Accounting & finance bankers

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Accounting & finance bankers

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Accounting & finance bankers

  1. 1. Accounting & Finance for Bankers
  2. 2. TOPICS <ul><li>BANK RECONCILIATION </li></ul><ul><li>TRIAL BALANCE </li></ul><ul><li>CAPITAL & REVENUE EXPENDITURE </li></ul><ul><li>INVENTORY VALUATION </li></ul><ul><li>BILLS OF EXCHANGE </li></ul><ul><li>CONSIGNMENT ACCOUNT </li></ul><ul><li>JOINT VENTURE </li></ul><ul><li>LEASING & HIRE PURCHASE </li></ul><ul><li>NON-TRADING ORGANISATIONS </li></ul><ul><li>DEPRECIATION </li></ul><ul><li>MODEL QUESTIONS </li></ul>
  3. 3. Bank Reconciliation statement <ul><li>Meaning </li></ul><ul><li>Causes of differences </li></ul><ul><ul><ul><ul><ul><li>Cheque issued but not presented for payment </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Cheque deposited but not yet realized </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Bank charges </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Interest on saving bank </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Int. on overdraft </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Amount directly collected by bank </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Amount directly paid by bank on Std. Instructions </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Dishonor of a Cheque </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Direct payment into bank by customer </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>errors </li></ul></ul></ul></ul></ul>
  4. 4. BANK RECONCILIATION STATEMENT <ul><li>BANK RECONCILIATION( B. R. ) IS BASED ON THE PRINCIPLE OF DOUBLE ENTRY. </li></ul><ul><li>CREDIT THE GIVER AND DEBIT THE RECEIVER </li></ul><ul><li>B. R. SHOWS CAUSES OF DIFFERENCES BETWEEN CASH BOOK AND PASS BOOK BALANCE </li></ul><ul><li>DEBIT BALANCE AS PER CASH BOOK IS CREDIT BALANCE AS PER PASS BOOK = POSITIVE BALANCE </li></ul><ul><li>CREDIT BALANCE IN CASH BOOK IS DEBIT BALANCE IN PASS BOOK = NEGATIVE BALANCE/OVERDRAFT </li></ul>
  5. 5. EXAMPLES <ul><li>M/s Shekhar Enterprises .was maintaining account with KRB Bank Ltd. On 31st December,2006, Bank column of cash book of company showed a debit balance of Rs. 26000. </li></ul><ul><li>Cheques deposited into the bank but not credited before 31st December,2006 amounted to Rs.4000 </li></ul><ul><li>Bank charges of Rs. 500 were debited by the bank but no entry was made by the accountant of the company. </li></ul><ul><li>From the above particulars, find out the balance as per KRB Bank’s books. </li></ul><ul><li>Rs.30500 </li></ul><ul><li>Rs.25500 </li></ul><ul><li>Rs .21500 </li></ul><ul><li>Rs.22500 </li></ul>
  6. 6. EXAMPLES <ul><li>When overdraft as per cash book and a Cheque of Rs.1000 directly deposited in the bank, but not recorded in cash book---- </li></ul><ul><ul><ul><ul><li>a) Add Rs.1000 in CB </li></ul></ul></ul></ul><ul><ul><ul><ul><li>b) D educt Rs.1000 in CB </li></ul></ul></ul></ul><ul><ul><ul><ul><li>c) Add Rs.2000 in cash book </li></ul></ul></ul></ul><ul><ul><ul><ul><li>d) Deduct Rs.2000 in CB </li></ul></ul></ul></ul><ul><li>Undercasting of the credit side of Cash Book has the same effect as overcasting of the– </li></ul><ul><li>D ebit side of the pass book. </li></ul><ul><li>Credit side of the pass book. </li></ul><ul><li>There is no relevance between the two </li></ul>
  7. 7. Trial Balance(TB)- Rectification entries <ul><li>Trial balance – meaning </li></ul><ul><li>Types- gross TB, Net TB </li></ul><ul><li>Disagreement of TB </li></ul><ul><li>Classification of errors </li></ul><ul><ul><ul><li>Clerical errors </li></ul></ul></ul><ul><ul><ul><ul><li>Errors of omission </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Errors of commission </li></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Posting of correct amount at wrong side </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Posting wrong amount at wrong side </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Totaling error in subsidiary book </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Mistake while balancing of ledger </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><li>Compensating errors </li></ul></ul></ul></ul><ul><ul><ul><li>Errors of principles </li></ul></ul></ul>
