Accountancy ppt

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  • NAL MEANS
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  • Accountancy ppt

    1. 1. 1 2 3 OF ACCOUNTING By. Prof. Naveen.N Chartered Accountant
    2. 2. NEED FOR INFORMATION INFORMATIONNON QUANTITATIVE QUANTITATIVE INFORMATION INFORMATION ACCOUNTING NON ACCOUNTING INFORMATION INFORMATION OPERATING FINANCIAL MANAGEMENTINFORMATION ACCOUNTING ACCOUNTING
    3. 3. DEFINITION OF ACCOUNTINGTHE process of identifying, measuring andcommunicating economic information topermit informed judgments and decisions byusers of the information. -American Accounting Association Committee
    4. 4. ACCOUNTING – HISTORICAL ANTECEDENTSWhen humans began keeping accounting records in their head ?Symbols recording transactions3200BC – Sumerian civilisation in Mesopotamia kept records in claytablets.1400BC – In Greece slaves used as scribes and auditors, it was assumedthat statements from slaves who could be tortured would be more reliablethat those from freemen990BC – Scribes in Babylonia and Egypt received formal accountingtraining in school.521-486BC – Persia under Darius had government scribes who performedsurprise audits of accounts of the province4AD – In Byzantine empire, Constantine founded a public administrationschool in which accounting was taught.642-814AD - Roman empire under Charlemagne continued examples ofgovernment accountants and auditors.In the 15th century, branches of the Medici Bank were required to submitannual balance sheets to the main office in Florence.
    5. 5. ACCOUNTING – A LANGUAGEACCOUNTING – LANGUAGE OF BUSINESS.COMPLICATION SIMILAR TO TASK OF LEARNING NEW LANGUAGE.WORDS USED IN A DIFFERENT SENSE IN ACCOUNTING THAN INTHEIR COLLOQUIAL MEANING (EG: NET WORTH).SOME ACCOUTING RULES ARE DEFINITE OTHERS ARE NOT.ACCOUNTING NOT STATIC – RULES SUBJECT TO CHANGE
    6. 6. BASIC CONCEPTS1. Money measurement.Record is made only of information that can be expressed in monetary terms.2. Entity.Accounts kept for entities, as distinguished from the persons who areassociated with these entities.3. Going concern.Entity will continue to operate for an indefinitely long period in the future.4. Cost concept.The economic resources of an entity is ordinarily entered in the accountingrecords at the price paid to acquire it.5. Dual aspect.Since all of the assets of a business are claimed by someone and since thetotal of these claims cannot exceed the amount of assets to be claimed itfollows that ASSETS = LIABILITIES & EQUITIES
    7. 7. BASIC CONCEPTS6. Accounting period.Accounting measures activities for a specified interval of time calledaccounting period. (Pacioli, first author of an accounting text, wrote in 1494:“ Books should be closed each year, especially in a partnership, because frequentaccounting makes for long partnership.”)7. Conservatism.Recognition of revenues requires better evidence than does recognition ofexpenses.8. Consistency.All the policies adopted for preparing financial statements should be consistentlyFollowed by the entity.9. Materiality.Insignificant events may be disregarded, but there must be full disclosure of allimportant information.
    8. 8. ACCOUNTING PROCESS ACCOUNTING PROCESS IDENTIFICATION OF THE ECONOMIC EVENTS CLASSIFYING THE BUSINESS TRANSACTIONS MEASUREMENT IN RUPEES RECORDING THE BUSINESS TRANSACTIONSANALYSING AND INTERPRETING THE BUSINESS TRANSACTIONS
    9. 9. ACCOUNTING CYCLE TRANSACTIONS PREPARATION OF JOURNAL AND SUBSIDIARY BOOKS LEDGER POSTINGS EXTRACTING TRIAL BALANCEPREPARING FINANCIAL STATEMENTS, TRADING AND PROFIT AND LOSS ACCOUNTS AND BALANCE SHEET
    10. 10. ACCOUNTING EQUATIONOWNER’S CAPITAL + LIABILITIES = ASSETS
    11. 11. FORMAL ACCOUNTING - DOUBLE ENTRY SYSTEM OF BOOK KEEPINGMETHOD OF RECORDING TWO-FOLD EFFECTS OF EVERYTRANSACTION.BOTH DEBIT AND CREDIT ASPECT OF A TRANSACTION ISRECORDED.FORMAL ACCOUNTING USES A SET OF BOOKS ANDLEDGERS TO RECORD TRANSACTIONS.LEDGER ( T-ACCOUNTS) ARE PREPARED FROM WHICHTRIAL BALANCES AND FINANCIAL STATEMENTS AREDRAWN.
