SYLLABUS OF ACCOUNTANCY1.1. BOOK KEEPING & ACCONNTING CONCEPT - 6 MARKS BOOK KEEPING & ACCONNTING CONCEPT - 6 MARKS

( THEORY)( THEORY)2.2. ACCOUNTING EQUATION - - 2 MARKSACCOUNTING EQUATION - - 2 MARKS3.3. JOURNAL, LEDGER & SUBSIDIARY BOOKS - 6 MARKSJOURNAL, LEDGER & SUBSIDIARY BOOKS - 6 MARKS4.4. CASH BOOK & BANK RECONCILIATION STATEMENT – 12 CASH BOOK & BANK RECONCILIATION STATEMENT – 12

MARKSMARKS5.5. TRIAL BALANCE & ACCOUNTING ERRORS - 6 MARKSTRIAL BALANCE & ACCOUNTING ERRORS - 6 MARKS6.6. FINAL ACCOUNTS, JOURNAL PROPER - 17 MARKSFINAL ACCOUNTS, JOURNAL PROPER - 17 MARKS7.7. CAPITAL AND REVENUE CONCEPT - 3 MARKSCAPITAL AND REVENUE CONCEPT - 3 MARKS8.8. DEPRECIATION - 8 MARKSDEPRECIATION - 8 MARKS9.9. RESERVES & PROVISIONS - 4 MARKSRESERVES & PROVISIONS - 4 MARKS10.10. ACCOUNTING FOR NON-PROFIT ORGANISATION – 10 ACCOUNTING FOR NON-PROFIT ORGANISATION – 10

MARKSMARKS11.11. ACCOUNTING FOR INCOMPLETE RECORDS - 4 MARKSACCOUNTING FOR INCOMPLETE RECORDS - 4 MARKS12.12. GOVERNMENT ACCOUNTING - 22 GOVERNMENT ACCOUNTING - 22

MARKS MARKS TEXT BOOK : TEXT BOOK : ASMITA PUBLICATIONASMITA PUBLICATION

REFERENCE BOOK: EP PUBLICATION

BASIC ACCOUNTING TERMINOLOGIES

THE SPECIAL TERMS OR WORDS

USED IN ACCOUNTANCY WHICH

MAKE US EASY TO UNDERSTAND

SUBJECT MATTER.

1. ACCOUNTANCY

• THE SUBJECT WHICH DEALS/STUDIES

ECONOMIC OR FINANCIAL TRANSACTIONS

IS CALLED ACCOUNTANCY. IT GUIDES TO

RECORD, ANALYSE, INTERPRET &

COMMUNICATE ECONOMIC TRANSACTION

TO ITS USERS.

2. FINANCIAL/ECONOMIC TRANSACTION

• The economic activities which can be express in term of money or money’s worth are called financial/economic transactions.

• Investment into business, buying and selling of commodities or services, receipt of income, payment of expenses are some example of financial/economic transactions.

3. ASSETS

• All type of properties belonging to the

business firm is called assets.

In other words, the total sum of properties or

resources belonging to the business firm

which helps to generate income are called

assets. •

4. FIXED ASSETS

• Those assets which can be last for more than

one year is called fixed assets. These type of

assets are purchased by business for the

long term use & benefit of which is received

for more than one year.

5. CURRENT ASSETS

• Those assets of the business firm

which can be converted into cash

within the same year or cash in hand/

cash at bank are current assets.

6. LIQUID ASSETS

• Liquid assets are those business

assets which can be converted into

cash (including cash/bank balance)

whenever needed / immediately.

7. FICTITIOUS ASSETS

• Those assets which can not be seen and can

not give benefit to the business are called

fictitious assets. Such assets neither can be

transferred to other business nor can be sold

in the market.

8. TANGIBLE ASSETS

• Those assets which have their physical

form & can be seen or felt are called

tangible assets.

9. Intangible assets

• Those assets which do not have their

physical form & can not be seen but felt

are called intangible assets.

10. GOODWILL

• Goodwill refers to good name & reputation

among the public due to good location,

efficient management, qualitative goods or

services. It helps to generate more income in

comparison to newly established business.

11. CAPITAL

• Capital is the sum of cash, goods or

any kind (things) which are invested in

the firm from the side of owner/s.

12. LIABILITIES

• The sum of money or money’s worth

payable to outsiders for any reason is

called liabilities. It refers to the

economic obligations of business other

than owners equity.

13. CURRENT LIABILITIES

• Current liabilities are those payable due

which are payable within current

accounting period or within one year.

14. LONG-TERM LIABILITIES

• Long-term liabilities refers to those

payable amount which are not required

to be repaid within current accounting

period.

