(i) Bulky and voluminous: Journal is a main book of original entry which records all business transactions. Sometimes, it becomes so bulky and voluminous that it cannot be handled easily. (ii) Information in scattered form: In this book, all information is recorded on daily basis and scattered form; hence it is very difficult to lo…

Meaning of Journal: Journal is the book of original entry in which, after following the rules of debit and credit, all business transactions are recorded in a chronological order. The word journal has been derived from the French word "jour", which means "a day". Thus, journal means a book which records all mone…

The ledger has the following main characteristics:   It has two identical sides - left hand side (debit side) and right hand side (credit side).   Debit aspect of all the transactions are recorded on the debit side and credit aspects of all the tra nsactions are recorded on credit side according to date. The difference of the tot…

The book in which accounts are maintained is called ledger. Generally, one account is opened on each page of this book, but if transactions relating to a particular account are numerous, it may extend to more than one page. All transactions relating to that account are recorded chronologically. From journal each transaction is post…

Accounting Conventions  There are four main conventions in practice in accounting: conservatism; consistency; full disclosure; and materiality. Conservatism   is the convention by which, when two values of a transaction are available, the lower-value transaction is recorded. By this convention, profit should never be overestimated,…

Obviously, if each business organisation conveys its information in its own way, we will have a babel of unusable financial data. Personal systems of accounting may have worked in the days when most companies were owned by sole proprietors or partners, but they do not anymore, in this era of joint stock companies. These companies …

GAAP (generally accepted accounting principles) is a collection of commonly-followed accounting rules and standards for financial reporting. The acronym is pronounced "gap." AAP specifications include definitions of concepts and principles, as well as industry-specific  rules. The purpose of GAAP is to ensure that financi…

As in many other areas of human activity, a number of specialized fields in accounting  also have evolved besides financial accounting. Management accounting and cost accounting  are the result of rapid technological advances and accelerated economic growth.The most i mportant among them are explained below: Tax Accounting: Tax ac…

There are several groups of people who are interested in the accounting information relating to the business enterprise. Following are some of them: Shareholders : Shareholders as owners are interested in knowing the profitability of the business  transactions and the distribution of capital in the form of assets and liabilities. I…