    12. 12. RULES OF DEBIT AND CREDIT T - ACCOUNT DEBIT SIDE CREDIT SIDE ASSETINCREASE OR ADDITIONS DECREASE OR DEDUCTIONON THE DEBIT SIDE ON THE CREDIT SIDE" + " ON LEFT HAND SIDE “ - " ON RIGHT HAND SIDE
    13. 13. RULES OF DEBIT AND CREDIT T - ACCOUNT DEBIT SIDE CREDIT SIDE LIABILITY (EXTERNAL) & CAPITAL(INTERNAL)DECREASE OR DEDUCTION INCREASE OR ADDITIONSON THE DEBIT SIDE ON THE CREDIT SIDE“ - " ON LEFT HAND SIDE " + " ON RIGHT HAND SIDE
    14. 14. RULES OF DEBIT AND CREDIT T - ACCOUNT DEBIT SIDE CREDIT SIDE EXPENSES / LOSSESINCREASE OR ADDITIONS DECREASE OR DEDUCTIONON THE DEBIT SIDE ON THE CREDIT SIDE" + " ON LEFT HAND SIDE “ - " ON RIGHT HAND SIDE
    15. 15. RULES OF DEBIT AND CREDIT T - ACCOUNT DEBIT SIDE CREDIT SIDE REVENUES / GAINSDECREASE OR DEDUCTION INCREASE OR ADDITIONSON THE DEBIT SIDE ON THE CREDIT SIDE“ - " ON LEFT HAND SIDE " + " ON RIGHT HAND SIDE
    16. 16. GREEN COMPANY
    17. 17. GREEN COMPANY – Transaction 1RAMASWAMY STARTED BUSINESS WITH CASH RS 1,00,000 Dr CASH (ASSET) Cr Capital Rs 1,00,000 Dr RAMASWAMY CAPITAL (EQUITY AND LIABILITY) Cr Cash Rs 1,00,000
    18. 18. GREEN COMPANY – Transaction 2GREEN COMPANY RAISED BANK LOAN OF RS 50,000 Dr CASH (ASSET) Cr Capital 1,00,000 Bank loan 50,000 Dr BANK LOAN (EQUITY AND LIABILITY) Cr Cash 50,000
    19. 19. GREEN COMPANY – Transaction 3GREEN COMPANY BOUGHT A BUILDING FOR RS 25,000 AND PAID IN CASH. Dr CASH (ASSET) Cr Capital 1,00,000 Building Bank loan 25,000 50,000 Dr BUILDING (ASSET) Cr Cash 25,000
    20. 20. GREEN COMPANY – Transaction 4GREEN COMPANY BOUGHT STOCK OF SUGAR FOR RS 10,000 Dr CASH (ASSET) Cr Capital 1,00,000 Building Bank loan 25,000 50,000 Stock 10,000 Dr STOCK (ASSET) Cr Cash 10,000
    21. 21. GREEN COMPANY – Transaction 5GREEN COMPANY SOLD THE ENTIRE STOCK OF SUGAR FOR RS 12,000 Dr CASH (ASSET) Cr Capital 1,00,000 Building Bank loan 25,000 50,000 Stock Sales 10,000 Dr STOCK (ASSET) 12,000 Cr Cash Cost of goods sold 10,000 10,000 Dr COST OF GOODS SOLD (EXPENSE) Cr Stock 10,000 Dr SALES (INCOME) Cr Cash 12,000
    22. 22. GREEN COMPANYRECOLLECT HOW MANY T – ACCOUNTS HAVE WE PREPARED1. CASH ACCOUNT (Asset)2. RAMASWAMY CAPITAL ACCOUNT (Liability)3. BANK LOAN ACCOUNT (Liability)4. BUILDING ACCOUNT (Asset)5. STOCK ACCOUNT (Asset)6. COST OF GOODS SOLD ACCOUNT (Expense)7. SALES ACCOUNT (Income)
    23. 23. YELLOW COMPANY
    24. 24. YELLOW COMPANY – Transaction 1RAMASWAMY STARTED BUSINESS WITH CASH RS 50,000 AND AVAILEDLOAN OF RS 75,000 Dr CASH (ASSET) Cr Capital Rs 50,000 Loan Rs 75,000 Dr RAMASWAMY CAPITAL (EQUITY AND LIABILITY) Cr Cash Rs 50,000 Dr MRS RAMASWAMY LOAN(EQUITY AND LIABILITY) Cr Cash Rs 75,000
