Commerce Exam  >  Commerce Notes  >  Accountancy Class 11  >  NCERT Textbook - Introduction to Accounting

NCERT Textbook - Introduction to Accounting | Accountancy Class 11 - Commerce PDF Download

Download, print and study this document offline
Please wait while the PDF view is loading
 Page 1


Learning Objectives 	 After studying this chapter 
you will be able to:
	 • 	 state the meaning and 
need of accounting;
	 •	 discuss accounting as 
a source of information;
	 •	 identify 	 the 	 internal	
and external users of 
accounting information;
	 •	 expl ain 	 the 	 objectives	
of accounting;
	 •	 describe 	 the 	 role 	 of	
accounting;
	 •	 explain the basic terms 
used in accounting.
O
ver the centuries, accounting has remained  
confined to the financial record-keeping 
functions of the accountant. But, today’s rapidly 
changing business environment has forced the 
accountants to reassess their roles and functions 
both within the organisation and the society. The 
role of an accountant has now shifted from that of a 
mere recorder of transactions to that of the member 
providing relevant information to the decision-
making team. Broadly speaking, accounting today 
is much more than just book-keeping and the 
preparation of financial reports. Accountants are 
now capable of working in exciting new growth 
areas such as: forensic accounting (solving crimes 
such as computer hacking and the theft of large 
amounts of money on the internet); e-commerce 
(designing web-based payment system); financial 
planning, environm  ental accounting, etc. This 
realisation came due to the fact that accounting is 
capable of providing the kind of information that 
managers and other interested persons need in order 
to make better decisions. This aspect of accounting 
Introduction to Accounting 1
Ch01.indd   1 9/29/2022   2:18:54 PM
2024-25
Page 2


Learning Objectives 	 After studying this chapter 
you will be able to:
	 • 	 state the meaning and 
need of accounting;
	 •	 discuss accounting as 
a source of information;
	 •	 identify 	 the 	 internal	
and external users of 
accounting information;
	 •	 expl ain 	 the 	 objectives	
of accounting;
	 •	 describe 	 the 	 role 	 of	
accounting;
	 •	 explain the basic terms 
used in accounting.
O
ver the centuries, accounting has remained  
confined to the financial record-keeping 
functions of the accountant. But, today’s rapidly 
changing business environment has forced the 
accountants to reassess their roles and functions 
both within the organisation and the society. The 
role of an accountant has now shifted from that of a 
mere recorder of transactions to that of the member 
providing relevant information to the decision-
making team. Broadly speaking, accounting today 
is much more than just book-keeping and the 
preparation of financial reports. Accountants are 
now capable of working in exciting new growth 
areas such as: forensic accounting (solving crimes 
such as computer hacking and the theft of large 
amounts of money on the internet); e-commerce 
(designing web-based payment system); financial 
planning, environm  ental accounting, etc. This 
realisation came due to the fact that accounting is 
capable of providing the kind of information that 
managers and other interested persons need in order 
to make better decisions. This aspect of accounting 
Introduction to Accounting 1
Ch01.indd   1 9/29/2022   2:18:54 PM
2024-25
2 Accountancy
gradually assumed so much importance that it has now been raised to the 
level of an information system. As an information system, it collects data 
and communicates economic information about the organisation to a wide 
variety of users whose decisions and actions are related to its performance. 
This introductory chapter therefore, deals with the nature, need and scope of 
accounting in this context.
1.1 Meaning of Accounting
In 1941, The American Institute of Certified Public Accountants (AICPA) had 
defined accounting as the art of recording, classifying, and summarising in a 
significant manner and in terms of money, transactions and events which are, 
in part at least, of financial character, and interpreting the results thereof’.
With greater economic development resulting in changing role of accounting, 
its scope, became broader. In 1966, the American Accounting Association (AAA) 
defined accounting as ‘the process of identifying, measuring and communicating 
economic information to permit informed judgments and decisions by users 
of information’.
Fig. 1.1 : Showing the process of accounting
Ch01.indd   2 9/29/2022   2:18:54 PM
2024-25
Page 3


