Conversion from single entry to double entry(03)

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Conversion from single entry to double entry(03)

  1. 1. THAWBAN BAIG
  2. 3. Single Entry System <ul><li>More economical way </li></ul><ul><li>Defective way of recording transactions </li></ul><ul><li>Impossible to know total purchases and sales </li></ul><ul><li>No completeness of records </li></ul>
  3. 4. Single Entry System (Cont…) <ul><li>Only has : </li></ul><ul><ul><ul><li>Personal account </li></ul></ul></ul><ul><ul><ul><li>Cash account </li></ul></ul></ul><ul><ul><ul><li>Bank account </li></ul></ul></ul><ul><li>No trial balance, no accuracy of accounts </li></ul><ul><li>Absence of balance sheet </li></ul>
  4. 5. Single Entry System (Cont…) <ul><li>Real and nominal accounts are absent </li></ul><ul><li>Profit and loss accounts cannot be prepared </li></ul><ul><li>Information is always doubtful </li></ul><ul><li>Only shows one aspect of a transaction </li></ul>
  5. 7. Double Entry System <ul><li>Much better and reliable </li></ul><ul><li>Two aspects of a transaction </li></ul><ul><li>Weight should be maintained equally </li></ul><ul><li>Has subsidiary ledger accounts </li></ul>
  6. 8. Double Entry System (Cont…) <ul><li>Both Debit and Credit aspects of a transaction are recorded </li></ul><ul><li>Ledger contains real and nominal accounts </li></ul><ul><li>Transactions are recorded in systematical manner </li></ul><ul><li>Trial balance is present, accuracy can be checked </li></ul>
  7. 9. Double Entry System (Cont…) <ul><li>Financial position can be checked by making balance sheet </li></ul><ul><li>Income and expenditure accounts are present </li></ul>
  8. 10. Debit and Credit Rule Account name Debit (Dr) Credit (Cr) Assets Liabilities Equity Revenue Expenses
  9. 11. The Accounting Equation <ul><li>If, Revenues = Expenses </li></ul><ul><ul><ul><li>Assets = Liabilities + Equity </li></ul></ul></ul><ul><li>If, Revenues = Expenses </li></ul><ul><ul><ul><li>Assets = Liabilities + Equity + (Revenues – Expenses) </li></ul></ul></ul>
  10. 12. Steps Included in Double Entry System
  11. 13. Steps Included in Double Entry System (Cont…)
  12. 14. Steps Included in Double Entry System (Cont…)
  13. 21. General Journal <ul><li>Dr Cr </li></ul><ul><li>Bank account 10,00,000 </li></ul><ul><li>Grant in aid (Revenue) 10,00,000 </li></ul><ul><li>Opened bank account by depositing cheque </li></ul><ul><li>Cash account 60,000 </li></ul><ul><li>bank account 60,000 </li></ul><ul><li>Withdraw cash </li></ul>
  14. 22. General Journal <ul><li>Dr Cr </li></ul><ul><li>Purchases 105,000 </li></ul><ul><li>Account payable 105,000 </li></ul><ul><li>Purchased tables and chairs </li></ul><ul><li>Computer 150,000 </li></ul><ul><li>Account payable 150,000 </li></ul><ul><li>Purchased computer </li></ul>
  15. 23. General Journal <ul><li>Dr Cr </li></ul><ul><li>Ceiling fan 8,000 </li></ul><ul><li>Cash 8,000 </li></ul><ul><li>Cash purchases of ceiling fans </li></ul><ul><li>Travelling advance 5000 </li></ul><ul><li>Cash 5000 </li></ul><ul><li>Travelling advance to A </li></ul>
  16. 24. General Journal <ul><li>Dr Cr </li></ul><ul><li>Printing expense 2,000 </li></ul><ul><li>Cash 2,000 </li></ul><ul><li>Printing expenses </li></ul><ul><li>Travelling expense 2,000 </li></ul><ul><li>Cash 3,000 </li></ul><ul><li>Travelling advance 5,000 </li></ul><ul><li>A submit claim for expenses of 2000 </li></ul>
  17. 25. General Journal <ul><li>Dr Cr </li></ul><ul><li>Medical advance 10,000 </li></ul><ul><li>Bank account 10,000 </li></ul><ul><li>Medical advance to B by cheque </li></ul><ul><li>Travelling expense 1,000 </li></ul><ul><li>Cash 2,000 </li></ul><ul><li>Travelling advance 3,000 </li></ul><ul><li>A submit claim for expenses of 1000 </li></ul>
  18. 26. General Journal <ul><li>Dr Cr </li></ul><ul><li>Salary expense 15,000 </li></ul><ul><li>Bank account 15,000 </li></ul><ul><li>Salaries paid by bank </li></ul><ul><li>Travelling expense 1,000 </li></ul><ul><li>Cash 1,000 </li></ul><ul><li>Travelling advance 2,000 </li></ul><ul><li>A submit claim for expenses of 1000 </li></ul>
  19. 27. General Journal <ul><li>Dr Cr </li></ul><ul><li>Medical expense 5,000 </li></ul><ul><li>Cash 5,000 </li></ul><ul><li>Medical advance 10,000 </li></ul><ul><li>B submit medical expenses, balance </li></ul><ul><li>amount returned to office </li></ul><ul><li>Salary expense 15,000 </li></ul><ul><li>Bank account 15,000 </li></ul><ul><li>Salaries paid by bank </li></ul>
