Basic Accounting Concept
What is the account?
an account is a summarized record of day to day transactions in such a way that the user can form an opinion about the business, judge its performance and make certain decisions. To learn to account, it is necessary to understand the fundamental of debits and credits, assets and liabilities, income and expenses to prepare and maintain accounts systematically and correctly.
What we need to account:
Accounting helps a business person to know :
- what is his property (assets)?
- what is his liability?
- how much profit or loss he has incurred in the business?
- financial positions: Will he be in a position to meet the commitments in the coming years?
What are the transactions?
Transactions mean a transfer of money from one party to another. For e.g. Sales of computer, purchase of furniture, etc.
Who is a debtor?
a debtor is a person to whom we sold goods on credit basis.
Who is creditor?
a creditor is a person from whom we purchased goods on a credit basis.
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