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1.2 Double Entry Book Keeping—CBSE XI

CHAPTER SUMMARY

• Meaning of Accounting: Accounting is a systematic process of identifying, measuring,
recording, classifying and summarising in terms of money, transactions and events of a financial
nature, analysing, interpreting and communicating the results thereof to the users.
• Attributes of Accounting: 1. Identification of Financial Transactions and Events,
2. Measuring the Identified Transactions and Events, 3. Recording, 4. Classifying,
5. Summarising, 6. Analysis and Interpretation, 7. Communicating.
• Process of Accounting: Process of Accounting refers to the sequence of accounting
procedure for recording, classifying and summarising transactions.
Recording is the process of entering the financial transactions in the books of original
entry (i.e., Journal) in the chronological manner, i.e., date-wise, classifying is the process
of posting of entries in the ledger so that the transactions of similar nature are accumulated
at one place and summarising is concerned with the preparation of Financial Statements
such as Income Statement and Balance Sheet. Analysing and Interpreting is the next stage
of the accounting process.

Accounting Process

Communicating Financial Transactions
to Users and Events

Analysis and Journal
Interpretation 1. Cash Book
2. Purchases Book
3. Sales Book
Summarising 4. Purchases Return Book
1. Trial Balance 5. Sales Return Book
2. Trading and Profit & Loss Account 6. Bills Payable Book* Recording
(Statement of Profit and Loss) 7. Bills Receivable Book*
3. Balance Sheet 8. Journal Proper
Classifying (Posting into Ledger)
*Not in Syllabus.
• Difference between Book Keeping and Accounting: Accounting is a wider concept which
includes Book Keeping. Book Keeping is mainly concerned with the recording of financial
data which is one aspect of accounting. Accounting is an art of recording, classifying and
summarising financial data and interpreting the results thereof to the users. Accounting
begins where Book Keeping ends.
• Objectives of Accounting: 1. Maintaining Systematic Records of Transactions,
2. Determining Profit or Loss, 3. Ascertaining Financial Position, 4. Facilitating Management,
5. Providing Accounting Information to Users, 6. Protecting Business Assets.
• Accounting Information: Accounting information is the information of financial nature
relating to entities. It is useful in taking decisions. Accounting information is provided to the
users through financial statements.