Accounting is defined as a process of Recording Classifying Summarizing Interpreting the financial transactions and Communicating the result thereof to the persons interested in such information for decision making purposes

Accounting may be defined as the process of collecting, recording, summarizing and communicating financial information. Accounting is nothing but a means of communicating the results of business operations to varies parties interested in or connected with the business, viz., the owner, creditors, investors, government, financial institutions and other agencies. Accounting is, therefore, rightly called as the language of business. The basis purpose of a language is to serve as a means of communication. Accounting also serve this purpose. Accounting is not only associated with business but also with every body who is interested in keeping an account for the money received and money spent.

Purchases Ledger Control Account is a summary account which checks the arithmetical accuracy of the Purchases Ledger. It enables us to see at a glance whether the general ledger balance for the purchase’s ledger agrees with the total of all the individual trade payable accounts held within the purchase’s ledger.

Control accounts are so called because they control a section of the ledgers. By control we mean that the total on the control accounts should be the same as the totals on the ledger accounts. There are two main types of control accounts:

HBC 2101 Introduction to Accounting I - ACCOUNTING FOR TRANSACTIONS

The cashbook for cash at bank records all the transactions taking place at the bank i.e. the movements of the account held with the bank. The bank will send information relating to this account using a bank statement for the firm to compare. Ideally, the records as per the bank and the cashbook should be the same and therefore the balance carried down in the cashbook should be the same as the balance carried down by the bank in the bank statement.

Qualities of Useful Financial Information. The four principal qualities of useful financial information are understandability, relevance, reliability and comparability.

Income Statements Single-step income statement Multiple-step income statement Gross Margin = Gross Profit = Net Sales – Cost of Goods Sold Gross Margin ratio = Gross Margin / Net Sales

A merchandising company is an enterprise that buys and sells goods to earn a profit. 1. Wholesalers sell to retailers. 2. Retailers sell to consumers.

In accounting, there are two types of accounts: debit accounts and credit accounts. Under normal accounting circumstances, debit accounts have a positive balance and credit accounts have a negative balance. Along these same lines, each accounting transaction requires two entries: A debit entry and a credit entry. This is called double entry accounting.