    25. 25. YELLOW COMPANY – Transaction 2YELLOW COMPANY BOUGHT A BUILDING FOR RS 10,000 AND PAID IN CASH. Dr CASH (ASSET) Cr Capital 50,000 Furniture 10,000 Loan 75,000 Dr FURNITURE(ASSET) Cr Cash 10,000
    26. 26. YELLOW COMPANY – Transaction 3YELLOW COMPANY BOUGHT RS 50,000 WORTH OF CEMENT ON CREDIT. Dr STOCK(ASSET) Cr Creditors 50,000 Dr CREDITORS (LIABILITY) Cr Stock 50,000
    27. 27. YELLOW COMPANY – Transaction 4YELLOW COMPANY SOLD ENTIRE STOCK OF CEMENT FOR RS 60,000 ON CREDIT. Dr STOCK(ASSET) Cr Creditors 50,000 Cost of goods sold 50,000 Dr DEBTORS (ASSET) Cr Sales 60,000 Dr COST OF GOODS SOLD (EXPENSE) Cr Stock 50,000 Dr SALES (INCOME) Cr Debtors 60,000
    28. 28. YELLOW COMPANY – Transaction 5YELLOW COMPANY RECEIVED FROM CEMENT PURCHASER RS 60,000 Dr CASH (ASSET) Cr Capital 50,000 Furniture 10,000 Loan 75,000 Debtor 60,000 Dr DEBTORS (ASSET) Cr Sales Cash 60,000 60,000
    29. 29. YELLOW COMPANY – Transaction 6YELLOW COMPANY PAID RS 50,000 TO SUPPLIER Dr CASH (ASSET) Cr Capital 50,000 Furniture 10,000 Loan 75,000 Creditor Debtor 60,000 50,000 Dr CREDITORS (LIABILITY) Cr Cash Stock 50,000 50,000
    30. 30. YELLOW COMPANY – Transaction 7YELLOW COMPANY REPAID LOAN RS 25,000 Dr CASH (ASSET) Cr Capital 50,000 Furniture 10,000 Loan 75,000 Creditor Debtor 60,000 50,000 Loan 25,000 Dr MRS RAMASWAMY LOAN(EQUITY AND LIABILITY) Cr Cash Cash Rs 25,000 75,000
    31. 31. GREEN COMPANYRECOLLECT HOW MANY T – ACCOUNTS HAVE WE PREPARED1. CASH ACCOUNT (Asset)2. RAMASWAMY CAPITAL ACCOUNT (Liability)3. MRS RAMASWAMY LOAN ACCOUNT (Liability)4. FURNITURE ACCOUNT(Asset)5. STOCK ACCOUNT (Asset)6. CREDITOR ACCOUNT (Liability)7. DEBTOR ACCOUNT (Asset)8. COST OF GOODS SOLD ACCOUNT (Expense)9. SALES ACCOUNT (Income)
    32. 32. IN THE BOOKS OF WOODCRAFT COMPANY
    33. 33. IN THE BOOKS OF WOODCRAFT COMPANY1. Sept 1, Began business by investing cash Rs 10,000 in company’s share capital.DR 1. CASH A/C CR DATE PARTICULARS J.F AMOUNT(RS) DATE PARTICULARS J.F AMOUNT (RS)1.9.XX To Capital 10,000DR 2. CAPITAL A/C CR DATE PARTICULARS J.F AMOUNT(RS) DATE PARTICULARS J.F AMOUNT (RS) 1.9.XX By Cash 10,000
    34. 34. IN THE BOOKS OF WOODCRAFT COMPANY2. Sept 4, Paid two months rent in advance for a shop Rs 2,000.DR 1. CASH A/C CR DATE PARTICULARS J.F AMOUNT(RS) DATE PARTICULARS J.F AMOUNT (RS)1.9.XX To Capital 10,000 4.9.XX By Rent advance 2,000DR 3. RENT IN ADVANCE A/C CR DATE PARTICULARS J.F AMOUNT(RS) DATE PARTICULARS J.F AMOUNT (RS)4.9.XX To Cash 2,000Capital account (2) opened earlier continues.
