BASIC ACCOUNTING PPT

1. : ISHA RANA
: 7473
: 12:00 PM
: PDEA

2. Accounting could be defined as the art of recording , summarizing , reporting and
examining financial transaction. Accounting is usually regarded as the process of
monitoring a business finance by recording its accounts payable , accounts receivable
and other monetary transactions
FEATURES OF ACCOUNTING
Recording CLASSIFYING
SUMMARISING INTERPRETING

3. BRANCHES OF ACCOUNTING
1. FINANCIAL ACCOUNTING
Financial Accounting based on a systematic method of Recording transactions of any business according to the
accounting principles is the original form of the accounting process.
2. COST ACCOUNTING
Cost Accounting deals with evaluating the cost of a product or service offered. It calculates the cost by considering
all factors that contribute the production of the output , both manufacturing and administrative factors.
3. MANAGEMENT ACCOUNTING
This branch of Accounting Provides information to management for better administration of the business. It helps
in making important decisions and controlling of various activities of the business.
4. FIDUCIARY ACCOUNTING
It is the accounting and evaluation of a third party business and property maintained under the guardianship of
another process.

4. 7. FUND ACCOUNTING
It deals with keeping records for funds of non-profit business entities. Separate fund accounts are maintained for
separate works like welfare schemes of different nature to ensure proper utilization of funds.
8. GOVERNMENT ACCOUNTING
It is done for central government and state government budget allocations and utilization. Keeping records
ensures proper and efficient utilization of the various budget allocations and safety of public funds.
6. TAX ACCOUNTING
Tax accounting deals with taxation matters. Its function include preparation and filling of various tax returns and
dealing with their legal implications.
Auditing is a branch of accounting where an external certified public accountant known as Auditor inspects and
certifies the accounts of a business for their accuracy and consistency.
5. AUDITING

5. ASSETS
An asset is a resource or property having a monetary/economic value possessed by an individual or entity, which is capable to
generate some future economic benefit.
They are of a Fixed nature in the context that they are not readily convertible into cash. They require elaborate procedure and
time for their sale and converted into cash.
These assets also known as circulating, Fluctuating or current assets.
They are those assets, which don’t have physical form. They don’t have any real values.
They are those assets, which don’t have physical existence. Goodwill, patents, Trademark etc.
Tangible assets are those assets which we can touch, see and feel. All fixed assets are intangible.

6. LIABILITIES
Liability is a legal obligation of an individual or a business entity towards creditors a rising out of some transactions.
These liabilities are payable generally, after a long period. Capital, land, debenture etc.
Liabilities Payable within a year are termed as current liabilities.
These are not the real liabilities. Future events can only decide whether it is really liability or not.

7. The word journal is derived from the Latin word , ‘journ’ which means a day . Therefore , it means a day book where
in day-to-day business transactions are recorded in chronological order.
A ledger is the principal book or computer file for recording and totaling economic transactions measured in terms of
monetary unit of account by account type, with debit and credit pin separate columns and beginning monetary
balance and ending monetary balance for each account.
A trial Balance is a book keeping worksheet in which the balance of all ledgers are compiled into debit and credit
account column totals that are equal. A company prepares a trial balance Periodically, usually at the end of every
reporting period.

8. FINAL ACCOUNTS
Final Accounts gives an idea about the profitability and financial position of a business to its management , owners and
other interested parties. All business transactions are first recorded in a journal. They are then transferred to a ledger
and balanced. These final tallies are prepared for a specific period. The preparation of a final accounting is the last
stage of the accounting cycle.
Trading Account is the first stage in the process of preparing final accounts. Trading account shows the gross profit or
gross loss during an accounting year. Its main components are sales, services rendered in the credit side of such sales
or services rendered in the debit side.
The Profit and Loss Statement is a Financial Statement that Summarizes the Revenues, costs and expenses incurred
during a specified period , usually a fiscal quarter or year. The Profit and loss Statement is Synonymous with the
income statement.

9. In financial account a Balance Sheet or Statement of Financial Position or Statement of Financial Condition is a
summary of the financial balances of an individual or organization, whether it be a sole proprietorship, a business
partnership, a corporation, Private limited Company or other organization such as government or not-for-profit entity.
Assets, Liabilities and ownership equity are listed as of a specific date, such as the end of its financial year.