  20. 28. General Journal <ul><li>Dr Cr </li></ul><ul><li>Salary expense 15,000 </li></ul><ul><li>Bank account 15,000 </li></ul><ul><li>Salaries paid by bank </li></ul><ul><li>Account receivable 12,000 </li></ul><ul><li>Bank account 12,000 </li></ul><ul><li>Loan given to C by cheque </li></ul>
  21. 29. General Journal <ul><li>Dr Cr </li></ul><ul><li>Salary expense 15,000 </li></ul><ul><li>Bank account 15,000 </li></ul><ul><li>Salaries paid by bank </li></ul><ul><li>Travelling expense 1,000 </li></ul><ul><li>Travelling advance 1,000 </li></ul><ul><li>A submit claim for expenses of 1000 </li></ul>
  22. 30. General Journal <ul><li>Dr Cr </li></ul><ul><li>Travelling advance 10,000 </li></ul><ul><li>Cash 10,000 </li></ul><ul><li>Further advance to A </li></ul><ul><li>Cash account 15,000 </li></ul><ul><li>Bank account 15,000 </li></ul><ul><li>Withdraw cash </li></ul>
  23. 31. General Journal <ul><li>Dr Cr </li></ul><ul><li>Salary expense 15,000 </li></ul><ul><li>Cash 15,000 </li></ul><ul><li>Salaries paid by cash </li></ul><ul><li>Bank account 12,000 </li></ul><ul><li>Account receivable 12,000 </li></ul><ul><li>Loan received from C </li></ul>
  24. 32. General Journal <ul><li>Dr Cr </li></ul><ul><li>Printing expense 5,000 </li></ul><ul><li>Cash 5,000 </li></ul><ul><li>Printing expenses </li></ul><ul><li>Salary expense 15,000 </li></ul><ul><li>Bank account 15,000 </li></ul><ul><li>Salaries paid by bank </li></ul>
  25. 33. General Journal <ul><li>Dr Cr </li></ul><ul><li>Salary expense 15,000 </li></ul><ul><li>Salary payable 1500 </li></ul><ul><li>Bank account 13,500 </li></ul><ul><li>Salary paid by bank, payable to D </li></ul><ul><li>Misc. expense 12,000 </li></ul><ul><li>Cash 12,000 </li></ul><ul><li>Misc. expenses </li></ul>
  26. 34. General Journal <ul><li>Dr Cr </li></ul><ul><li>Salary payable 1500 </li></ul><ul><li>Cash 1500 </li></ul><ul><li>Salary paid to D in cash </li></ul><ul><li>Salary expense 15,000 </li></ul><ul><li>Bank account 15,000 </li></ul><ul><li>Salaries paid by bank </li></ul>
  27. 35. General Journal <ul><li>Dr Cr </li></ul><ul><li>Printing expense 3,000 </li></ul><ul><li>Cash 3,000 </li></ul><ul><li>Printing expenses </li></ul><ul><li>Telephone expense 15,000 </li></ul><ul><li>Bank account 15,000 </li></ul><ul><li>Telephone expenses by cheque </li></ul>
  28. 36. General Journal <ul><li>Dr Cr </li></ul><ul><li>Advance to Mr. Verma 8,000 </li></ul><ul><li>Cash 8,000 </li></ul><ul><li>Advance to Mr. Verma </li></ul><ul><li>Account payable 50,000 </li></ul><ul><li>Bank account 50,000 </li></ul><ul><li>Payment to Indian store by cheque </li></ul>
  29. 37. General Journal <ul><li>Dr Cr </li></ul><ul><li>Account payable 72,500 </li></ul><ul><li>Bank account 72,500 </li></ul><ul><li>Payment to M/s Excel </li></ul>
  30. 38. 1000,000 12,000 Bank account 60,000 10,000 15,000 15,000 15,000 12,000 15,000 15,000 15,000 13,500 15,000 15,000 50,000 72,500 674,000 Cash account 8000 5000 2000 10,000 15,000 5000 12,000 1500 3000 8000 16,500 60,000 1000 2000 5000 15000 3000
  31. 39. Revenue 10,00,000 10,00,000 Account receivable 12,000 12,000 Travelling expense 2000 1000 1000 1000 5,000 Account payable 105,000 150,000 132,500 50,000 72,500
  32. 40. Purchases 105,000 105,000 Printing expense 2000 5000 3000 10,000 Travelling advance 5000 10,000 4,000 Ceiling fan 8000 8000 5000 3000 2000 1000
  33. 41. To Verma 8000 8000 Telephone expense 15,000 15,000 Medical advance 10,000 10,000 Medical expense 5000 5000
  34. 42. Salary payable 1500 1500 Salary expense 15000 15000 15000 15000 15000 15000 15000 15000 120,000 Misc. expense 12000 12000
  35. 43. Trial Balance Particulars Dr Cr Bank account 674,000 Cash account 16500 Revenue (Aid) 10,00,000 Account receivable 0 Account payable 132,500 Travelling expense 5000 Travelling advance 4000 Printing expense 10,000 Purchases 105,000 Ceiling fan 8000 Computer 150,000
  36. 44. Trial Balance Particulars Dr Cr Medical expense 0 Medical advance 5000 Loan to Verma 8000 Salary payable 0 Misc. expenses 12,000 Salary expense 120,000 Telephone expense 15000 Total 1132,500 1132,500
  37. 45. Income Statement Accounts Dr Cr Revenue 10,00,000 Expenses : Travelling expense 5000 Printing expense 10,000 Telephone expense 15,000 Misc. expense 12,000 Salary expense 120,000 Total 167,000 167,000
  38. 46. <ul><li>Revenue – Expenses = Net income </li></ul><ul><li>10,00,000 – 167,000 = 833000 </li></ul>
  39. 47. Balance Sheet Particulars Dr Cr ASSETS : Cash account 16,500 Bank account 674,000 Travelling advance 4000 Purchases 105,000 Ceiling fan 8000 Computer 150,000 Advance to Verma 8000 LIABILITIES : Account payable 132,500 Net income 833000 Total 965500 965500

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