  8. 8. Suspense account- <ul><li>Suspense account- After preparation of T/B </li></ul><ul><li>Rectification when books are closed- Diff. in nominal A/c adj. through P & L Adj. A/c- then effect on Capital A/c </li></ul>
  9. 9. Rectification of Errors-Examples <ul><li>(1) Rs. 5000 paid as wages for installing the machinery should be debited to----- </li></ul><ul><ul><ul><li>Wages A/c </li></ul></ul></ul><ul><ul><ul><li>Machinery a/c </li></ul></ul></ul><ul><ul><ul><li>Capital A/c </li></ul></ul></ul><ul><ul><ul><li>None of the above </li></ul></ul></ul><ul><li>(2) Sales to Navin of Rs.1000 is debited to Ravin A/c. this will be rectified by----- </li></ul><ul><li>Debiting Navin a/c and Crediting Ravin A/c </li></ul><ul><li>Debiting both Accounts </li></ul><ul><li>Debiting Ravin a/c and Crediting Navin A/c </li></ul><ul><li>Debiting Navin A/c and crediting Sales A/C </li></ul>
  10. 10. Rectification of Errors-Examples <ul><li>(1) Rs. 5000 paid as wages for installing the machinery should be debited to----- </li></ul><ul><ul><ul><li>Wages A/c </li></ul></ul></ul><ul><ul><ul><li>Machinery a/c </li></ul></ul></ul><ul><ul><ul><li>Capital A/c </li></ul></ul></ul><ul><ul><ul><li>None of the above </li></ul></ul></ul><ul><li>(2) Sales to Navin of Rs.1000 is debited to Ravin A/c. this will be rectified by----- </li></ul><ul><li>Debiting Navin a/c and Crediting Ravin A/c </li></ul><ul><li>Debiting both Accounts </li></ul><ul><li>Debiting Ravin a/c and Crediting Navin A/c </li></ul><ul><li>Debiting Navin A/c and crediting Sales A/C </li></ul>
  11. 11. Rectification of Errors-Examples <ul><li>Credit sale of Rs.5000 to Suresh is posted to his credit, then rectification is </li></ul><ul><li>Credit Suresh to the extent of Rs.10,000 </li></ul><ul><li>Credit Suresh to the extent of Rs.5,000 </li></ul><ul><li>Debit Suresh to the extent of Rs.10,000 </li></ul><ul><li>Debit Suresh to the extent of Rs.5000 </li></ul><ul><li>Freight expenses for carrying New Machinery is carried to Traveling Exp. a/c. Choose the correct rectification entry </li></ul><ul><li>Debit machinery a/c and credit Traveling Exp a/c. </li></ul><ul><li>Credit machinery a/c and debit Freight Exp a/c </li></ul><ul><li>Credit profit and loss account and debit Freight Exp a/c. </li></ul><ul><li>Debit profit and loss a/c( P&L a/c) and credit Traveling Exp a/c. </li></ul>
  12. 12. Capital & Revenue Expenditure CAPITAL REVENUE Large amount Relatively small Improve or enhance earning capacity Maintain asset Long duration benefit Short duration Non- recurring recurring Balance sheet item Trading /P & L A/c item
  13. 13. Cap. & Rev. Expenditure-Examples <ul><li>( 1) Cost of replacement of defective parts of the machinery is ----- </li></ul><ul><li>Capital expenditure </li></ul><ul><li>R evenue expenditure </li></ul><ul><li>Deferred revenue expenditure </li></ul><ul><li>(2) Loss of goods due to fire Rs.8000 is a revenue expenditure because---- </li></ul><ul><li>It is recurring </li></ul><ul><li>Amount involved is small </li></ul><ul><li>L oss is arising out of business operations </li></ul>
  14. 14. Cap. & Rev. Expenditure-Examples <ul><li>(3) Expenditure incurred in acquiring the patents rights for the business is an example of ---- </li></ul><ul><li>C apital expenditure </li></ul><ul><li>Deferred revenue expenditure </li></ul><ul><li>Revenue expenditure </li></ul><ul><li>( 4) Professional fees paid in connection with acquisition of leasehold premises is---- </li></ul><ul><li>C apital expenditure </li></ul><ul><li>Deferred revenue expenditure </li></ul><ul><li>Revenue expenditure </li></ul>
