Basic accounting principles and partnership accounts

Accounting records, classifies and summarises the transactions of a business so that its profit and financial position can be known. It runs on a few principles: every transaction has two sides (duality), revenue is recognised when earned, and the business is treated as separate from its owners. Worked example: when the owner puts ₹1,00,000 into the business, the business records cash of ₹1,00,000 and capital of ₹1,00,000 — the two sides always balance, which is why the balance sheet always tallies.