Basic Accounting Notes
Subject Overview
Basic Accounting is BBA's foundation paper in financial accountancy — the BBA equivalent of B.Com's Financial Accounting, built for management students who need to read and prepare financial statements rather than specialise in accounting itself. It starts with core accounting concepts, conventions, and the regulatory framework of Accounting Standards in India, then moves through the accounting equation, journal and ledger entries, and trial balance preparation. The second half covers Bank Reconciliation Statements and depreciation (WDV and SLM methods) before building up to final accounts — trading, profit & loss, and balance sheet preparation for a sole proprietorship — and an introduction to company final accounts under the Companies Act. The paper closes with a practical look at computerised accounting and accounting software. This is a 6-credit core paper across 4 units, and it's the foundation for Cost & Management Accounting and Corporate Accounting later in the BBA program.
Subject at a glance
4
Units
21
Topics
6
Credits
4
Infographics
Unit-wise Syllabus
4 units — open any unit for detailed topic-wise notes, diagrams and important exam questions
- Meaning
- objectives and scope of financial accounting
- concept of book-keeping
- basic accounting terms
- users and limitations of accounting information
- accounting concepts and conventions
- Accounting Standards in India
Business entity
Business is separate from its owner
Going concern
Business will continue indefinitely
Money measurement
Only money transactions are recorded
Accrual
Record income and expenses when earned or incurred
Conservatism
Anticipate losses, not profits
Consistency
Same methods year after year
Study guide
This unit introduces accounting: its meaning, objectives and scope, book-keeping, basic terms, users and limitations of accounting information, accounting concepts and conventions and Accounting Standards in India. Learn the accounting concepts (going concern, accrual, consistency and others) with a simple example each.
- Accounting equation
- types and nature of accounts
- rules of debit and credit
- recording transactions in the journal
- preparation of ledger accounts and subsidiary books
- preparation of trial balance
- Personal account
- Debit the receiver, credit the giver
- Real account
- Debit what comes in, credit what goes out
- Nominal account
- Debit expenses and losses, credit incomes and gains
- Accounting equation
- Assets = Liabilities + Capital
Study guide
You learn the accounting equation, types of accounts, the rules of debit and credit, journal entries, ledger posting, subsidiary books and the trial balance. Practise the golden rules of debit and credit on at least twenty transactions until they become automatic.
- Bank Reconciliation Statement
- meaning and importance of depreciation
- WDV and SLM methods
- preparation of trading and profit & loss account and balance sheet for a sole proprietorship
Charged on
Original cost
Book value at start of year
Annual charge
Same every year
Falls every year
Asset value reaches
Zero or scrap value
Never exactly zero
Suits
Assets used evenly, e.g. furniture
Assets that lose value early, e.g. machinery
Study guide
You prepare a bank reconciliation statement, understand depreciation using the WDV and straight line methods and prepare the trading account, profit and loss account and balance sheet of a sole proprietor. Learn why bank and cash book balances differ and practise at least three BRS problems.
- Provisions of the Companies Act on preparation of company final accounts
- understanding a company's annual report
- computers in accounting
- accounting software packages
Directors' report
Performance and future plans
Balance sheet
Assets, equity and liabilities on a date
Statement of profit and loss
Income and expenses for the year
Cash flow statement
Operating, investing and financing flows
Notes and auditor's report
Policies, details and audit opinion
Study guide
The final unit looks at company final accounts under the Companies Act, understanding an annual report, the use of computers in accounting and accounting software. Read the annual report of a listed company to see these ideas in real form.
Why Basic Accounting Matters
Accounting is the language of business, and every BBA student, whether going into marketing, HR or finance, needs to read financial statements. It is the foundation for later cost accounting, finance and analytics papers.
How to Prepare for Basic Accounting
- Practise journal, ledger and trial balance questions every day.
- Memorise the formats of the trading account, profit and loss account and balance sheet.
- Read one real annual report to connect the theory to practice.
Basic Accounting: Frequently Asked Questions
What is the accounting equation?
Assets equal liabilities plus owner's equity, the basic identity on which double-entry bookkeeping rests.
What is the difference between WDV and straight-line depreciation?
Straight-line charges the same depreciation every year, while the written down value method charges a fixed percentage on the reducing book value each year.