SimonMash.com | Kerala Plus One & Plus Two Study Notes, Question Papers, Answer Keys, Resources

SOURCE DOCUMENTS & ACCOUNTING VOUCHERS Source Documents: Written evidence of a transaction (Cash Memo, Invoice, Cheque, Pay-in-slip). No entry without source document. Accounting Vouchers: Format showing which account to debit/credit. Types: Cash (receipt/payment), Non-Cash/Transfer (credit), Debit (expense), Credit (income), Transaction (one debit one credit), Complex/Journal (multiple debits/credits). ACCOUNTING EQUATION Formula: Assets = Liabilities + Capital. Also: Assets – Liabilities = Capital; Assets – Capital = Liabilities. Always remains balanced. Example: Started business with ₹5,00,000 cash → Assets (Cash) ₹5,00,000 = Liabilities 0 + Capital ₹5,00,000. RULES OF DEBIT & CREDIT (MODERN APPROACH) Account Type Debit Credit Assets Increase (+) Decrease (–) Liabilities Decrease (–) Increase (+) Capital Decrease (–) Increase (+) Expenses/Losses Increase (+) Decrease (–) Revenues/Gains Decrease (–) Increase (+) JOURNAL – BOOK OF ORIGINAL ENTRY Format: ...

CHAPTER 2: THEORY BASE OF ACCOUNTING – MICRO NOTES GAAP (GENERALLY ACCEPTED ACCOUNTING PRINCIPLES) Meaning: Common set of accounting rules, standards & procedures for uniform financial statements (grammar of accounting). Necessity: Ensures uniformity, comparability, reliability. Investors & banks can trust & compare statements. BASIC ACCOUNTING CONCEPTS (13) 1. Business Entity Concept: Business & owner are separate. Owner's investment = Capital (liability). Drawings reduce capital. 2. Money Measurement Concept: Only transactions measurable in money are recorded (sale of goods – yes; talented CEO – no). 3. Going Concern Concept: Business will continue indefinitely. Assets depreciated over life, not expensed fully in purchase year. 4. Accounting Period Concept: Life divided into artificial periods (usually 1 year) to know periodic profit/loss. 5. Cost Concept (Historical Cost): Assets recorded at purchase price, not market value. Land bought for ₹10L ...