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Accounts and Finance Study Notes (Part-2) | Assistant Audit Officer CGL Tier-2 Exam 2017

Accounts and Finance Study Notes (Part-2) | Assistant Audit Officer CGL Tier-2 Exam 2017_40.1
Dear students, SSC CGL Tier-2 will be conducted in the month of November (10,11) 2017 tentatively. SSC Adda and Adda247 has started CGL Tier-2 campaign for all the CGL Aspirants. There are total four papers in CGL tier-II Exam. Paper-1 (Quantitative Abilities) and Paper-2 (English Language and Comprehension) are compulsory for all candidates, but Paper-3 (Statistics), Paper-4 (General Studies Finance & Economics) are optional. Paper IV is only for those candidates who apply for the post of Assistant Audit Officer (AAO). We will provide Finance & Economics study notes and quizzes on all important topics. These study notes will prepare you completely for the CGL Tier-2 Exam. 
Assistant Audit Officer (AAO) in CAG through SSC CGL Exam is one of the most sought after posts advertised from 2016 onward. This is the only gazetted post so it is in demand very much. Since this is a gazetted post, it requires some specialized knowledge and skill of Accounts & Finance. So, Paper 4 General Studies (Finance and Economics) has been added to test the important knowledge required for the job. Here are a few tips which one can follow- We will provide material at SSC ADDA, apart from these notes, NCERT books for Accountancy and Economics will be very beneficial. For Accountancy, follow Class 11th NCERT book for the subject. It has covered 90–95 % of the syllabus of accounts part. For Microeconomics, one can refer class 12th NCERT book on the subject where all the concepts have been explained in a lucid manner.Today in this post, we will be discussing Accounting (Part-2) of Paper-4 of CGL Tier-2 2017.
Accountancy is the theory and practice of accounting.” Accountancy is also described as the discipline which analyzes the art and principles of recording all monetary transactions are known as accountancy.
Thus accountancy is not separate from accounting. It is not the process of doing accounting work. It is a discipline or a body of knowledge or subject of study which explains the art and principles of recording financial or business transactions. 
Accountancy explains, why books of account are to be maintained and the form in which these books of account should be maintained for various business transactions like cash books, purchase book, sales book, return inwards and return outwards books and how to prepare the principal financial statements like profit and loss account, balance sheet and cash-flow statement. Accountancy also lays down the procedure for interpretation of accounting information with the help of comparative balance sheets and income statement, ratio analysis and cash-flow statements and also how to communicate the results and interpretation of financial information to the ultimate users of the accounting information for making different types of decisions like investments, grant of loans and supply of goods on credit. It must be made clear that accounting is a part of the concept of accounting.
The main features of accountancy are summed up as under:
(i) It is a discipline, that is, a body of knowledge or a subject of study e.g. chartered accountancy and cost accountancy.
(ii) It prescribes or lays down the rules in respect of recording, classifying, summarizing and interpreting the financial information. 
(iii) It is also concerned with the basic concepts or conventions for recording the business transactions leading to the preparation of the financial statements and the interpretation of operating results (profit or loss) and the financial position.
(iv) Accountancy is a wide term which includes both book-keeping and accounting.
(v) Accountancy is also the practice of accountants like chartered accountants, tax accountants, cost accountants and so on.
Book-keeping may be defined as a science as well as the art of recording business transactions under appropriate accounts.” Book-keeping is also defined as the art of recording business transactions in a systematic manner.
The substance of the above stated and some other definitions are that Book-keeping is the process of recording business transactions, in proper books of account in a systematic manner so as to find out the profit or loss and the financial position of the business enterprise.
A comparison of the respective definitions of book-keeping and accounting would show the following points of difference between the two:
Single Entry System
Single Entry System of Bookkeeping is the oldest method of maintaining financial records in which an entry is made for every financial transaction. In this system, the corresponding opposite entry is not made because the transactions are recorded only once. Full record keeping of transactions is not done due to a single entry of every transaction. It mainly keeps track of the transactions relating to cash receipts and disbursements.
Double Entry System
Double Entry System is the scientific method of keeping financial records. This system is based on the principle of duality, i.e. every transaction has a dual aspect. Each transaction affects two accounts at the same time, in which one account is debited while the other is credited.
Example:  Suppose Mr Kamal has purchased goods of Rs.1000 for cash from Mr Prashant, so here, on one hand, he has received goods and on the other hand the cash is given to Mr Prashant So, you should have noticed that the goods have been acquired by giving up cash. Therefore, as its name signifies, this system records both the aspects of a single transaction, i.e. the increase in goods with the simultaneous decrease in cash.

Key Differences between Single Entry System and Double Entry System
The following are the major differences between single entry system and double entry system of bookkeeping:
1. The bookkeeping system in which only one aspect of a transaction is recorded, i.e. either debit or credit, is known as Single Entry System. Double Entry System is a system of keeping records, whereby both the aspects of a transaction are captured.
2. Single Entry Transaction is simple and easy whereas Double Entry System is complex as well as it requires expertise in accounting for maintaining records.
3. In single entry system, incomplete records are maintained while in double entry system complete recording of transactions is there.
4. In single entry system comparison between two accounting periods is very difficult. Conversely, we can easily compare two accounting periods in the double entry system.
5. Single Entry System maintains personal and cash accounts. On the other hand, personal, real and nominal accounts are kept in Double Entry System.
6. The Single Entry system is best suited for small enterprises, but big organisations prefer Double Entry System.
7. Frauds and embezzlement are easy to identify in double entry system which cannot be located in single entry system.


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