Revision: Introduction to Book-Keeping and Accountancy Accounts HSC Commerce (English Medium) 11th Standard Maharashtra State Board

Prof. Robert N. Anthony has defined accounting as “Nearly every business enterprise has an accounting system. It is a means of collecting, summarizing, analyzing and reporting in monetary terms information about the business transactions."

1. Richard E. Strahelm: “The art of analyzing and recording business transactions, reporting results of business operations through periodic statements and interpreting such results for purposes of effective control of future operations.”
2. J. R. Batliboi : “Book-keeping is the art of recording business dealings in a set of books.”
3. Nocth Cott : “Book-keeping is the art of recording in the books of accounts the monetary aspects of commercial or financial transactions.”
4. R.N. Carter : “Book-keeping is the science and art of correctly recording in the books of accounts,all those business transactions that result in the transfer of money or money’s worth.”

According to R. N. Carter, “Book-keeping is the science and art of recording correctly in the books of account all those business transactions of money or money’s worth”. 

“Accountancy refers to the entire body of the theory and process of accounting.” By Kohler.

Money the business cannot collect from a debtor (it’s a loss). 

Someone who must pay the business for goods/services bought on credit. 

A person/company whom the business must pay for goods/services received on credit. 

A discount is a price reduction offered by a seller to a buyer. 

When a person’s assets (everything they own) are greater than or equal to their liabilities (everything they must pay off), they are called solvent. A solvent person can pay off all their debts and is considered financially strong. 

When a person’s liabilities are greater than their assets, they are called insolvent. An insolvent person cannot pay all their debts and may need help from a court. 

• ''The term goodwill is generally used to denote the benefit arising from connections and reputation.'' - Lord Lindley
• ''Goodwill is nothing more than the probability that the old customers will resort to the old place.'' - Lord Eldon
• ''Goodwill may be said to be that element arising from the reputation, connections or other advantages possessed by a business which enables it to earn greater profits than the return normally to be expected on the capital represented by the net tangible assets employed in the business.'' - Spicer and Pegler 
• "When a man pays for goodwill, he pays for something which places him in the position of being able to earn more than he would be able to do by his own unaided efforts." - Dicksee

Anything valuable the business owns or controls, measured in money. 

Money the business still needs to pay. 

In the words of Kohler: “Accounting standards are codes of conduct imposed by customs, laws or professional bodies for the benefit of public accountants and accountants generally.” 

Capital = Assets – Liabilities 

• Meaning: Goodwill is the reputation of a business that helps it earn more than normal profits.
• Nature: It's an intangible but valuable asset, sold only with the full business. Only purchased goodwill is recorded.
• Features: Attracts customers, earns extra profits, value keeps changing, can't be sold alone, and hard to measure.
• When Valued: On partner admission, retirement, change in profit-sharing, sale, or merger.
• Factors Affecting: Management, location, age, profit trend, quality, licenses, and market conditions.