    35. 35. IN THE BOOKS OF WOODCRAFT COMPANY3. Sept 5, Bought equipment for cash Rs 1,200.DR 1. CASH A/C CR DATE PARTICULARS J.F AMOUNT(RS) DATE PARTICULARS J.F AMOUNT (RS)1.9.XX To Capital 10,000 4.9.XX By Rent advance 2,000 5.9.XX By Equipment 1,200DR 4. EQUIPMENT A/C CR DATE PARTICULARS J.F AMOUNT(RS) DATE PARTICULARS J.F AMOUNT (RS)5.9.XX To Cash 1,200Capital account (2), Rent in advance account (3) opened earlier continues.
    36. 36. IN THE BOOKS OF WOODCRAFT COMPANY4. Sept 7, Bought supplies on credit, Rs 700DR 5. SUPPLIES A/C CR DATE PARTICULARS J.F AMOUNT(RS) DATE PARTICULARS J.F AMOUNT (RS) 7.9.XX To Creditors 700DR 6. CREDITORS A/C CR DATE PARTICULARS J.F AMOUNT(RS) DATE PARTICULARS J.F AMOUNT (RS) 7.9.XX By Supplies 700Capital account (2) , Rent in advance account (3), Cash account (1), Equipment account (4)opened earlier continues.
    37. 37. IN THE BOOKS OF WOODCRAFT COMPANY5. Sept 10, Received payment for remodeling a kitchen Rs 8,600DR 1. CASH A/C CR DATE PARTICULARS J.F AMOUNT(RS) DATE PARTICULARS J.F AMOUNT (RS) 1.9.XX To Capital 10,000 4.9.XX By Rent advance 2,000 10.9.XX To Revenue 8,600 5.9.XX By Equipment 1,200DR 7. REVENUE FROM SERVICE A/C CR DATE PARTICULARS J.F AMOUNT(RS) DATE PARTICULARS J.F AMOUNT (RS) 10.9.XX By Cash 8,600Capital account (2) , Rent in advance account (3), Equipment account (4), Supplies account(5), Creditors account (6) opened earlier continues.
    38. 38. IN THE BOOKS OF WOODCRAFT COMPANY6. Sept 14, Paid for advertisement that appeared in local newspaper Rs 1,400.DR 1. CASH A/C CR DATE PARTICULARS J.F AMOUNT(RS) DATE PARTICULARS J.F AMOUNT (RS) 1.9.XX To Capital 10,000 4.9.XX By Rent advance 2,000 10.9.XX To Revenue 8,600 5.9.XX By Equipment 1,200 14.9.XX By Advertisement 1,400DR 8. ADVERTISEMENT A/C CR DATE PARTICULARS J.F AMOUNT(RS) DATE PARTICULARS J.F AMOUNT (RS) 14.9.XX To Cash 1,400Capital account (2) , Rent in advance account (3), Equipment account (4), Supplies account(5), Creditors account (6), Revenue account (7) opened earlier continues.
    39. 39. IN THE BOOKS OF WOODCRAFT COMPANY7. Sept 17, Received payment for furnishing office room Rs 11,200DR 1. CASH A/C CR DATE PARTICULARS J.F AMOUNT(RS) DATE PARTICULARS J.F AMOUNT (RS) 1.9.XX To Capital 10,000 4.9.XX By Rent advance 2,000 10.9.XX To Revenue 8,600 5.9.XX By Equipment 1,200 17.9.XX To Revenue 11,200 14.9.XX By Advertisement 1,400DR 7. REVENUE FROM SERVICE A/C CR DATE PARTICULARS J.F AMOUNT(RS) DATE PARTICULARS J.F AMOUNT (RS) 10.9.XX By Cash 8,600 17.9.XX By Cash 11,200Capital account (2) , Rent in advance account (3), Equipment account (4), Supplies account(5), Creditors account (6), Advertisement account (8) opened earlier continues.
