Basic of Accounts in Tally ERP 9

Meaning of Accounts:

According to AICPA, "Accounting is the art of recording, classifying and summarizing in a significant manner and in the term of money, or money’s worth transactions and event".

It is said (assumed) that accounting is the language of business. It means that a firm or company communicates with the outside world, including the proprietors, partners and share holders through statement.

Books-keeping of Accounts:

Book-keeping is the art of recording the business transaction in a systematic manner.

Methods of Accounting:

Business transaction n is recording in two different ways.

Single entry system
Double entry system

1. Single entry system:

It is an incomplete system of recording business transaction. The business organization maintains only cash and personal of debtors and creditors book. So completed recording of business transaction cannot be made.

2. Double entry system:

Double entry system is an accounting system that records of effect to transaction and other event in at least two accounts with equal debit and credit. This system involves the following steps:

a) Preparation of journal:

Journal is called the book of original entry. It records the effect all transaction of the first time.

b) Preparation of ledger:

Ledger is the collection of all accounts used by a business. Journal is posted to the ledger.

c) Preparation of Trial Balance:

It is summarizing of accounts. It is a summary of ledger balance prepared in the form of a list. It is the statement of ledger account.

d) Preparation of Final Accounts :

At the end of the accounting period to know the achievement of organization. The final account steps as follows.