be concluded by saying that an accountant acts as the caretaker of the resources of
society in general and the enterprise in particular. He not only maintains the accounting record
of such resources but also ensures their fuller and optimum utilization. In the present day
scenario when there is global economic meltdown, these accountants are confronted with
numerous opportunities, challenges and threats, paving their way for innovative actions. In
addition to their role of recording business transactions, providing accurate timely and relevant
information, they will also be accepted to participate as business consultants and partners with
management in strategic planning process.
There are tremendous opportunities for the accountants to shine as a professional group by
showing their professional skills and capabilities. To fit in this role, the accountants need to
develop effective communication abilities, adopt a structured approach, a flexible outlook,
positive mindset and of course, keep themselves updated with the latest evolving technologies
in the field of information technology as well as in their own profession. The various accounting
software no doubt, have put some pressure on this profession, but taken in right perspective,
these software will help in supplementing their activities rather than supplanting.