10. * 1-Apr Michael started business with cash 6,00,000, cash at bank of America 7,00,000, furniture
2,00,000.
* 1-Apr Purchased plant & Machinery worth 2,50,000 by Cheque.
* 25-Apr Purchased goods from ABC ltd. Worth 8,00,000 @10% trade account.
* 5-May Cash Sales 10,00,000 @5% trade discount to XYZ Traders.
* 15-May Deposited cash with Bank of America 5,00,000.
* 5-jun Paid ABC ltd. 3,00,000 in cash.
* 10-Jun Received commission 75,000 by Cheque.
* 25-Jun Cash Purchases 2,50,000.
* 5-July Sold goods to XYZ Traders 4,75,000.
* 15-July Received 2,75,000 by Cheque from XYZ traders.
* 5-Aug Loan taken from bank of America 2,00,000.
You are required to:
1) Journalize the above transactions and post them in Ledger and Prepare a Trial Balance.
2) Prepare Trading A/C, Profit & Loss A/C, and Balance sheet taking into consideration:
(a) Depreciation @10% to be charged on Furniture & Fixtures and @15% on Plant & Machinery.
(b) Closing Stock as on 31st March 2020 is 2,00,000.

11. In the books of Michael traders
As on 31st March 2020
DATE PARTICULARS L.F. DEBIT
AMOUNT
CREDIT
AMOUNT
1-APR CASH A/C DR.
BANK OF AMERICA A/C DR.
FURNITURE & FIXTURES A/C DR.
TO MICHAEL’S CAPITAL A/C
(BEING BUSINESS STARTED FOR CASH)
6,00,000
7,00,000
2,00,000
15,00,000
1-APR PLANT & MACHINERY A/C DR.
TO BANK OF AMERICA A/C
(BEING PURCHASED PLANT &/MACHINERY)
2,50,000
2,50,000
25-APR PURCHASES A/C DR.
TO ABC LTD. A/C
(BEING PURCHASED GOODS @10% TRADE DISCOUNT)
7,20,000
7,20,000
5-MAY CASH A/C DR.
TO SALES A/C
(BEING CASH SALES TO XYZ TRADERS @5% TRADE
DISCOUNT)
9,50,000
9,50,000
15-MAY BANK OF AMERICA A/C DR.
TO CASH A/C
5,00,000
5,00,000

12. DATE PARTICULARS L.F. DEBIT
AMOUNT
CREDIT
AMOUNT
5-JUN ABC LTD. A/C DR.
TO CASH A/C
(BEING CASH PAID )
3,00,000
3,00,000
10-JUN BANK OF AMERICA A/C DR.
TO COMMISSION RECEIVED A/C
(BEING RECEIVED COMMISSION BY CHEQUE)
75,000
75,000
25-JUN PURCHASES A/C DR.
TO CASH A/C
(BEING CASH PURCHASES)
2,50,000
2,50,000
5-JUL XYZ TRADERS A/C DR.
TO SALES A/C
(BEING SOLD GOODS TO XYZ TRADERS)
4,75,000
4,75,000
15-JUL BANK OF AMERICA A/C DR.
TO XYZ TRADERS A/C
(BEING RECEIVED CASH BY CHEQUE)
2,75,000
2,75,000
5-AUG BANK OF AMERICA A/C DR.
TO BANK LOAN A/C
(BEING LOAN TAKEN FROM BANK OF AMERICA)
2,00,000
2,00,000

13. MICHAEL’S CAPITAL A/C
DATE PARTICULARS AMOUNT DATE PARTICULARS AMOUNT
1-APR BY CASH A/C 6,00,000
1-APR BY BANK OF AMERICA A/C 7,00,000
1-APR BY FURNITURE & FIXTURES A/C 2,00,000
31-MAR TO BALANCE C/D 15,00,000
TOTAL 15,00,000 TOTAL 15,00,000
1-APR BY BALANCE B/D 15,00,000
PLANT & MACHINERY A/C
DATE PARTICULARS AMOUNT DATE PARTICULARS AMOUNT
1-APR TO BANK OF AMERICA A/C 2,50,000
31-MAR BY BALANCE C/D 2,50,000
TOTAL 2,50,000 TOTAL 2,50,000
1-APR TO BALNCE B/D 2,50,000

14. FURNITURE & FIXTURES A/C
DATE PARTICULARS AMOUNT DATE PARTICULARS AMOUNT
1-APR TO MICHAEL’S CAPITAL
A/C
2,00,000
31-MAR BY BALANCE C/D 2,00,000
TOTAL 2,00,000 TOTAL 2,00,000
1-APR TO BALNCE B/D 2,00,000
PURCHASE A/C
DATE PARTICULARS AMOUNT DATE PARTICULARS AMOUNT
25-APR TO ABC LTD. A/C 7,20,000
25-JUN TO CASH A/C 2,50,000
31-MAR BY TRADING A/C 9,70,000
TOTAL 9,70,000 TOTAL 9,70,000
1-APR TO BALANCE B/D 9,70,000

15. ABC LTD. A/C
DATE PARTICULARS AMOUNT DATE PARTICULARS AMOUNT
5-JUN TO CASH A/C 3,00,000 25-APR BY PURCHASES A/C 7,20,000
31-MAR TO BALANCE C/D 4,20,000
TOTAL 7,20,000 TOTAL 7,20,000
1-APR BY BALNCE B/D 4,20,000
SALES A/C
DATE PARTICULARS AMOUNT DATE PARTICULARS AMOUNT
5-MAY BY CASH A/C 9,50,000
5-JUL BY XYZ TRADERS A/C 4,75,000
31-MAR TO TRADING A/C 14,25,000
TOTAL 14,25,000 TOTAL 14,25,000
1-APR BY BALNCE B/D 14,25,000

