Vidya is an interior designer who started her own business, Sri Vidya Associates, in 2005 after working for a design firm. She invested 150,000 rupees of her own money and took a 150,000 rupee loan. The business records show receipts of 280,000 rupees but outstanding amounts of 95,000 rupees and bad debts of 20,000 rupees. Expenses have reduced the bank balance to 14,750 rupees.

2. PRESENTED BY
1)
2)
3)
4)
5)
6)
7)
AKASH
JAYA
NIKITA
SAYYAD
KANIK
JAYENDRA
SANTOSH

3. 
Vidya is the qualified architect
and a certified interior designer
and decorator who initially was
working with reputed consulted
firm for almost a decade. But ,
later on April 2005 she started
her own business under the
name “ Sri Vidya Associates”
for offering consultancy
expertise in interior design and
decoration.

4. INVESTMENT
AMOUNT
EXPENDITURE
FROM INVESTMENT
AMOUNT
OWN
CONTRIBUTION
1,50,000
RENT
70,000
LOAN FROM BANK
1,50,000
PURCHASE OF COMPUTER
75,000
FURNITURE AND FIXTURES
10,000
PURCHASE OF SOFTWARES
60000
ADVANCE FOR EQUIPMENT
10,000
OFFICE SURPLUS
3000

5. 




She received INR 280000 from billing
(TDS25000)
Outstanding Amount 95,000
Not recovered Amount 20,000
After some time when she found out that her
bank balance had come down to RS 14750,
she noted down the following expenditures
from her bank A/c

6. 












Salary paid 3 months
12000*3 = 36000
Telephone and internet bill
1250*3 = 3750
Paid to welfare association
1000*3 = 3000
Insurance premium
6000*1 = 6000
Withdraw for personal use
=10,000
Service tax payable during June
=35,000
Paid freight for equipment
= 5,000
Hotel charges
= 5,200
Purchase of office supplies
= 1800
Advanced income tax
= 15000
Total exp.
1,20,750
Net Amt.available
14,750
Total bank amt.
1,35,500

7. EMPLOYEES
Works for the system
SELF
EMPLOYED
Hates to work in the system
BUSINESSMAN
OWN SYSTEM
INVESTORS
Invests in the system

8. A person who works to earn money
• Works for the system
• And earn money
Who makes money for following three
entities
• Employer
• Government
• Bank

9. A person who moves into the zone of
independence
People who are ready to take calculated risks
Who works as
• Doctors
• Counselors

10. These are the people who are having ability to lead people
those are more talented than them.
•Who can take high risk
•And has great ideas to earn money
Owns control and the system
•They run their own system
•And keep control in their hands
They have the power to hire employees and even the selfskilled people
•For accounting
•marketing

11. These are the most smart people amongst all the four
quadrants
•Smart income
•More money in short time
They make money to work the system properly
•functioning
•planning
These are the people who are financially independent and
do not have any time constraints
•Own money
•Self risk

12. Investors
Businessmen
Employees/Self
employed

13. 
Accounting is the art
of recording,
classifying and
summarizing in a
significant manner in
terms of money,
transactions and
events which are, in
part at least, of
financial character and
interpreting the results
there of.

14. 1
2
3
4
5
6
7
8
Identifying the business transaction
Measuring the identified transaction
Recording the business transaction
Classifying the Business Transaction
Summarizing the business transaction
Analyzing the business transaction
Interpreting the business transaction
Communicating the interpreted information to
the users

15. (i)
(ii)
ASSETS= LIABILITIES + OWNER’S EQUITY

16. At the end of the accounting
period, there may be expenses
which have become due but
have not yet been paid. The
extent to which the amount
belongs to the currents year
but payable in the next year is
called Outstanding Expenses.
Salaries a/c
Dr
xxx
To Outstanding salaries
a/c
xxx
(Being Salaries for the month of
Mar 2011 due but not yet paid
accounted.)

17. The only relation is that both
are the balancing figures i.e.
balance in hand is the opening
balance and net profit or loss is
the closing figure...and balance
in hand is the cash that you have
& profit is the earning after your
expenses. You might have profit
without cash!!!

