Financial Accounting Course Introduction

Course Overview

This course on financial accounting will be helpful for B.Com and B.A students.
The course is divided into two levels: Basic and Advanced.
- Basic Level: Covers topics similar to 11th-grade accounting.
  - Includes fundamental accounting rules, journal, ledger, trial balance, final accounts, and adjustments.
- Advanced Level: Involves partnership, branch accounts, departmental accounts, insurance accounts, hire purchase, installment systems, etc.

Traditional Rules
- Personal Accounts: Debit the receiver, credit the giver.
  - Applies to both natural persons (e.g., individuals) and artificial persons (e.g., businesses, banks).
- Real Accounts: Debit what comes in, credit what goes out.
  - Applies to commodities and products.
- Nominal Accounts: Debit expenses and losses, credit income and profits.
  - Includes business expenses like electricity bills, rent, salaries (expenses and losses are debited).
  - Income and profits (e.g., interest received) are credited.
Modern Rules
- Based on the balance sheet concept.
- Assets: Always debit when increasing, credit when decreasing.
- Liabilities: Always credit when increasing, debit when decreasing.
- These rules are tied to the accounting equation and balance sheet impacts.

Business and Businessman Separation: For accounting purposes, the business is separate from the businessman.
Financial Transactions: Transactions that can be measured in money and impact the balance sheet.
Balance Sheet: A financial statement with liabilities on one side and assets on the other.

Understand and memorize these rules to apply in practical financial accounting.
Future lectures will involve practical exercises and further concepts such as general entry, ledger, trial balance, and final accounts.
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