The document outlines the accounting cycle which includes source documents that record financial transactions, books of original entry that initially record transactions, ledger accounts that are part of the double entry system and record transactions by period, a trial balance that totals ledger accounts to check for errors, and final accounts that produce financial statements showing financial performance and position. It then provides a series of accounting transactions as an example to practice the accounting cycle.

1. Accounting Cycle
Source Documents
Books Original Entry
Ledger Accounts
Trial Balance
Final Accounts

2. Source Documents
Represents all documents in the business
which contains financial records and act as
evidence of the transactions which have taken
place.
Examples: Journal Voucher, Cash Payment
Voucher, Bank Payment Voucher.
Books Original Entry
These are books which are used in recording
the transactions for the first time. The books
are maintained for only memorandum purpose
only and will not form part of the double entry
system.
Examples: Purchase day book, Sales day book,
Cash Book, Purchase return day book.

3. Ledger Accounts
These form part of double entry system and
used to record the transactions for the period.
These are accounts where information relating
to a particular asset, liability, capital, income
and expenses are recorded.
Trial Balance
It contains the totals from various ledger
accounts and act as a preliminary check on
accounts before producing final accounts.
Final Accounts
Financial statements are produced to show the
financial performance and financial position of
an entity.

4. 1 01-Jan-10 Mr. A Started business with cash Rs. 500,000
2 03-Jan-10 He paid into the bank Rs. 200,000.
3 05-Jan-10 He puchased goods for cash Rs. 150,000.
4 08-Jan-10 He sold goods for cash Rs. 110,000.
5 10-Jan-10 He purchased furniture and paid by cheque Rs. 50,000.
6 12-Jan-10 He sold goods to Mr. X for Rs. 30,000.
7 14-Jan-10 He purchased goods from Mr. Y for Rs. 40,000.
8 15-Jan-10 He returned goods to Mr. Y for Rs. 10,000.
9 16-Jan-10 He received from Mr. X Rs. 28,000 in full settlement.
10 18-Jan-10 He withdrew cash from business for personal use Rs. 30,000.
11 24-Jan-10 He paid telephone charges Rs. 6,000.
12 26-Jan-10 cash paid to Mr. Y in full settlement Rs. 29,500.
13 29-Jan-10
Paid for stationery Rs. 2,000, Rent Rs. 5,000 and salaries to staff Rs.
20,000.