Chart of Accounts

Chart of Accounts is grouped into five main categories:
1. Assets
2. Liabilities
3. Capital
4. Expenses
5. Revenues

Assets:
Assets are the recources of business, which a business utilizes to get future economic benefits. Assets are sub-grouped into two categories:
1. Current Assets
2. Fixed Assets

Current Assets:
Current Assets are recources, which a business usually utilizes with a year. Some of the current assets are: Cash in hand, Cash at bank, Bills Receivable, Notes Receivable, Inventory etc.

Fixed Assets:
Fixed Assets are recources of business, having a life more than one year. The assets purchased for resale are not included in Fixed Assets. Some of the fixed assets are: Land, Building, Machinery, Furniture etc.

Liabilities:
Liabilities are the Debts. Some of the examples of Liabilities are:
* Accounts payable- the parties from which goods are purchased on credit.
* Loan from Bank- usually provided by Commercial Banks.

Capital:
Capital is the amount which owner provides for operating business activities. Capital is increased when recources of business are increased when Owner additionally invests cash or other asset and the business earn profit.

Expenses:
Cost intended to benefit the near future like, Salaries, Rent, Bank charges etc.

Revenues:
The term Revenue stands for sale of product, service and merchandise or earnings from interest, dividends, rent etc, or gains from sale or exchange of assets. Some of the revenues are sales, rent income, commission income etc.

What is Accounting?

Accounting is the process, applied in a business which comprises recording the data, classifying and summarizing the data, presenting the results to the owner(s) of business.

During business, events like receiving cash from customers, payments to supplies, purchasing goods for sale out, sale of goods, salaries, wages and so on take place. These events as mentioned are generally called transactions. Every transaction concerned with receipt and payment of cash or otherwise, must be recorded in the books. The books in which such transactions are recorded are General Journal and Subsidiary Books like Cash book, Sales Journal, Purchase Journal etc.

The Transactions, which are recorded in General journal and Subsidiary books are then sorted and arranged for analyzing. Moreover, these individual accounts are balanced-off and list of these balances is prepared which is termed as Trial Balance. These records are kept for the purpose of calculating profit or loss. Likewise, they want to know how much the share of recources is owned in the business. Financial statements like Trading and Profit & Loss account and balance sheet are prepared for achieving these objectives.

After preparing financial statements, the finance/accounts managers clarify the business position to the owners. They convey to them the strong and weak points of the business.

Definition of Economics

Economics is social science, which is concerned with the efficient use of scarce recourses to achieve the maximum satisfaction of economic wants. A basic understanding of economics is essential for well-informed people.

An understanding of basics of economic decision making and the operation of economic system enables businessman to increase profit. The businessman who understands when to use new technology, when to merge with another firm, and so on, will be in a position to earn more profit. Economics helps consumers and workers make better buying and employment decisions.

Since economics is a part of social science it includes sociology, psychology and political science. It is a study of how people make choices to satisfy their wants. In economics we examine situations in which individuals can choose how to do things, when to do things and with whom to do them. Ultimately the purpose of economics is to understand choices.

History of Banking

It is very difficult to state the complete historical background of banks or banking. It is not possible to learn when and how the banking system came into existence. Mankind has always been seeking security and protection. This need has led him to scientific and technological development on one hand, and banking development on the other.

The name bank derives from the Italian word banco which means "desk/bench". Man has always found himself in the pursuit of safety and convenience. If we go back to the history we will come to know that his persistent effort to achieve these two targets. In the days gone by when man started saving money he felt himself unsecured. First he buried his savings underground. But this practice did not last long for its shortcomings. Then, he resorted to deposit his savings with the strong and robust persons for safekeeping who hired armed guards on wages. These persons charged fee from depositors.

This practice turned into widely accepted business, which gave rise to the idea to lend the deposited money. The new scheme proved a blessing in disguise because it, then, attracted even more business and brought the trustee new dimensions of profit, and thus modern banking started.

The bank of Venice, established in 1157, is supposed to be the most ancient bank. The bank of England was established on 15th April, 1694. It was a turning point in the history of English Banking which led to the growth of modern banking.

Today the banks are the most important financial institutions which play a vital role throughout the world's economic system.