Welcome to Accounting : Accounting Basics Day 1

General perception of the learners of accounting is very dry and tough. Through this tutorial we will try to make accounting interesting. We will go step by step in simple real world example for better understanding the concept

1.1 Lets start a business

Suppose you want to start a new restaurant business. You complete all the legalities and name the restaurant as The Taste of Delhi. You are new at business but not comfortable with the difficult subject of accounting. You hire an accountant Mr. Das. Based on your business idea/plan, Das estimates that TOD (Taste of Delhi) shall have thousands of transactions per year. As this is your first rendezvous with accounting, you are puzzled by the term “transaction”. Mr. Das explains you the meaning of term “transaction” by giving you following examples

1. You will have to put in your personal money and own shares into your own company.
2. The Taste of Delhi will have bikes for Delivery
3. TOD will begin earning by billing consumers for services
4. TOD will incur expenses in operating business such as salary, and expenses associated with vehicle and advertising.

Now you are clear about what “transaction” means.

Mr. Das proceeds to explain purpose and content of the following financial statements

1. Income Statement
2. Balance Sheet
3. Statement of Cash Flows
4. Double Entry System of Accouting


For Accounting Jargon refer http://www.oracleappstoday.com/2014/09/accounting-jargons.html