16. COMMISSION RECEIVED A/C
DATE PARTICULARS AMOUNT DATE PARTICULARS AMOUNT
10-JUN BY BANK OF AMEERICA A/C 75,000
31-MAR TO PROFIT &LOSS A/C 75,000
TOTAL 75,000 TOTAL 75,000
1-APR BY BALANCE B/D 75,000
XYZ TRADERS A/C
DATE PARTICULARS AMOUNT DATE PARTICULARS AMOUNT
5-JUL TO SALES A/C 4,75,000 15-JUL BY BANK OF AMERICA A/C 2,75,000
31-MAR BY BALANCE C/D 2,00,000
TOTAL 4,75,000 TOTAL 4,75,000
1-APR TO BALANCE B/D 2,00,000

17. BANK LOAN
DATE PARTICULARS AMOUNT DATE PARTICULARS AMOUNT
5-AUG BY BANK OF AMERICAA/C 2,00,000
31-MAR TO BALANCE C/D 2,00,000
TOTAL 2,00,000 TOTAL 2,00,000
1-APR BY BALANCE B/D 2,00,000
CASH A/C
DATE PARTICULARS AMOUNT DATE PARTICULARS AMOUNT
1-APR TO MICHAEL CAPITAL’S A/C 6,00,000 15-MAY BY BANK OF AMERICA A/C 5,00,000
5-MAY TO SALES A/C 9,50,000 5-JUN BY ABC LTD. A/C 3,00,000
25-JUN BY PURCHASES A/C 2,50,000
31-MAR BY BALANCE B/D 5,00,000
TOTAL 15,50,000 TOTAL 15,50,000
1-APR TO BALANCE B/D 5,00,000

18. BANK OF AMERICA A/C
DATE PARTICULARS AMOUNT DATE PARTICULARS AMOUNT
1-APR TO MICHEL’S CAPITAL A/C 7,00,000 1-APR BY PLANT & MACHINERY A/C 2,50,000
15-MAY TO CASH A/C 5,00,000
10-JUN TO COMMISSION RECEIVED
A/C
75,000
15-JUL TO XYZ TREADERS A/C 4,75,000
5-AUG TO BANK LOAN A/C 2,00,000 31-
MAR
BY BALANCE C/D 17,00,000
TOTAL 19,50,000 TOTAL 19,50,000
1-APR TO BALANCE B/D 17,00,000

19. S.NO PARTICULARS DEBIT CREDIT
1 MICHAEL’S CAPITAL 15,00,000
2 PLANT & MACHINERY 2,50,000
3 FURNITURE & FIXTURES 2,00,000
4 PURCHASES 9,70,000
5 ABC LTD. (CREDITORS) 4,20,000
6 SALES 14,25,000
7 COMMISSION RECEIVED 75,000
8 XYZ TRADERS (DEBTOR) 2,00,000
9 BANK LOAN 2,00,000
10 CASH 5,00,000
11 BANK OF AMERICA 17,00,000
TOTAL 38,20,000 38,20,000

20. TRADING ACCOUNT
FOR THE YEAR ENDED
31ST MARCH 2020
PARTICULARS AMOUNT PARTICULARS AMOUNT
TO PURCHAES 9,70,000 BY SALES 14,25,000
BY CLOSING STOCK 2,00,000
TO GROSS PROFIT 6,55,000
16,25,000 16,25,000
PROFIT & LOSS ACCOUNT
FOR THE YEAR ENDED
31ST MARCH 2020
PARTICULARS AMOUNT PARTICULARS AMOUNT
TO DEPRECIATON:- BY GROSS PROFIT B/D 6,55,000
FURNITURE 20,000 BY COMMISSION
RECEIVED
75,000
PLANT & MACHINERY 37,500
TO NET PROFIT 6,72,500
7,30,000 7,30,000

21. BALANCE SHEET
AS ON
31ST MARCH 2020
PARTICULARS AMOUNT PARTICULARS AMOUNT
OPENING CAPITAL 15,00,000 PLANT & MACHINERY 2,50,000
(+) NET PROFIT 6,72,500 21,72,500 (-) DEPRECIATION 37,500 2,12,500
BANK LOAN 2,00,000 FURNITURE & FIXTURES 2,00,000
ABC LTD. (CREDITORS) 4,20,000 (-) DEPRECIATION 20,000 1,80,000
BILL PAYABLE 2,00,000 CASH IN HAND 5,00,000
BANK 17,00,000
XYZ TRADERS (DEBTORS) 2,00,000
CLOSING STOCK 2,00,000
TOTAL 2992500 TOTAL 2992500