15. ACCOUNTING YEAR/PERIOD

• The periodical division of the business life is known as the accounting year. The accounting period normally fixed as one year or 12 months or 365 days.

• For Nepal: Shrawan 1 to Asadh 31.• For India: April 1 to March 31.

16. PURCHASE

• Purchase refers to buying of raw

materials for production purpose or

buying of finished for resale.

17. SALE

• Sale refers to exchange of goods or

services with money.

18. INCOME / REVENUE

• It refers to the amount received or

receivables by selling of goods or

rendering of services.

19. EXPENSES

• Expenses refers to the amount which is

spent instead of buying goods or

taking services in order to earn

revenue.

20. DRAWING

• Cash, goods or any other assets taken

by owner/ proprietor from the business

firm for his/her personal/domestic use

is called drawing.

21. DEBTORS

• The persons to whom goods or

services are sold on credit is called

debtors.

22. CREDITORS

• The persons from whom goods or

services are purchased on credit is

called creditors.

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23. BAD DEBTS

• Bad debts is the amount of receivable

which are definitely declared as

irrecoverable due to dishonesty or

insolvency.

24. INSOLVENCY

• It refers to bad/weak economic

situation in which business/person are

unable to meet the liabilities.

25. BANK OVERDRAFT

• It is the facility provided by the bank to

its regular customer for withdrawing

more amount than the deposited one.

26. DEPRECIATION

• Reduction in the value of fixed assets

due to various reasons such as wear &

tear, regular use, passing of time and

obsolescence is called depreciation.

BOOK KEEPING

• Book keeping is an art of recording the day to day economic transaction regularly with most systematic manner so as to know the result of business easily.

• Book + Keeping = Book-keeping• Book means collections of all economic

transactions.• Keeping means the act of maintaining the

record in systematic manner.

Objectives of book-keeping• To identify the economic transactions.

• To keep systematic, scientific and permanent economic records.

• To classify the transactions.

• To help in preparing financial statements.

ACCOUNTING• Accounting is an art and science

of identifying, recording, classifying, summarising, analyzing and interpreting the economic transactions in systematic manner and communicating the business result to the concerned parties.

ACCOUNTING PROCESS• Identification of economic transaction.• Recording of economic transaction – Journal as &

subsidiary Books.• Classification of economic transaction in Ledgers.• Summarizing of classified transaction through Trial

Balance.• Preparation of financial statements as Trading Account,

Profit & Loss Account, Balance Sheet.• Analysis & interpretation of financial statements.• Communication of financial information to various users.

Difference between BOOK-KEEPING & ACCOUNTING

• BOOK-KEEPING• It Records the economic

transactions.

• Its main purpose is to make permanent records.

• It does not require depth knowledge.

• It is concern with journalising & making ledger account.

• ACCOUNTING• It is the process of recording,

classifying, analyzing and interpreting the economic transactions.

• Its main purpose is to ascertain profit or loss & financial position.

• It requires depth knowledge & analytical ability.

• It is concern with journalising, making ledger account, Trial Balance, Final Account.

SCOPE OF ACCOUNTING

• Trading Concern.• Non-Trading Concern.• Government.• Professionals & Individuals.

BASIC ACCOUNTING CONCEPTS

• There are some basic assumptions which help in understanding the accounting system. These assumptions must be followed while recording the transactions in order to get the actual result of the business.

1. BUSINESS ENTITY CONCEPT• According to this concept, the business

is taken as separate entity from its owner. The owner of business is natural person and business is artificial person. Therefore, the accountant should separately record the transaction of business and its owner.

2. MONEY MEASUREMENT CONCEPT• According to this concept, those

transaction should be recorded in books of account which can be measured in terms of money or money’s worth. Thus, any event which can not be expressed in term of monetary value should not be recorded in books of account.

3. GOING CONCERN CONCEPT• According to this concept, the

business continues its activities for a long period and indefinite time period. The life of the business can not be fixed. The business has an indefinite life unless it is likely to be sold or dissolve in the near future.

4. COST CONCEPT• The activities, events and transactions of the

business are to be recorded at the amounts actually received and spent. Most of the transactions related to assets, liabilities and capital are recorded in the books of account at the cost. These assets, liabilities and capital are not recorded at current market price.

5. ACCOUNTING PERIOD CONCEPT• According to this concept, the economic

life of the business is divided into different periods for preparing financial statements. The periodical division of the business life is known as the accounting period. The accounting period normally fixed as one year or 12 months or 365 days. For Nepal; the period between Shrawan 1st to Asadh 31st is accounting year.