Learning Objectives 	 After studying this chapter 
you will be able to:
	 • 	 state the meaning and 
need of accounting;
	 •	 discuss accounting as 
a source of information;
	 •	 identify 	 the 	 internal	
and external users of 
accounting information;
	 •	 expl ain 	 the 	 objectives	
of accounting;
	 •	 describe 	 the 	 role 	 of	
accounting;
	 •	 explain the basic terms 
used in accounting.
O
ver the centuries, accounting has remained  
confined to the financial record-keeping 
functions of the accountant. But, today’s rapidly 
changing business environment has forced the 
accountants to reassess their roles and functions 
both within the organisation and the society. The 
role of an accountant has now shifted from that of a 
mere recorder of transactions to that of the member 
providing relevant information to the decision-
making team. Broadly speaking, accounting today 
is much more than just book-keeping and the 
preparation of financial reports. Accountants are 
now capable of working in exciting new growth 
areas such as: forensic accounting (solving crimes 
such as computer hacking and the theft of large 
amounts of money on the internet); e-commerce 
(designing web-based payment system); financial 
planning, environm  ental accounting, etc. This 
realisation came due to the fact that accounting is 
capable of providing the kind of information that 
managers and other interested persons need in order 
to make better decisions. This aspect of accounting 
Introduction to Accounting 1
Ch01.indd   1 9/29/2022   2:18:54 PM
2024-25
2 Accountancy
gradually assumed so much importance that it has now been raised to the 
level of an information system. As an information system, it collects data 
and communicates economic information about the organisation to a wide 
variety of users whose decisions and actions are related to its performance. 
This introductory chapter therefore, deals with the nature, need and scope of 
accounting in this context.
1.1 Meaning of Accounting
In 1941, The American Institute of Certified Public Accountants (AICPA) had 
defined accounting as the art of recording, classifying, and summarising in a 
significant manner and in terms of money, transactions and events which are, 
in part at least, of financial character, and interpreting the results thereof’.
With greater economic development resulting in changing role of accounting, 
its scope, became broader. In 1966, the American Accounting Association (AAA) 
defined accounting as ‘the process of identifying, measuring and communicating 
economic information to permit informed judgments and decisions by users 
of information’.
Fig. 1.1 : Showing the process of accounting
Ch01.indd   2 9/29/2022   2:18:54 PM
2024-25
3 Introduction to Accounting
In 1970, the Accounting Principles Board of AICPA also emphasised that 
the function of accounting is to provide quantitative information, primarily 
fi nancial in nature, about economic entities, that is intended to be useful in 
making economic decisions.
Accounting can therefore be defined as the process of identifying, measuring, 
recording and communicating the required information relating to the economic 
events of an organisation to the interested users of such information. In order 
to appreciate the exact nature of accounting, we must understand the following 
relevant aspects of the definition:
• Economic Events
• Identification, Measurement, Recording and Communication
• Organisation
• Interested Users of Information
Box  1
History and Development of Accounting
Accounting enjoys a remarkable heritage. The history of accounting is as old as 
civilisation. The seeds of accounting were most likely first sown in Babylonia and Egypt 
around 4000 B.C. who recorded transactions of payment of wages and taxes on clay 
tablets. Historical evidences reveal that Egyptians used some form of accounting for 
their treasuries where gold and other valuables were kept. The incharge of treasuries 
had to send day wise reports to their superiors known as Wazirs (the prime minister) 
and from there month wise reports were sent to kings. Babylonia, known as the city of 
commerce, used accounting for business to uncover losses taken place due to frauds 
and lack of efficiency. In Greece, accounting was used for apportioning the revenues 
received among treasuries, maintaining total receipts, total payments and balance of 
government financial transactions. Romans used memorandum or daybook where in 
receipts and payments were recorded and wherefrom they were posted to ledgers on 
monthly basis. (700 B.C to 400 A.D). China used sophisticated form of government 
accounting as early as 2000 B.C. Accounting practices in India could be traced back 
to a period when twenty three centuries ago, Kautilya, a minister in Chandragupta’s 
kingdom wrote a book named Arthashasthra, which also described how accounting 
records had to be maintained.
       Luca Pacioli’s, a Franciscan friar (merchant class), book Summa de 
Arithmetica, Geometria, Proportion at Proportionality  (Review of Arithmetic and Geometric 
proportions) in Venice (1494) is considered as the first book on double entry book-
keeping. A portion of this book contains knowledge of business and book-keeping. 
Ch01.indd   3 9/29/2022   2:18:54 PM
2024-25
Page 4