  15. 15. Examples <ul><li>(5)Preliminary expenses , discount allowed on issue of shares are the examples of </li></ul><ul><li>Capital expenditure </li></ul><ul><li>D eferred revenue expenditure </li></ul><ul><li>Revenue expenditure </li></ul><ul><li>(6) Machinery costing Rs.10,000, whose current book value is Rs.7000 is sold for Rs.12000 what is the amount of capital & revenue receipt </li></ul><ul><li>Capital receipt of Rs. 2000 & Rev. Receipt of Rs.10000 </li></ul><ul><li>C apital receipt of Rs. 9000 & Rev. Receipt of Rs.3000 </li></ul><ul><li>Capital receipt of Rs. 12000 & Rev. Receipt of Rs.Nil </li></ul>
  16. 16. Methods of valuation of inventory FIFO LIFO AVERAGECOST <ul><li>Goods issued valued at earliest price </li></ul><ul><li>Stock valuation at latest price </li></ul><ul><li>Goods issued valued at latest price </li></ul><ul><li>Stock valuation at earliest price </li></ul>Found out by dividing total price paid by quantity received
  17. 17. Examples <ul><li>( 1)During inflation, issue of material from the stores is charged to the products at the highest price under----- </li></ul><ul><li>LIFO method </li></ul><ul><li>F IFO method </li></ul><ul><li>Average cost method </li></ul><ul><li>None of the above </li></ul><ul><li>(2) The ascertainment of value of stock from accounting record is known as ----- </li></ul><ul><li>Periodic inventory </li></ul><ul><li>P erpetual inventory </li></ul>
  18. 18. Examples-conted. <ul><li>As per According to Accounting Standard 2 inventory means tangible property held </li></ul><ul><li>for sale in the ordinary course of business (finished goods) </li></ul><ul><li>in the process of production for such sale (work-in-process) </li></ul><ul><li>for production in the production of goods or services for sale (Raw materials) </li></ul><ul><li>Maintenance supplies and consumables other than Machinery and spares (Components) </li></ul><ul><li>(a), (b) and (c) above </li></ul><ul><li>(a), (b), (c) and (d) above </li></ul><ul><li>None of the above </li></ul>
  19. 19. Examples-conted.. <ul><li>Q- The cost formulae recommended by Accounting Standard 2 for valuation of inventories are- </li></ul><ul><li>F IFO or Weighted average </li></ul><ul><li>Standard cost </li></ul><ul><li>LIFO or latest purchase price </li></ul><ul><li>Q:During the rising prices the ______ method will reflect ( F IFO/LIFO/weighted Average) </li></ul><ul><li>lowest cost of material supplied and results in under pricing the products </li></ul><ul><li>Inventory is shown at the higher priced material. </li></ul><ul><li>Lock up of large amount of working capital. </li></ul><ul><li>Profits are inflated </li></ul><ul><li>More liability for payment of taxes </li></ul>
  20. 20. DEPRECIATION ACCCOUNTING <ul><li>Meaning </li></ul><ul><li>Causes of depreciation </li></ul><ul><li>Need for depreciation </li></ul><ul><ul><ul><ul><ul><li>To know correct profit </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Show correct financial position </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Make provision for replacement of assets </li></ul></ul></ul></ul></ul>
  21. 21. Factors of depreciation <ul><li>Cost of asset </li></ul><ul><li>Residual value </li></ul><ul><li>Life of an asset </li></ul>
  22. 22. METHODS OF DEPRECIATION <ul><li>Straight Line Method </li></ul><ul><li>Written Down Value Method </li></ul><ul><li>Example: </li></ul><ul><li>Depreciation is a reduction in the book value of </li></ul><ul><li>all fixed assets </li></ul><ul><li>all fixed assets excepting land </li></ul><ul><li>all fluctuating assets </li></ul><ul><li>both fixed and current assets </li></ul><ul><li>all assets used in business. </li></ul>
  23. 23. Bill of Exchange Bill of Exchange Promissory Note Unconditional order Unconditional promise Made by creditor Made by debtor Acceptance by debtor must No acceptance as such Three parties to a bill Two parties to a bill Noting is not necessary On dishonor, noting is necessary by notary public
