Basic Accounting Notes
Subject Overview
Basic Accounting gives IT students the accounting literacy needed for business applications — accounting concepts and the double-entry system, journal/
Subject at a glance
4
Units
18
Topics
4
Credits
4
Infographics
Unit-wise Syllabus
4 units — open any unit for detailed topic-wise notes, diagrams and important exam questions
- Background
- importance and scope of accounting
- types and classification of accounts
- basic terms (capital, income, expenditure, assets, liabilities)
- accounting equation
- double entry system
- generally accepted accounting principles
- 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
This unit introduces the importance and scope of accounting, types of accounts, basic terms, the accounting equation, the double-entry system and generally accepted principles. Practise classifying accounts as personal, real or nominal.
- Recording entries in the journal with narration
- posting from journal to ledger
- purchase book/sales book/cashbook basics
- need and objectives of trial balance
- types of errors
- trial balance preparation
- 1Transaction
Supported by a voucher
- 2Journal
Debit, credit and narration
- 3Ledger
Posted to each account
- 4Balance the accounts
- 5Trial balance
Debits = credits
Study guide
You study journal entries with narration, posting to the ledger, the purchase, sales and cash books, the trial balance and types of errors. Prepare a trial balance from a list of transactions.
- Final accounts without adjustments
- bank transactions
- preparation of a simple bank reconciliation statement
- 1Start with balance as per cash book
- 2Add cheques issued but not presented
- 3Less cheques deposited but not credited
- 4Adjust bank charges and direct credits
- 5Result = balance as per pass book
Study guide
You study simple final accounts, bank transactions and the bank reconciliation statement. Learn why bank and cash book balances differ.
Sources of raising working capital and long-term capital in corporate undertakings, application of computers in accounting
Purpose
Fixed assets, expansion
Day-to-day operations
Examples
Shares, debentures, term loans, retained earnings
Trade credit, bank overdraft, cash credit
Period
Over 5 years
Under 1 year
Study guide
You study the sources of working and long-term capital in companies and the use of computers in accounting. Be able to list the sources of finance briefly.
Why Basic Accounting Matters
Basic accounting knowledge helps IT professionals who build billing and ERP software or run their own businesses, and it improves your understanding of how companies measure performance.
How to Prepare for Basic Accounting
- Practise journal, ledger and trial balance questions daily.
- Learn the golden rules of accounting.
- Try a simple accounting package to see the concepts at work.
Basic Accounting: Frequently Asked Questions
Why do IT students study accounting?
Accounting is needed to build and understand business software such as billing, payroll and ERP systems.