Learning Objectives 	 After studying this chapter 
you will be able to:
	 • 	 state the meaning and 
need of accounting;
	 •	 discuss accounting as 
a source of information;
	 •	 identify 	 the 	 internal	
and external users of 
accounting information;
	 •	 expl ain 	 the 	 objectives	
of accounting;
	 •	 describe 	 the 	 role 	 of	
accounting;
	 •	 explain the basic terms 
used in accounting.
O
ver the centuries, accounting has remained  
confined to the financial record-keeping 
functions of the accountant. But, today’s rapidly 
changing business environment has forced the 
accountants to reassess their roles and functions 
both within the organisation and the society. The 
role of an accountant has now shifted from that of a 
mere recorder of transactions to that of the member 
providing relevant information to the decision-
making team. Broadly speaking, accounting today 
is much more than just book-keeping and the 
preparation of financial reports. Accountants are 
now capable of working in exciting new growth 
areas such as: forensic accounting (solving crimes 
such as computer hacking and the theft of large 
amounts of money on the internet); e-commerce 
(designing web-based payment system); financial 
planning, environm  ental accounting, etc. This 
realisation came due to the fact that accounting is 
capable of providing the kind of information that 
managers and other interested persons need in order 
to make better decisions. This aspect of accounting 
Introduction to Accounting 1
Ch01.indd   1 9/29/2022   2:18:54 PM
2024-25
2 Accountancy
gradually assumed so much importance that it has now been raised to the 
level of an information system. As an information system, it collects data 
and communicates economic information about the organisation to a wide 
variety of users whose decisions and actions are related to its performance. 
This introductory chapter therefore, deals with the nature, need and scope of 
accounting in this context.
1.1 Meaning of Accounting
In 1941, The American Institute of Certified Public Accountants (AICPA) had 
defined accounting as the art of recording, classifying, and summarising in a 
significant manner and in terms of money, transactions and events which are, 
in part at least, of financial character, and interpreting the results thereof’.
With greater economic development resulting in changing role of accounting, 
its scope, became broader. In 1966, the American Accounting Association (AAA) 
defined accounting as ‘the process of identifying, measuring and communicating 
economic information to permit informed judgments and decisions by users 
of information’.
Fig. 1.1 : Showing the process of accounting
Ch01.indd   2 9/29/2022   2:18:54 PM
2024-25
3 Introduction to Accounting
In 1970, the Accounting Principles Board of AICPA also emphasised that 
the function of accounting is to provide quantitative information, primarily 
fi nancial in nature, about economic entities, that is intended to be useful in 
making economic decisions.
Accounting can therefore be defined as the process of identifying, measuring, 
recording and communicating the required information relating to the economic 
events of an organisation to the interested users of such information. In order 
to appreciate the exact nature of accounting, we must understand the following 
relevant aspects of the definition:
• Economic Events
• Identification, Measurement, Recording and Communication
• Organisation
• Interested Users of Information
Box  1
History and Development of Accounting
Accounting enjoys a remarkable heritage. The history of accounting is as old as 
civilisation. The seeds of accounting were most likely first sown in Babylonia and Egypt 
around 4000 B.C. who recorded transactions of payment of wages and taxes on clay 
