Process of Accounting

When we start business, process of accounting will also start. Its beginning point starts from identification of your business transactions and separate these transactions from personal transactions. Record these transactions. End of the process of accounting will be by making of trial balance and financial statements.

Now, one by one we are explaining steps of process of accounting.

1. Identification of Business Transactions

To identify the business transactions is the first step of process of accounting. In business, there are lots of transactions. Some, we can express in monetary or financial form but other we can not express in monetary form. We make list only the transactions which we can show in monetary form. We also check its evidence. We can not record the transactions without evidence. So, all these evidences will be basis of transactions which should record in the books. There are lots of monetary personal transactions which are not related business transactions. We need not record such transactions.

2. Making of Vouchers

Now, on the basis of source documents, we will make the vouchers. Each transactions will have one voucher and all the bills or cash memo will attach with this. For example, cash transaction, there will be cash voucher. Sale transaction, there will be sale voucher (credit)

3. Recording in Day Book

Now, we will take third step. On the basis of vouchers, we will record transactions in day book. Day book is the original book of entry. We will pass the journal entries. If we will not take the second step, we will pass the journal entries on the basis of bills or cash memo directly. In day book, we will pass the journal entries on the basis of double entry system. If there is big business, we will divide whole day book in sub-journals. We will also say these books as subsidiary books. For purchase transactions, we will record in purchase book. For sales transactions, we will record in sales book. All transactions will record in journal special.

4. Posting in Ledger

Now, we post all the journal entries in the different accounts of ledger. Ledger is the book which contains all the accounts systematic and classified form. All transactions relating to one account, we will record in one account. For example, whether cash account is debited or credited in the journal entries, it will be recorded in cash account. Sales account will record sales related journal entries. All will done on the basis of posting. In journal entry, we know, one account will debit and other account will credit. So, two account will prepare. One account which debited in journal will be posted credit side of other account. Other account which is credited in journal entries, will be posted debit side of one account.

5. Preparation of Trial Balance and Preparation of Financial Statements

After positing all journal entries to ledger accounts, we calculate the balance of each accounts in ledger. Same balance will transfer to trial balance. Trail balance is the list of debit and credit balance of ledger accounts. If it will match, it means ledger accounts are free from methamatical errors. Now, on the basis of  trial balance, we make trading account, profit and loss account and balance sheet. 






access account accountant Accounting accounting definitions accounting ebook Accounting education accounting procedure accounting process outsourcing Accounting Software advance advertising africa Amalgamation amendments announcements Annuity assets audit auditing Australia B.Com. balance sheet bank Bank reconciliation banking basic accounting BBA benefits best bill black money blog bloggers book keeping bookkeeping Branch Accounting - full tutorial budget Budget variance business businessman CA calculator canada capital capital budgeting career cash cash book cash flow statement Chiense children china class coaching coins college commerce commerce students company computer computer accounting conference Contact vinod kumar Control Your Spending corporate accounting cost cost accounting cost center cost centre CPA credit credit card cs currency data Debit and credit debit cards debt debtor degree depletion depreciation Diwali Messages documents dollar domain Downloads Dubai e-accounting earning education Education Loans email employee EPF ERP euromoney examination excel excise duty expenses facebook factor of loan fans feature fifo FII fiji finacle finance Financial financial accounting fire insurance flickr flow forensic forex formula france fraud free fun function fund GAAP GDP gdr germany gold goodwill goodwill accounting google google apps Google Adsense google apps google base google buzz google calendar Google docs google finance google fusion tables google talk govt. GST guide health Hindi Hindi Language history holding company How to treat FBT in Tally 9 HRA ICAI ICAWI ICICI Bank IFRS income income statement Income Tax India indian railway Indonesia inflation inflation accounting infographics information inspiration insurance insurance accounting Intangible interest international Internet Introduction of Tally 9 inventory investment investment in Shares invoice IT Japan Job costing journal entries Journal Entries eBook Help Kalculate keyboard kindle kuwait laptop law LBT learning lease lecture ledger leducation Leverage Analysis liabilities lifo linkedin loan logical point loss loss of profit M.Com. m.phil malaysia management accounting manual accounting manufacturing account market marketing mastercard material MBA MCA media migration mobile money ms word ms. excel multi currency in tally 9 Multicurrency Accounting mutual fund national security new and sacrifice ratio new york times new zealand news NGO nonprofit-accounting North Georgia Mountains NPV NSE odbc office oman online application online accounting Online Accounting Course otcei pakistan parents Partnership pay pal pdf Personal Finance pie chart pie chart of income pnb podcast ppf presentation price privacy policy prize money prof. vinod kumar profit profit and loss account project management provision purchase puzzles quickbooks Quote quotes quotes of svtuition rating agency ratio analysis RBI readers real estate rectification of errors remote control reports reserves responsibility accounting retirement revenue Revenue reserves review risk rupees salary sale saudi arabia saving sbi scholarship school SEBI security service tax share share trading Shares shri lanka singapore sms social accounting society solution South Africa stock stock exchange structure student students study subsidiary company svtuition swiss bank tally tally 9 Tally 7.2 Tally 9 Tally.ERP 9 tanzania tax Tax Accounting TDS teacher teaching technology test testimonial testimonials thailand tips trading trading on equity transaction trend trial balance truthfulness tuition twitter UAE UGC - NET Commerce UK United Arab Emirates university usa valuation VAT Video Voucher and vouching Wealth wikipedia working capital youtube
Accounting Education: Process of Accounting
Process of Accounting
Accounting Education
Not found any lecture VIEW ALL Continue reading Reply Cancel reply Delete By Home PAGES Lectures View All RECOMMENDED FOR YOU Category ARCHIVE SEARCH ALL Lectures Not found any lecture match with your request, please help to write it and send it to our email at for making this website free accounting and finance encyclopedia. Back Home Sunday Monday Tuesday Wednesday Thursday Friday Saturday Sun Mon Tue Wed Thu Fri Sat January February March April May June July August September October November December Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec just now 1 minute ago $$1$$ minutes ago 1 hour ago $$1$$ hours ago Yesterday $$1$$ days ago $$1$$ weeks ago more than 5 weeks ago Followers Follow THIS CONTENT IS PREMIUM Please share to unlock