    40. 40. IN THE BOOKS OF WOODCRAFT COMPANY8. Sept 23, Billed customers for work done other than on cash terms Rs 13,100DR 7. REVENUE FROM SERVICE A/C CR DATE PARTICULARS J.F AMOUNT(RS) DATE PARTICULARS J.F AMOUNT (RS) 10.9.XX By Cash 8,600 17.9.XX By Cash 11,200 23.9.XX By Debtors 13,100DR 9. DEBTORS A/C CR DATE PARTICULARS J.F AMOUNT(RS) DATE PARTICULARS J.F AMOUNT (RS) 23.9.XX To Revenue 13,100Capital account (2) , Rent in advance account (3), Equipment account (4), Supplies account(5), Creditors account (6), Advertisement account (8) , Cash account (1) opened earliercontinues.
    41. 41. IN THE BOOKS OF WOODCRAFT COMPANY9. Sept 25, Paid wages to assistant Rs 1,500DR 1. CASH A/C CR DATE PARTICULARS J.F AMOUNT(RS) DATE PARTICULARS J.F AMOUNT (RS) 1.9.XX To Capital 10,000 4.9.XX By Rent advance 2,000 10.9.XX To Revenue 8,600 5.9.XX By Equipment 1,200 17.9.XX To Revenue 11,200 14.9.XX By Advertisement 1,400 25.9.XX By Wages 1,500DR 10. WAGES A/C CR DATE PARTICULARS J.F AMOUNT(RS) DATE PARTICULARS J.F AMOUNT (RS) 25.9.XX To Cash 1,500Capital account (2) , Rent in advance account (3), Equipment account (4), Supplies account(5), Creditors account (6), Revenue account (7), Advertisement account (8) , Debtors account(9) opened earlier continues.
    42. 42. IN THE BOOKS OF WOODCRAFT COMPANY10. Sept 28, Paid electricity charges Rs 240DR 1. CASH A/C CR DATE PARTICULARS J.F AMOUNT(RS) DATE PARTICULARS J.F AMOUNT (RS) 1.9.XX To Capital 10,000 4.9.XX By Rent advance 2,000 10.9.XX To Revenue 8,600 5.9.XX By Equipment 1,200 17.9.XX To Revenue 11,200 14.9.XX By Advertisement 1,400 25.9.XX By Wages 1,500 28.9.XX By Electricity 240DR 11. ELECTRICITY CHARGES A/C CR DATE PARTICULARS J.F AMOUNT(RS) DATE PARTICULARS J.F AMOUNT (RS) 28.9.XX To Cash 240Capital account (2) , Rent in advance account (3), Equipment account (4), Supplies account(5), Creditors account (6), Revenue account (7), Advertisement account (8) , Debtors account(9), Wages account (10) opened earlier continues.
    43. 43. IN THE BOOKS OF WOODCRAFT COMPANY11. Sept 29, Received from customers billed amount of Rs 4,800DR 1. CASH A/C CR DATE PARTICULARS J.F AMOUNT(RS) DATE PARTICULARS J.F AMOUNT (RS) 1.9.XX To Capital 10,000 4.9.XX By Rent advance 2,000 10.9.XX To Revenue 8,600 5.9.XX By Equipment 1,200 17.9.XX To Revenue 11,200 14.9.XX By Advertisement 1,400 29.9.XX To Debtors 4,800 25.9.XX By Wages 1,500 28.9.XX By Electricity 240DR 9. DEBTORS A/C CR DATE PARTICULARS J.F AMOUNT(RS) DATE PARTICULARS J.F AMOUNT (RS) 23.9.XX To Revenue 13,100 29.9.XX By Cash 4,800Capital account (2) , Rent in advance account (3), Equipment account (4), Supplies account(5), Creditors account (6), Revenue account (7), Advertisement account (8) , Wages account(10), Electricity account (11) opened earlier continues.
    44. 44. IN THE BOOKS OF WOODCRAFT COMPANY12. Sept 30, Paid a dividend Rs 2,500DR 1. CASH A/C CR DATE PARTICULARS J.F AMOUNT(RS) DATE PARTICULARS J.F AMOUNT (RS) 1.9.XX To Capital 10,000 4.9.XX By Rent advance 2,000 10.9.XX To Revenue 8,600 5.9.XX By Equipment 1,200 17.9.XX To Revenue 11,200 14.9.XX By Advertisement 1,400 29.9.XX To Debtors 4,800 25.9.XX By Wages 1,500 28.9.XX By Electricity 240 30.9.XX By Dividend 2,500DR 12. DIVIDEND A/C CR DATE PARTICULARS J.F AMOUNT(RS) DATE PARTICULARS J.F AMOUNT (RS) 30.9.XX To Cash 2,500Capital account (2) , Rent in advance account (3), Equipment account (4), Supplies account(5), Creditors account (6), Revenue account (7), Advertisement account (8) , Wages account(10), Electricity account (11), Debtors account (9) opened earlier continues.