tablets. Historical evidences reveal that Egyptians used some form of accounting for 
their treasuries where gold and other valuables were kept. The incharge of treasuries 
had to send day wise reports to their superiors known as Wazirs (the prime minister) 
and from there month wise reports were sent to kings. Babylonia, known as the city of 
commerce, used accounting for business to uncover losses taken place due to frauds 
and lack of efficiency. In Greece, accounting was used for apportioning the revenues 
received among treasuries, maintaining total receipts, total payments and balance of 
government financial transactions. Romans used memorandum or daybook where in 
receipts and payments were recorded and wherefrom they were posted to ledgers on 
monthly basis. (700 B.C to 400 A.D). China used sophisticated form of government 
accounting as early as 2000 B.C. Accounting practices in India could be traced back 
to a period when twenty three centuries ago, Kautilya, a minister in Chandragupta’s 
kingdom wrote a book named Arthashasthra, which also described how accounting 
records had to be maintained.
       Luca Pacioli’s, a Franciscan friar (merchant class), book Summa de 
Arithmetica, Geometria, Proportion at Proportionality  (Review of Arithmetic and Geometric 
proportions) in Venice (1494) is considered as the first book on double entry book-
keeping. A portion of this book contains knowledge of business and book-keeping. 
Ch01.indd   3 9/29/2022   2:18:54 PM
2024-25
4 Accountancy
However, Pacioli did not claim that he was the inventor of double entry book-keeping 
but spread the knowledge of it. It shows that he probably relied on then–current book-
keeping manuals as the basis for his masterpiece. In his book, he used the present 
day popular terms of accounting Debit (Dr.) and Credit (Cr.). These were the concepts 
used in Italian terminology. Debit comes from the Italian debito which comes from 
the Latin debita and debeo which means owed to the proprietor. Credit comes from 
the Italian credito which comes from the Latin ‘credo’ which means trust or belief (in 
the proprietor or owed by the proprietor. In explaining double entry system, Pacioli 
wrote that ‘All entries… have to be double entries, that is if you make one creditor, 
you must make some debtor’. He also stated that a merchants responsibility include 
to give glory to God in their enterprises, to be ethical in all business activities and to 
earn a profit. He discussed the details of memorandum, journal, ledger and specialised 
accounting procedures.
1.1.1  Economic Events
Business organisations involves economic events. An economic event is known 
as a happening of consequence to a business organisation which consists 
of  transactions and which are measurable in monetary terms. For example, 
purchase of machinery, installing and keeping it ready for manufacturing is 
an event which comprises  number of financial transactions such as buying 
a machine, transportation of machine, site preparation for installation of 
a machine, expenditure incurred on its installation and trial runs. Thus, 
accounting identifies bunch of transactions relating to an economic event. If an 
event involves transactions between an outsider and an organisation, these are 
known as external 	 events. The following are the examples of such transactions:
• Sale of merchandise to the customers.
• Rendering services to the customers by ABC Limited.
• Purchase of materials from suppliers.
• Payment of monthly rent to the landlord.
An	 internal 	 event 	 is an economic event that occurs entirely between the 
internal wings of an enterprise, e.g., supply of raw material or components by 
the stores department to the manufacturing department, payment of wages to 
the employees, etc.
Ch01.indd   4 9/29/2022   2:18:54 PM
2024-25
Page 5


