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Financial Accounting for Managers, 3e by Sanjay Dhamija

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3

Accounting Cycle

CHAPTER OBJECTIVES

This chapter will help the readers to:

  • Understand the accounting process leading to the preparation of the profit and loss account, and the balance sheet.
  • Differentiate between real accounts, personal accounts and nominal accounts.
  • Apply the rules for debiting or crediting different types of accounts.
  • Understand the process of ledger posting, balancing of accounts and preparation of trial balance.
  • Prepare the profit and loss account, and the balance sheet from a given trial balance and year-end adjustment entries.
3.1 INTRODUCTION

Financial statements—the profit and loss account and the balance sheet—convey useful information about the financial health of a business enterprise. Every manager is expected ...

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