    45. 45. IN THE BOOKS OF WOODCRAFT COMPANYAscertaining the closing balanceDR 1. CASH A/C CR DATE PARTICULARS J.F AMOUNT(RS) DATE PARTICULARS J.F AMOUNT (RS) 1.9.XX To Capital 10,000 4.9.XX By Rent advance 2,000 10.9.XX To Revenue 8,600 5.9.XX By Equipment 1,200 17.9.XX To Revenue 11,200 14.9.XX By Advertisement 1,400 29.9.XX To Debtors 4,800 25.9.XX By Wages 1,500 28.9.XX By Electricity 240 30.9.XX By Dividend 2,500 30.9.XX By Balance 25,760 34,600 34,600DR 2. CAPITAL A/C CR DATE PARTICULARS J.F AMOUNT(RS) DATE PARTICULARS J.F AMOUNT (RS) 30.9.XX To balance 10,000 1.9.XX By Cash 10,000 10,000 10,000
    46. 46. IN THE BOOKS OF WOODCRAFT COMPANYAscertaining the closing balanceDR 3. RENT IN ADVANCE A/C CR DATE PARTICULARS J.F AMOUNT(RS) DATE PARTICULARS J.F AMOUNT (RS) 4.9.XX To Cash 2,000 30.9.XX By Balance 2,000 2,000 2,000DR 4. EQUIPMENT A/C CR DATE PARTICULARS J.F AMOUNT(RS) DATE PARTICULARS J.F AMOUNT (RS) 5.9.XX To Cash 1,200 30.9.XX By Balance 1,200 1,200 1,200DR 5. SUPPLIES A/C CR DATE PARTICULARS J.F AMOUNT(RS) DATE PARTICULARS J.F AMOUNT (RS) 7.9.XX To Creditors 700 30.9.XX By Balance 700 700 700DR 6. CREDITORS A/C CR DATE PARTICULARS J.F AMOUNT(RS) DATE PARTICULARS J.F AMOUNT (RS) 30.9.XX To balance 700 7.9.XX By Supplies 700 700 700
    47. 47. IN THE BOOKS OF WOODCRAFT COMPANYAscertaining the closing balanceDR 7. REVENUE FROM SERVICE A/C CR DATE PARTICULARS J.F AMOUNT(RS) DATE PARTICULARS J.F AMOUNT (RS) 30.9.XX To balance 32,900 10.9.XX By Cash 8,600 17.9.XX By Cash 11,200 23.9.XX By Debtors 13,100 32,900 32,900DR 8. ADVERTISEMENT A/C CR DATE PARTICULARS J.F AMOUNT(RS) DATE PARTICULARS J.F AMOUNT (RS) 14.9.XX To Cash 1,400 30.9.XX By Balance 1,400 1,400 1,400DR 9. DEBTORS A/C CR DATE PARTICULARS J.F AMOUNT(RS) DATE PARTICULARS J.F AMOUNT (RS) 23.9.XX To Revenue 13,100 29.9.XX By Cash 4,800 30.9.XX By Balance 8,300 13,100 13,100
    48. 48. IN THE BOOKS OF WOODCRAFT COMPANYAscertaining the closing balanceDR 10. WAGES A/C CR DATE PARTICULARS J.F AMOUNT(RS) DATE PARTICULARS J.F AMOUNT (RS) 25.9.XX To Cash 1,500 30.9.XX By Balance 1,500 1,500 1,500DR 11. ELECTRICITY CHARGES A/C CR DATE PARTICULARS J.F AMOUNT(RS) DATE PARTICULARS J.F AMOUNT (RS) 28.9.XX To Cash 240 30.9.XX By Balance 240 240 240DR 12. DIVIDEND A/C CR DATE PARTICULARS J.F AMOUNT(RS) DATE PARTICULARS J.F AMOUNT (RS) 30.9.XX To Cash 2,500 30.9.XX By Balance 2,500 2,500 2,500
    49. 49. TRIAL BALANCE – WOODCRAFT COMPANY PARTICULARS DEBIT (RS.) CREDIT (RS.)CASH 25,760CAPITAL 10,000PREPAID RENT 2,000EQUIPMENT 1,200SUPPLIES 700CREDITORS 700REVENUE 32,900ADVERTISEMENT 1,400DEBTORS 8,300WAGES 1,500ELECTRICITY 240DIVIDEND 2,500 43,600 43,600
    50. 50. VENU’S MUSIC CORNER
