MTG101
MTG101
MTG101
Treating the business independently from its owners is called the ‘Separate Entity Concept’.
In single entry book keeping, two to three registers “Khata”. In one register cash received from
customers is recorded whereas the other one is a person-wise record of goods sold on credit “Udhar
Khata”. There may or may not be a register of suppliers to whom money is payable.
The account that receives the benefit is debited and the account that provides the benefit is credited.
‘Debit’ and ‘Credit’ are denoted by ‘Dr’ and ‘Cr’ respectively.
The ultimate result of the system is that for every Debit (Dr) there is an equal Credit (Cr).
In double entry book keeping, every transaction has equal Debit and Credit.
DEBIT: It signifies the receiving of benefit. In simple words it is the left hand side.
CREDIT: It signifies the providing of a benefit. In simple words it is the right hand side.
Anything that provides benefit to the business in future is called ‘Asset’.
Anything for which the business has to repay in any form is called ‘Liability’.
The liability of the business towards its owners is called ‘Capital’. Assets = Capital+Liabilities.
LECTURE-5
Record that summarizes movement in an individual item is called an Account.
Expenses can be further divided into capital and revenue expenses.
Assets are the properties and possessions of the business.
Properties and possessions can be of two types, one that have physical existence (called tangible)
and the others that have no physical existence (called intangible).
Asset is a right to receive and liability an obligation to pay, therefore these are opposite to each other.
Increase in Asset is Debit, Decrease in Asset is Credit.
Increase in Liability is Credit, Decrease in Liability is Debit.
Increase in Expenditure is Debit, Decrease in Expenditure is Credit.
Increase in Income is Credit, Decrease in Income is Debit.
Occurrence of an Event
The Voucher
General Journal
Long Term Liabilities – these are the liabilities that will become payable after a period of more
than one year of the balance sheet date.
Current Liabilities – These are the obligations of the business that are payable within twelve
months of the balance sheet date.
Fixed Assets – Are the assets of permanent nature that a business acquires, such as plant,
machinery, building, furniture, vehicles etc.
Long Term Assets – These are assets that are not fixed but their life is more than twelve
months the balance sheet.
Current Assets – Are the receivables that are expected to be received within one year of the
balance sheet date.
LECTURE-10
Creditors are the third persons/parties, from whom business owes money.
Debtors are the third persons/parties, who owe money from the business.