  24. 24. Bill of Exchange <ul><li>Honoring on due date </li></ul><ul><li>Retirement </li></ul><ul><li>Discounting of bill </li></ul><ul><li>Sent for collection to bank </li></ul><ul><li>Endorsed to creditor </li></ul><ul><li>Renewal of the bill </li></ul><ul><li>Accommodation bill </li></ul>
  25. 25. Examples <ul><li>Q. ___________ draws a bill on __________ </li></ul><ul><li>Q. A bill of exchange is a negotiable instrument </li></ul><ul><li>True </li></ul><ul><li>False </li></ul><ul><li>Q. Negotiable instruments can be ________from one person to another </li></ul><ul><li>Q. A bill of exchange must be in writing </li></ul><ul><li>True </li></ul><ul><li>False </li></ul><ul><li>Q: A bill of exchange is not to be dated </li></ul><ul><li>True </li></ul><ul><li>F alse </li></ul>
  26. 26. Examples-conted <ul><li>Q.: The date on which the bill is payable is called its _________ </li></ul><ul><li>Q. The due date is calculated after adding __________ to the actual period of the bill. </li></ul><ul><li>Q. If the due date falls on a public holiday, then it becomes due on the ------- </li></ul><ul><li>Q.A bill was drawn on 23rd Dec. 2005 for one month maturity. What will be its due date. </li></ul><ul><li>Q. When a Bill of exchange or promissory note has been dishonoured for non acceptance or non payment, the holder may, within a reasonable period, cause such dishonour to be noted and certified by a notary public, such a certificate is called ________ </li></ul><ul><li>Ans.: due date, Three days of grace, Previous working day, 25th January,protest </li></ul>
  27. 27. CONSIGNMENT ACCOUNT <ul><li>A consignment is the dispatch of goods by its owner to his agent for the purpose of selling. </li></ul><ul><li>Consignor, consignee, Proforma Invoice, Account Sale </li></ul><ul><li>Books of Account in the books of consignor- </li></ul><ul><ul><ul><li>Consignment A/c </li></ul></ul></ul><ul><ul><ul><li>Consignee A/c </li></ul></ul></ul><ul><ul><ul><li>Goods sent on Consignment </li></ul></ul></ul><ul><li>Valuation of closing stock </li></ul><ul><li>Consigning goods at higher price </li></ul>
  28. 28. CONSIGNMENT ACCOUNT <ul><li>A TYPICAL CONSIGNMENT ACCOUNT WILL APPEAR AS FOLLOWS: </li></ul><ul><li>DR. CR </li></ul><ul><li>To goods sent on By consignee </li></ul><ul><li>consignment (goods sold by </li></ul><ul><li>(invoice value) consignee) </li></ul><ul><li>To bank By closing stock </li></ul><ul><li>(all expenses incurred by </li></ul><ul><li>Consignor in transporting) </li></ul><ul><li>To consignee </li></ul><ul><li>(all expenses incurred by </li></ul><ul><li>Consignee in selling) </li></ul><ul><li>To profit & loss a/c </li></ul>
  29. 29. Examples <ul><li>Q. The possession of the goods remains with the _________, but the property in or the ownership of the goods remain with the _________ </li></ul><ul><li>Q. : Usually the consignee recovers all ___________ by him on the consignment. </li></ul><ul><li>Q.:Consignment account is of the nature of </li></ul><ul><li>Personal account </li></ul><ul><li>Nominal account </li></ul><ul><li>Real account </li></ul><ul><li>Q.When the goods are sent by the consignor to the consignee, they are accompanied by </li></ul><ul><li>Proforma invoice* </li></ul><ul><li>Commercial invoice </li></ul><ul><li>Account sales </li></ul><ul><li>Bank draft </li></ul><ul><li>Consignee, Consignor, expenses incurred, nominal </li></ul>
  30. 30. Examples <ul><li>Q. Where del-credere commission is paid: </li></ul><ul><li>the normal commission is not payable to the consignee </li></ul><ul><li>the bad debts, if occur, are borne by the consignor </li></ul><ul><li>the bad debts, if occur, are borne by the consignee </li></ul><ul><li>the bad debts, if occur, are shared by the consignor and consignee equally </li></ul><ul><li>Q.: The principle followed in valuations of closing stock on consignment is </li></ul><ul><li>to include the expenses by the consignor only </li></ul><ul><li>cost to the consignor plus proportionate expenses incurred till the goods reach to the premises of the consignee plus direct expenses of consignee </li></ul><ul><li>Cost plus proportionate non-recurring expenses incurred by the consignor </li></ul><ul><li>Cost plus proportionate non-recurring expenses incurred by the consignee </li></ul>