    51. 51. VENU’S MUSIC CORNER - PROFIT AND LOSS ACCOUNT PARTICULARS RS RSRevenues from services 12,660ExpensesSalaries 5,600Electricity 410Advertisement 130Rent 300 6,440Profit for the year 6,220
    52. 52. VENU’S MUSIC CORNER – BALANCE SHEET PARTICULARS ASSETSCASH 570DEBTORS 1,210SUPPLIES 2,190EQUIPMENT 25,500 29,470 LIABILITIESCREDITORS 2,510UNEARNED INCOME 600EQUITYVENUGOPAL CAPITALOpening balance 21,140Add: Additions during the year 3,000Add: Profit 6,220 30,360Less: Drawings 4,000 26,360 29,470
    53. 53. RELIANCE TENNIS LIMITED
    54. 54. IN THE BOOKS OF RELIANCE TENNIS LIMITEDAscertaining the closing balanceDR CASH A/C CR DATE PARTICULARS J.F AMOUNT(RS) DATE PARTICULARS J.F AMOUNT (RS)01.03.12 Balance 5,000 02.03.12 Salary 2,50001.03.12 Revenue 3,600 03.03.12 Bank loan repaid 2,00012.03.12 Unearned revenue 1,400 06.03.12 Supplies 70026.03.12 Receivable 7,850 08.03.12 Maintenance 900 09.03.12 Advertisement 300 14.03.12 Electricity 650 28.03.12 Creditors 440 29.03.12 Prepaid Insurance 830 30.03.12 Dividend 1,100 31.03.12 Balance c/d 8,430 17,850 17,85001.04.12 Balance b/d 8,430
    55. 55. RELIANCE TENNIS LIMITED – TRIAL BALANCE PARTICULARS DEBIT (RS.) CREDIT (RS.)Tennis court 20,000Accounts receivable 1,180Cash 8,430Supplies 4,100Unearned revenue 4,200Bank loan payable 4,000Share capital 23,000Dividends 3,200Revenue from services 19,740Electricity expenses 1,480Insurance expenses 2,720Prepaid insurance 830Repairs & maintenance 2,100Salaries 6,600Advertisement 300 50,940 50,940
    56. 56. ANUPAMA SECURITIES LTD
    57. 57. ANUPAMA SECURITIES LTDRevenueBroking commission earned (24,630 + 910) 25,540ExpensesSalaries expenses (6,400+340) 6,740Electricity expenses 720Telephone expenses 910Rent expenses (4,400+400) 4,800Interest on loan (20,000 @ 15% for 4 months) 1,000Supplies (1,430- 680) 750Depreciation on computer 3,600 18,520PBT 7,020Less: Tax @ 50% 3,510PAT 3,510
    58. 58. VASAN VIDEO LIMITED
    59. 59. VASAN VIDEO LTDCapital 20,000Revenue 22,590Supplies 1,540Debtor 970Insurance 1,200Creditor 6,450Expenses 2,210Rent 3,000Advance rent 500Salary 9,620Unearned revenue 1,300Camera 30,000Salary payable 380Electricity 1,005Telephone 450Prepaid insurance 1,200Electricity charges payable 95Bank charges 880 51,695 51,695
    60. 60. JOURNALWORD JOURNAL HAS BEEN DERIVED FROM THE FRENCH WORD‘JOUR’ WHICH MEANS A DAY. THEREFORE JOURNAL MEANS DAILYRECORD.JOURNAL IS A BOOK IN WHICH DAY TO DAY TRANSACTIONS ARERECORDED.IN JOURNAL EACH TRANSACTION IS CLASSIFIED INTO DEBIT ANDCREDIT ASPECT AND BOTH THE ASPECT ARE RECORDEDTOGETHER WITH EXPLANATION FOR EACH ENTRY.THE PROCESS OR ACT OF RECORDING A TRANSACTION IN THEJOURNAL IS CALLED JOURNALISING. THE RECORD OF ATRANSACTION IN THE JOURNAL IS CALLED JOURNAL ENTRY.