Learning Objectives 	 After studying this chapter 
you will be able to:
	 • 	 state the meaning and 
need of accounting;
	 •	 discuss accounting as 
a source of information;
	 •	 identify 	 the 	 internal	
and external users of 
accounting information;
	 •	 expl ain 	 the 	 objectives	
of accounting;
	 •	 describe 	 the 	 role 	 of	
accounting;
	 •	 explain the basic terms 
used in accounting.
O
ver the centuries, accounting has remained  
confined to the financial record-keeping 
functions of the accountant. But, today’s rapidly 
changing business environment has forced the 
accountants to reassess their roles and functions 
both within the organisation and the society. The 
role of an accountant has now shifted from that of a 
mere recorder of transactions to that of the member 
providing relevant information to the decision-
making team. Broadly speaking, accounting today 
is much more than just book-keeping and the 
preparation of financial reports. Accountants are 
now capable of working in exciting new growth 
areas such as: forensic accounting (solving crimes 
such as computer hacking and the theft of large 
amounts of money on the internet); e-commerce 
(designing web-based payment system); financial 
planning, environm  ental accounting, etc. This 
realisation came due to the fact that accounting is 
capable of providing the kind of information that 
managers and other interested persons need in order 
to make better decisions. This aspect of accounting 
Introduction to Accounting 1
Ch01.indd   1 9/29/2022   2:18:54 PM
2024-25
2 Accountancy
gradually assumed so much importance that it has now been raised to the 
level of an information system. As an information system, it collects data 
and communicates economic information about the organisation to a wide 
variety of users whose decisions and actions are related to its performance. 
This introductory chapter therefore, deals with the nature, need and scope of 
accounting in this context.
1.1 Meaning of Accounting
In 1941, The American Institute of Certified Public Accountants (AICPA) had 
defined accounting as the art of recording, classifying, and summarising in a 
significant manner and in terms of money, transactions and events which are, 
in part at least, of financial character, and interpreting the results thereof’.
With greater economic development resulting in changing role of accounting, 
its scope, became broader. In 1966, the American Accounting Association (AAA) 
defined accounting as ‘the process of identifying, measuring and communicating 
economic information to permit informed judgments and decisions by users 
of information’.
Fig. 1.1 : Showing the process of accounting
Ch01.indd   2 9/29/2022   2:18:54 PM
2024-25
3 Introduction to Accounting
In 1970, the Accounting Principles Board of AICPA also emphasised that 
the function of accounting is to provide quantitative information, primarily 
fi nancial in nature, about economic entities, that is intended to be useful in 
making economic decisions.
Accounting can therefore be defined as the process of identifying, measuring, 
recording and communicating the required information relating to the economic 
events of an organisation to the interested users of such information. In order 
to appreciate the exact nature of accounting, we must understand the following 
relevant aspects of the definition:
• Economic Events
• Identification, Measurement, Recording and Communication
• Organisation
• Interested Users of Information
Box  1
History and Development of Accounting
Accounting enjoys a remarkable heritage. The history of accounting is as old as 
civilisation. The seeds of accounting were most likely first sown in Babylonia and Egypt 
around 4000 B.C. who recorded transactions of payment of wages and taxes on clay 
tablets. Historical evidences reveal that Egyptians used some form of accounting for 
their treasuries where gold and other valuables were kept. The incharge of treasuries 
had to send day wise reports to their superiors known as Wazirs (the prime minister) 
and from there month wise reports were sent to kings. Babylonia, known as the city of 
commerce, used accounting for business to uncover losses taken place due to frauds 
and lack of efficiency. In Greece, accounting was used for apportioning the revenues 
received among treasuries, maintaining total receipts, total payments and balance of 
government financial transactions. Romans used memorandum or daybook where in 
receipts and payments were recorded and wherefrom they were posted to ledgers on 
monthly basis. (700 B.C to 400 A.D). China used sophisticated form of government 
accounting as early as 2000 B.C. Accounting practices in India could be traced back 
to a period when twenty three centuries ago, Kautilya, a minister in Chandragupta’s 
kingdom wrote a book named Arthashasthra, which also described how accounting 
records had to be maintained.
       Luca Pacioli’s, a Franciscan friar (merchant class), book Summa de 
Arithmetica, Geometria, Proportion at Proportionality  (Review of Arithmetic and Geometric 