18. At the end of the
accounting period, there
may be expenses which
have been paid in
advance. These are
expenses which are paid
in advance and would
be adjusted in the
relevant expenditure
during the subsequent
accounting periods.

19. Income that is earned in a fund or by company by
providing a service or selling a product, but has yet to
be received. Mutual funds or other pooled assets that
accumulate income over a period of time but only
pay it out to shareholders once a year are, by
definition, accruing their income. Individual
companies can also accrue income without actually
receiving it, which is the basis of the accrual
accounting system.

20. 

For calculating depreciation over assets we make an
account known as depreciation.
In this particular case there is no amount for
depreciation but we calculate it on the basis of
accounting standard that we have to take 10%
depreciation on furniture that would be Rs. 250 for
three months.

21. Because that contribution is treated as the capital for
the business and the business is liable to pay back to
vidya’s contribution at the time of dissolution of
firm.
according to law business is treated separate and
the people who work for them also treated as
separate entity

22. 
Definition of actual rent: The actual rental

Definition of realistic rent. The realistic rent is
rate that the landlord achieves after
deducting the concession value from the base
rental rate a tenant pays
that the landlord achieves before deducting
the concession tax, and municipal charges
from the actual rent

23. LIABILITIES
These denote the money which a businessman owes to
outsider who have supplied goods or rendered services
to the business.
 Long
term liability- which are repaid after one year.
 Current
liability- which are repaid within a period
of one year.

24. Assets:
Economic resources employed by an enterprise or
valuable things having a money value. Assets may be
of various types: Fixed Assets- are of permanent nature and are
acquired for use in the business and not for resale.
Ex- land & building, Plant & Machinery, furniture.
 Current Assets- are those which can be converted
into cash within a period of 12 months. Ex- closing
stock, debtors, cash in hand.

25. 





It is prepared to know the net profit or loss.
It includes indirect expenses other than manufacturing
expenses
All the balances of nominal account are transferred to
profit and loss account
Incomes and expenses are shown
Helpful in preparation of balance sheet
Income tax is levied on the basis of net income

26. Profit & Loss Account of Vidya Associates
as on June 2005
Payments
Amount (Rs.)
ReceiptsAmount (Rs.)
To Rent
30,000By Salary Received
To Salary Paid
60,000By Sales
To Tel. Bill
3,000
To Insurance
1,000
To Office Supply
280,000
3,750
To Maintenance
4,800
1,800
To Bad Debts
20,000
To Freight
5,000
To Int. Paid
4,500
To Service tax
35,000
To Membership
1,000
To Depriciation
250
To Sundry Expenses
5,200
To Net Profit
114,300
Total
284,800Total
To Net Profit added to Capital
114,300
284,800

27. Statement containing the balances of assets and liabilities
on a particular date
 It has two sides i.e. on left side liability is shown and on
right side asset is shown
 It shows the financial position of the business


28. Balance Sheet of Vidya Associates
as on June 2005
Capital + Liability
Capital
1,50,000
(+) Net Profit
1,14,300
(-) Depreciation
10,000
Liability :Creditors
Loan @ 12% p.a.
Amount (Rs.)
Assets
Amount (Rs.)
Current Assets :Bank
254,300
75,000
150,000
134,350
Bills Recievable
P.P. for Equipment
Prepaid Inc. Tax
Tax Deducted at Source
Security Deposit
Adv. Insurance
95,000
50,000
15,000
25,000
60,000
5,000
Fixed Assets :Office Stock
Furniture
10,000
(-) 10% Dep.
250
1,200
9,750
Computer
Intangible Assets :Membership (Lifetime)
Total
Foot Note :(a) Bank balance calculated at Rs. 1,34,350
479,300
75,000
9,000
Total
479,300

29. 

First of all Vidya needs to appoint an
accountant for handling her business
accounts as she is unable to understand the
accounting jargons.
Secondly, as we have seen that she is earning
the profit more than her previous salary that
means her decision for starting her own
business is justified.