Formats

Chapter – 3
Introduction to system and
types of Accounting
3.1 Accounting is the practice or profession of maintaining financial
records, noting expenses or revenues and determining how much one
owes or it owned. A good Accounting system can put light on how the
resources are being used properly.
3.2 This chapter gives a bird’s eye views of the types of Accounting
system, the current accounting system at PRIs.
3.3 Types of Accounting System: There are several types of
Accounting each of which reports revenue and earning differently from
other methods. Two major accounting methods are accrual accounting
and cash accounting. Cash accounting recognizes revenue and expenses
in the order in which they are received or spent.
3.4 The accounting systems can also be classified basing on the way
transactions are recorded in the books of accounts either single entry or
double entry accounting.
3.5 What is Cash basis of Accounting: Cash basis system of
accounting where the transactions are accounted based on actual cash
receipts and cash payments.
3.6 Salient features of Cash basis Accounting:
• It is very simple.
• When payment is received in shape of interest, sale of goods
repayment of loan, revenue is recorded as the date of receipt of
funds.
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