proportions) in Venice (1494) is considered as the first book on double entry book-
keeping. A portion of this book contains knowledge of business and book-keeping. 
Ch01.indd   3 9/29/2022   2:18:54 PM
2024-25
4 Accountancy
However, Pacioli did not claim that he was the inventor of double entry book-keeping 
but spread the knowledge of it. It shows that he probably relied on then–current book-
keeping manuals as the basis for his masterpiece. In his book, he used the present 
day popular terms of accounting Debit (Dr.) and Credit (Cr.). These were the concepts 
used in Italian terminology. Debit comes from the Italian debito which comes from 
the Latin debita and debeo which means owed to the proprietor. Credit comes from 
the Italian credito which comes from the Latin ‘credo’ which means trust or belief (in 
the proprietor or owed by the proprietor. In explaining double entry system, Pacioli 
wrote that ‘All entries… have to be double entries, that is if you make one creditor, 
you must make some debtor’. He also stated that a merchants responsibility include 
to give glory to God in their enterprises, to be ethical in all business activities and to 
earn a profit. He discussed the details of memorandum, journal, ledger and specialised 
accounting procedures.
1.1.1  Economic Events
Business organisations involves economic events. An economic event is known 
as a happening of consequence to a business organisation which consists 
of  transactions and which are measurable in monetary terms. For example, 
purchase of machinery, installing and keeping it ready for manufacturing is 
an event which comprises  number of financial transactions such as buying 
a machine, transportation of machine, site preparation for installation of 
a machine, expenditure incurred on its installation and trial runs. Thus, 
accounting identifies bunch of transactions relating to an economic event. If an 
event involves transactions between an outsider and an organisation, these are 
known as external 	 events. The following are the examples of such transactions:
• Sale of merchandise to the customers.
• Rendering services to the customers by ABC Limited.
• Purchase of materials from suppliers.
• Payment of monthly rent to the landlord.
An	 internal 	 event 	 is an economic event that occurs entirely between the 
internal wings of an enterprise, e.g., supply of raw material or components by 
the stores department to the manufacturing department, payment of wages to 
the employees, etc.
Ch01.indd   4 9/29/2022   2:18:54 PM
2024-25
5 Introduction to Accounting
1.1.2	 	 Identification, 	 Measurement,	Recording 	and 	 Communication
Identification 	: It means determining what transactions to record, i.e., to identity 
events which are to be recorded. It involves observing activities and selecting 
those events that are of considered financial character and relate to the 
organisation. The business transactions and other economic events therefore 
are evaluated for deciding whether it has to be recorded in books of account.  
For example, the value of human resources, changes in managerial policies or 
appointment of personnel are important but none of these are recorded in  books 
of account. However, when a company makes a sale or purchase, whether on 
cash or credit, or pays salary it is recorded in the books of account.
Measurement : It means quantification (including estimates) of business 
transactions into financial terms by using monetary unit, viz. rupees and paise 
as a measuring unit.  If an event cannot be quantified in monetary terms, it 
is not considered for recording in financial accounts.  That is why important 
items like the appointment of a new managing director, signing of contracts or 
changes in personnel are not shown in the books of accounts. 
Recording : Once the economic events are identified and measured in financial 
terms, these are recorded in books of account in monetary terms and in a 
chronological order. Recording is done in a manner that the necessary financial 
information is summarised as per well-established practice and is made 
available as and when required.
Communication :  The economic events are identified, measured and recorded 
in order that the pertinent information is generated and communicated in 
a certain form to management and other internal and external users.  The 
information is regularly communicated through  accounting reports. These 
reports provide information that are useful to a variety of users who have an 
interest in assessing the financial performance and the position of an enterprise, 
planning and controlling business activities and making necessary decisions 
from time to time. The accounting information system should be designed in 
such a way that the right information is communicated to the right person at 
the right time. Reports can be daily, weekly, monthly, or quarterly, depending 
upon the needs of the users.  An important element in the communication 
process is the accountant’s ability and efficiency in presenting the relevant 
information.
Ch01.indd   5 9/29/2022   2:18:54 PM
2024-25
Read More
82 videos|105 docs|42 tests