  31. 31. JOINT VENTURE <ul><li>Meaning </li></ul><ul><li>Temporary partnership </li></ul><ul><li>Accounting -when separate books </li></ul><ul><ul><ul><ul><li>Joint Bank Account </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Co-venturer’s Account </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Joint Venture Account </li></ul></ul></ul></ul><ul><li>Accounting - when no separate books are maintained </li></ul><ul><ul><ul><ul><li>Joint Venture </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Co-Venturer </li></ul></ul></ul></ul>
  32. 32. Examples <ul><li>Q.When separate set of books are kept for keeping the accounts of Joint Venture, then </li></ul><ul><li>Memorandum Joint Venture Account is prepared </li></ul><ul><li>Transactions take the form of ordinary accounting system </li></ul><ul><li>Only Joint Venture and Personal accounts of the co-venturers are maintained. </li></ul><ul><li>Joint Venture, Co-venturers and Joint Bank accounts are opened* </li></ul><ul><li>Q.A debit balance in Joint Venture A/c indicates </li></ul><ul><li>a. Profit on Joint Venture </li></ul><ul><li>b. Loss on Joint venture </li></ul><ul><li>c. Amount receivable </li></ul><ul><li>d. Amount payable </li></ul>
  33. 33. LEASING <ul><li>Contract between two parties </li></ul><ul><li>Owner of an asset transfers his right of use to other party on payment of a fixed rent periodically </li></ul><ul><li>Types >> Finance or Capital Lease </li></ul><ul><ul><ul><ul><ul><li>Operating Lease </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Service Lease </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Leveraged Lease </li></ul></ul></ul></ul></ul>
  34. 34. Leasing Examples <ul><li>A lease which does not secure for the lessor, the recovery of his capital outlay (original cost of the asset leased) plus a return on the funds invested during the lease term is called----- </li></ul><ul><li>(a) Capital Lease </li></ul><ul><li>(b) O perational Lease </li></ul><ul><li>(c) Service Lease </li></ul><ul><li>(d) Leveraged Lease </li></ul>
  35. 35. Leasing Examples <ul><li>(2) There are three parties in----- </li></ul><ul><li>Capital Lease </li></ul><ul><li>Operational Lease </li></ul><ul><li>Service Lease </li></ul><ul><li>L everaged Lease </li></ul><ul><li>(3) Allocating total finance income of Rs. 30000 over the leased period of 4 years by the sum of the digit method results in----- </li></ul><ul><li>FY Rs.7500,SY Rs.7500 TY Rs.7500, FY Rs.7500 </li></ul><ul><li>FY Rs.12000,SY Rs.9000 TY Rs.6000 FOURTH Y Rs.3000 </li></ul><ul><li>FY Rs.3000,SY Rs.6000 TY Rs.9000 FY Rs.12000 </li></ul><ul><li>FY Rs.NIL,SY Rs.10000 TY Rs.10000 FOURTH Y Rs.10000 </li></ul>
  36. 36. Leasing Examples <ul><li>(4) If Lease charges of the year exceed the depreciation charge of the year then----- </li></ul><ul><li>Lease Equalization account is debited (with the difference) </li></ul><ul><li>Lease Equalization account is credited (with the difference) </li></ul><ul><li>Lease Terminal Adjustment account is debited (with the difference) </li></ul><ul><li>None of the above </li></ul><ul><li>(5) In case operational Lease , if the total lease rent is receivable in various installments then in the first year of lease , the journal entry for total lease rent receivable, in the books of lessor is------ </li></ul><ul><li>Debit Lessee account and Credit Rent Suspense a/c* </li></ul><ul><li>Debit Advance Lease Rent account and Credit Lease Rent a/c </li></ul><ul><li>Debit Bank Account and Credit Lease Rent Account </li></ul><ul><li>Debit Bank Account and Credit Advance Lease Rent Account </li></ul>
