Higher education, it is said, is the seat of learning where majority of younger generation spends much time availing education through various courses and degrees. Thus, higher education becomes a major industry which creates skilled and qualified human resources. Higher education, especially given through colleges and universities involves financial activities though their chore activity is catering education to their students. Financial transactions, methods and systems of accounting used by these colleges invoke interests in the minds of many academicians and people concerned with accounting and finance. The Arts, Science and Commerce colleges in Mumbai Sub-Urban District which are affiliated to University of Mumbai and are also aided by the UGC are selected in this paper to collect the data. On the basis of the collected information, inferences are drawn regarding the use of accounting principles and conventions practiced by the sample colleges. The present paper attempts to throw light upon the prevailing accounting practices in the conventional colleges. Also, an attempt is made to evaluate the data gathered through questionnaire regarding the maintaining of accounts with respect to curricular activities, co-curricular activities and extra-curricular activities in colleges. Arts, Science and Commerce colleges follow certain accounting principles and conventions while preparing their budget for the financial year keeping in view the activities that the institute designs to conduct throughout the year. Some colleges prefer to adopt computerized accounting system whereas few colleges maintain their accounts manually.