Up next

FAQs on NCERT Textbook - Introduction to Accounting - Accountancy Class 11 - Commerce

1. What is accounting?
Ans. Accounting is the process of recording, classifying, summarizing, and interpreting financial transactions and events. It involves the preparation of financial statements such as income statement, balance sheet, and cash flow statement to communicate financial information to various stakeholders.
2. What is the importance of accounting?
Ans. Accounting is important as it helps businesses to keep track of their financial transactions and make informed decisions. It helps in assessing the financial performance of the business, identifying areas of improvement, and complying with legal and regulatory requirements. It also helps in planning and budgeting, raising funds, and attracting investors.
3. What are the different types of accounting?
Ans. There are several types of accounting, including financial accounting, management accounting, cost accounting, tax accounting, and auditing. Financial accounting deals with the preparation of financial statements for external stakeholders, while management accounting provides financial information for internal decision-making. Cost accounting involves the analysis of costs associated with production and operations, while tax accounting deals with the preparation of tax returns. Auditing involves the examination of financial statements to ensure that they are accurate and comply with accounting standards.
4. What are the basic principles of accounting?
Ans. The basic principles of accounting include the principles of going concern, consistency, conservatism, materiality, relevance, reliability, and comparability. The principle of going concern assumes that the business will continue to operate in the foreseeable future. The principle of consistency requires that accounting methods and procedures should be applied consistently from one period to another. The principle of conservatism requires that losses should be recognized as soon as possible while profits should only be recognized when they are realized. The principle of materiality states that financial information should only be disclosed if it is material and relevant. The principle of relevance requires that financial information should be useful for decision-making. The principle of reliability requires that financial information should be accurate and verifiable. The principle of comparability requires that financial information should be comparable across different periods and entities.
5. What are the steps involved in the accounting cycle?
Ans. The steps involved in the accounting cycle include analyzing transactions, recording transactions in the journal, posting transactions to the ledger, preparing a trial balance, adjusting entries, preparing an adjusted trial balance, preparing financial statements, closing entries, and preparing a post-closing trial balance. The analysis of transactions involves identifying the accounts affected, the amounts involved, and the direction of the transaction. Recording transactions in the journal involves entering them in chronological order. Posting transactions to the ledger involves transferring the information from the journal to the ledger accounts. The trial balance is prepared to ensure that the total debits equal the total credits. Adjusting entries are made to record transactions that have not been recorded yet, such as accrued expenses or prepaid expenses. The adjusted trial balance is prepared to ensure that all adjusting entries have been recorded. Financial statements are prepared to communicate the financial performance of the business. Closing entries are made to transfer the balances of temporary accounts to the retained earnings account. Finally, a post-closing trial balance is prepared to ensure that all accounts have been adjusted and closed properly.
82 videos|105 docs|42 tests
Download as PDF

Up next

Explore Courses for Commerce exam
Signup for Free!
Signup to see your scores go up within 7 days! Learn & Practice with 1000+ FREE Notes, Videos & Tests.
10M+ students study on EduRev
Related Searches

ppt

,

shortcuts and tricks

,

mock tests for examination

,

Exam

,

past year papers

,

Objective type Questions

,

video lectures

,

NCERT Textbook - Introduction to Accounting | Accountancy Class 11 - Commerce

,

pdf

,

practice quizzes

,

Semester Notes

,

Summary

,

MCQs

,

Sample Paper

,

Important questions

,

NCERT Textbook - Introduction to Accounting | Accountancy Class 11 - Commerce

,

study material

,

Viva Questions

,

NCERT Textbook - Introduction to Accounting | Accountancy Class 11 - Commerce

,

Previous Year Questions with Solutions

,

Extra Questions

,

Free

;