  37. 37. HIRE PURCHASE & INSTALMENT SALE <ul><li>A buyer purchases goods but pays the price in various installments. </li></ul><ul><li>In hire purchase ownership passes to the buyer on the payment of last installment while in installment selling it passes immediately. </li></ul><ul><li>The hire purchase price consists of two elements a) cash price and b) interest for delayed payments </li></ul>
  38. 38. Accounting of non-trading organizations <ul><li>Meaning </li></ul><ul><li>Need for maintenance of accounts </li></ul><ul><li>Accounts </li></ul><ul><ul><ul><ul><ul><li>Receipt & Payment account </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Income & Expenditure Account </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Balance sheet </li></ul></ul></ul></ul></ul>
  39. 39. Distinction Receipt & Payment A/ct Income& ExpenditureA/c Real Account Nominal Account All receipts & payment in a year Only income and expenses in a year Capital/ revenue items Only revenue items Starts with Opening cash & end with closing cash No op. balance but end with surplus/ deficit current,previous and next year Current year only
  40. 40. Treatment of some items <ul><li>Donations </li></ul><ul><li>Entrance fees </li></ul><ul><li>Life membership fees </li></ul><ul><li>Government grants </li></ul><ul><li>Special fund </li></ul><ul><li>Op. & closing. Stock of stationary </li></ul><ul><li>Sale of fixed assets/investments </li></ul><ul><li>Sports material </li></ul><ul><li>Opening/closing Balance sheet </li></ul><ul><li>Capital fund </li></ul>
  41. 41. <ul><li>Q.For rendering services to the public, Non Trading organizations collect moneys by way of </li></ul><ul><li>Membership and Entrance Fee </li></ul><ul><li>Tuition Fee </li></ul><ul><li>Subscriptions </li></ul><ul><li>Donations </li></ul><ul><li>Q:The following financial statement is not prepared by a non-trading concerns </li></ul><ul><li>Receipt and Payment account </li></ul><ul><li>Income & Expenditure Account </li></ul><ul><li>P rofit & Loss Account </li></ul><ul><li>Balance Sheet </li></ul><ul><li>Q: Receipts and Payments account is </li></ul><ul><li>R eal account </li></ul><ul><li>Personal account </li></ul><ul><li>Nominal account </li></ul>
  42. 42. ADJUSTING ENTRIES <ul><li>Some common adjustments are: </li></ul><ul><li>Closing Stock </li></ul><ul><li>Expenses due but not paid (Outstanding expenses) </li></ul><ul><li>Expenses paid in advance (Prepaid expenses) </li></ul><ul><li>Incomes due but not received (Accrued incomes) </li></ul><ul><li>Incomes not due but received (Unearned incomes) </li></ul><ul><li>Depreciation on assets </li></ul><ul><li>Interest on Capital </li></ul><ul><li>Interest on Drawings </li></ul><ul><li>Interest on Loan </li></ul><ul><li>Bad debts to be written off </li></ul><ul><li>Provision for bad debts </li></ul><ul><li>Provision for discount on Debtors </li></ul><ul><li>Provision for discount on creditors </li></ul><ul><li>Losses on account of accidents </li></ul><ul><li>Commission payable on profit </li></ul><ul><li>Goods used by the proprietor </li></ul><ul><li>Goods distributed as Free Samples </li></ul>
  43. 43. CLOSING ENTRIES <ul><li>Closing consolidated journal entries are normally passed for </li></ul><ul><li>Transfer of all manufacturing and purchase expense to the debit side of trading a/c </li></ul><ul><li>Transfer of Purchases and Sales return to the debit side of Trading a/c </li></ul><ul><li>Transfer of Sales and Purchases return to the credit side of Trading a/c </li></ul><ul><li>Transfer of closing stock to the credit of trading account by an adjustment entry </li></ul><ul><li>Transfer of Gross profit to the credit side of Profit & Loss a/c </li></ul><ul><li>Transfer of Gross loss to the debit side of Profit & Loss a/c </li></ul><ul><li>Transfer of all administrative, selling and financial expenses to the debit of P & L A/c </li></ul><ul><li>Transfer of all operational and non-operational incomes to the credit of P & L A/c </li></ul><ul><li>Transfer of Net profit to the credit of Capital a/c </li></ul><ul><li>Transfer of net loss to the debit of Capital a/c </li></ul>

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