    61. 61. JOURNAL FORMATDATE PARTICULARS L.F DEBIT (RS.) CREDIT (RS.)
    62. 62. FINANCIAL STATEMENTSSTAGES IN ACCOUNTING1)Journal2)Ledger3)Trial Balance to verify the accuracy of ledgeraccount balance4)Preparation of financial statements
    63. 63. TYPES OF BUSINESS ESTABLISHMENTSTYPES1)TRADING CONCERNS2)MANUFACTURING CONCERNSTrading concerns purchase finished goods from market and sell it at a profit. Suchfirm prepare1)Trading account2)Profit and loss account3)Balance sheetManufacturing concerns are those which purchase raw material and effect certainproductive activities on it and convert the same into marketable goods and thensell it. Such concern while preparing final accounts prepare1)Manufacturing account2)Trading account3)Profit and loss account4)Balance sheet
    64. 64. TRADING & MANUFACTURING ACCOUNT Particulars Amount Particulars AmountTo Opening stock By Sales Less ReturnsTo Purchases Less Returns By Closing stockTo Direct expenses By Gross Loss c/d to profit and loss accountTo Gross profit c/d to profit and loss account TOTAL XXX TOTAL XXX
    65. 65. PROFIT AND LOSS ACCOUNT FORMAT Particulars Amount Particulars AmountTo Gross loss c/d from By Gross profit c/d from trading Trading account accountTo Indirect expenses By Interest incomeTo Interest expenses By Miscellaneous incomeTo Depreciation By Net loss transferred to capital accountTo Net profit transferred to capital account TOTAL XXX TOTAL XXX
    66. 66. BALANCE SHEETLIABILITIES Amount ASSET Amount CAPITAL FIXED ASSETSLIABILITIES CURRENT ASSETS TOTAL XXX TOTAL XXX
    67. 67. DIFFERNCE – TRADING AND P&L ACCOUNT TRADING ACCOUNT PROFIT AND LOSS ACCOUNTFIRST STAGE OF FINAL ACCOUNT SECOND STAGE OF FINAL ACCOUNTIT RECORDS SALES AND DIRECT THIS ACCOUNT RECORDS GROSSCOSTS PROFIT, INCOMES, INDIRECT COSTS AND LOSSESIT DISCLOSES GROSS PROFIT OR IT DISCLOSES NET PROFIT OR NETGROSS LOSS LOSS
    68. 68. DIFFERNCE BETWEEN GP AND NP GROSS PROFIT NET PROFITIt is the difference between sales and direct It is the difference between gross profit andcosts indirect expensesGross profit is transferred to profit and loss Net profit is transferred to capital accountaccountDrawing of a owner does not depend on the Drawings of the owner depends on the netgross profit profit
    69. 69. ENGLISH SYSTEM OF ACCOUNTING CLASSIFICATION OF ACCOUNTS1) PERSONAL ACCOUNTS2) REAL ACCOUNTS3) NOMINAL ACCOUNTS
    70. 70. PERSONAL ACCOUNTSACCOUNTS OF PHYSICAL PERSONSEG., NAVEEN’S ACCOUNTACCOUNTS OF LEGAL PERSONSEG., CANARA BANK’S ACCOUNTREPRESENTATIVE PERSONAL ACCOUNTSEG., OUTSTANDING EXPENSES
    71. 71. REAL & NOMINAL ACCOUNTSREAL ACCOUNTS REPRESENT THE PROPERTY OF THEBUSINESS.NOMINAL ACCOUNTS REPRESENT LOSSES OR EXPENSESOR INCOMES OR GAINS OF A BUSINESS.
    72. 72. MATCH THE FOLLOWING A BA RAMESH 1 REALB DENA BANK 2 PERSONALC RENT 3 NOMINALD COMPUTER 4 REALE LAND 5 NOMINALF DISCOUNT 6 PERSONAL
    73. 73. CONCEPT OF DEBIT AND CREDITPERSONAL DEBIT THE RECEIVERACCOUNTS CREDIT THE GIVERREAL ACCOUNTS DEBIT WHAT COMES IN CREDIT WHAT GOES OUTNOMINAL DEBIT ALL EXPENSES AND LOSSESACCOUNTS CREDIT ALL INCOMES AND GAINS

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