11/24/2023 0 Comments Accounting definition![]() ![]() How you have received (cash or Bank) and from Whom/why (Income).Towards what you have paid (Expenses) and How (Cash or Bank)?.To Whom you have paid (Vendor, Customer etc.) and How (Cash or Bank)?.These statements will help you understand better. To make it simple, the double entry system of booking requires you to answer two aspects for a given transaction. If you have paid 5,000 towards electricity bill using cash, you will debit electricity expenses and credit cash account. Example of double entry accounting system To sum up, for every benefit you receive, there always an outgoing aspect of the business. Thus, for every accounting transaction, debit will always be equal to the credit. This implies that every accounting transaction should be recognized into two accounts, one debit account and the other credit account. ![]() Under the double entry accounting system, every transaction is recorded with two aspects – Debit aspect and Credit aspect. Among the various accounting system, the most common and widely adopted accounting system is ‘Double Entry System’. Accounting systemĪs the definition of accounting states, it is a systematic way of managing the business transactions, there are defined system of recording or accounting the business transactions in the books of the accounts. that business follows in preparing the financial statements. Generally Accepted Accounting Principles (GAAP) can be defined as a set of accepted principles, standards, assumptions, procedures etc. Generally accepted accounting principles’, commonly known as ‘GAAP’, sets the protocol for summarizing and preparing the financial statements. Generally accepted accounting principles (GAAP) in accounting
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