A balance sheet shows a business's assets, liabilities, and capital. Assets include fixed assets like buildings and equipment, and current assets like inventory, cash, and amounts owed by debtors. Liabilities include current liabilities owed to creditors and loans, as well as capital invested by shareholders. The balance sheet balances by showing that assets are equal to the sum of liabilities and shareholders' capital. It provides information about a business's financial health and ability to pay debts.
Partnerships generally are associated with the practice of law, medicine, public accounting and other professions, and also with small business enterprises
Common questions surrounding the ASC 310 10-35 (FAS 114) calculationLibby Bierman
These slides cover key characteristics of ASC 310-10-35 loans, such as the difference between ASC 450-20 (FAS 5) & ASC 310-10-35 loans, when an ASC 310-10-35 can be moved back to ASC 450-20 status and the three valuation methods for calculating ASC 310-10-35s and best practices for each.
The document provides information on conducting a SWOT analysis, including:
1. It defines each component of a SWOT analysis - strengths, weaknesses, opportunities, and threats - and provides examples.
2. The steps for conducting a SWOT analysis are described as analyzing the internal and external environment, performing the analysis and documenting it, and preparing action plans.
3. Tips for an effective SWOT analysis include being analytical, prioritizing factors, choosing the right participants, and using the outcomes for planning.
The document discusses how interest is treated for capital invested in a business, drawings from the business, and loans to/from the business. Interest charged on capital and drawings is treated as income for the business and interest expense for the proprietor, while interest paid on loans is treated as an expense for the business and interest received is treated as income. Journal entries are provided to record these interest transactions and reflect the impact on the balance sheet and profit and loss account.
Portfolio Management Services (PMS) allow clients to have their investments professionally managed through a customized portfolio. The document discusses Motilal Oswal Financial Services, one of India's leading PMS providers. It outlines their various PMS schemes, management team, corporate governance practices involving board committees and audits, financial position shown through their balance sheet and key ratios, and concludes with recommending PMS as a way to create wealth through professional investment management.
By consistently monitoring and keeping track of the changing statutory norms and regulations, we at Offshore Accounting & Taxation Services (OATS) aim to reduce risk for the clients and bring high levels of efficiency in our process.
Accounting for Partnership- Fundamentals.pptxPankaj Saikia
The document discusses key aspects of partnerships, including:
1) A partnership is an agreement between two or more people to carry out a business and share profits and losses. The business can be run jointly or by some partners on behalf of others.
2) A partnership deed outlines the terms of the partnership agreement but is not required by law. It typically specifies profit sharing ratios, capital contributions, management roles, and other details.
3) Partnership accounts include capital accounts to track each partner's balance over time as well as appropriation accounts to distribute profits and losses according to the partnership agreement.
A balance sheet shows a business's assets, liabilities, and capital. Assets include fixed assets like buildings and equipment, and current assets like inventory, cash, and amounts owed by debtors. Liabilities include current liabilities owed to creditors and loans, as well as capital invested by shareholders. The balance sheet balances by showing that assets are equal to the sum of liabilities and shareholders' capital. It provides information about a business's financial health and ability to pay debts.
Partnerships generally are associated with the practice of law, medicine, public accounting and other professions, and also with small business enterprises
Common questions surrounding the ASC 310 10-35 (FAS 114) calculationLibby Bierman
These slides cover key characteristics of ASC 310-10-35 loans, such as the difference between ASC 450-20 (FAS 5) & ASC 310-10-35 loans, when an ASC 310-10-35 can be moved back to ASC 450-20 status and the three valuation methods for calculating ASC 310-10-35s and best practices for each.
The document provides information on conducting a SWOT analysis, including:
1. It defines each component of a SWOT analysis - strengths, weaknesses, opportunities, and threats - and provides examples.
2. The steps for conducting a SWOT analysis are described as analyzing the internal and external environment, performing the analysis and documenting it, and preparing action plans.
3. Tips for an effective SWOT analysis include being analytical, prioritizing factors, choosing the right participants, and using the outcomes for planning.
The document discusses how interest is treated for capital invested in a business, drawings from the business, and loans to/from the business. Interest charged on capital and drawings is treated as income for the business and interest expense for the proprietor, while interest paid on loans is treated as an expense for the business and interest received is treated as income. Journal entries are provided to record these interest transactions and reflect the impact on the balance sheet and profit and loss account.
Portfolio Management Services (PMS) allow clients to have their investments professionally managed through a customized portfolio. The document discusses Motilal Oswal Financial Services, one of India's leading PMS providers. It outlines their various PMS schemes, management team, corporate governance practices involving board committees and audits, financial position shown through their balance sheet and key ratios, and concludes with recommending PMS as a way to create wealth through professional investment management.
By consistently monitoring and keeping track of the changing statutory norms and regulations, we at Offshore Accounting & Taxation Services (OATS) aim to reduce risk for the clients and bring high levels of efficiency in our process.
Accounting for Partnership- Fundamentals.pptxPankaj Saikia
The document discusses key aspects of partnerships, including:
1) A partnership is an agreement between two or more people to carry out a business and share profits and losses. The business can be run jointly or by some partners on behalf of others.
2) A partnership deed outlines the terms of the partnership agreement but is not required by law. It typically specifies profit sharing ratios, capital contributions, management roles, and other details.
3) Partnership accounts include capital accounts to track each partner's balance over time as well as appropriation accounts to distribute profits and losses according to the partnership agreement.
INTRODUCTION TO THE SYSTEM OF ACCOUNTINGAQEEL RAZA
The book on System of Accounting level one is prescribed for information to start level accounting students and readers which i think will be useful to add knowledge in accounting.
My book "the system of accounting" volume iii having twelve chapters; the basis of accounting, employment, budgeting, depreciation, debts, purchases, sales, inventories, tax, import and export, consignment and questions and answers.
just made your self ...................................................................................................................................................................................................................................s...........................................................................................................................................................................................s.........................................
Accounting is the process of identifying, recording, and communicating economic events of an organization. It involves selecting relevant transactions, keeping records of them chronologically in journals and ledgers, and communicating this information through financial reports. Accounting provides critical information to both internal and external users to help with decision making. It has evolved over centuries to meet the growing information needs of businesses and their stakeholders. Modern accounting continues to develop global standards to ensure transparency and comparability across borders in today's globalized business environment.
Unit 4 - Digital Notes - MG 8091 EDP - VIII Sem Mech.pdfWorkCit
This document provides an overview of accounting concepts and processes for entrepreneurs. It defines accounting and discusses its objectives and scope. The key concepts covered include the business entity concept, money measurement concept, classification of accounts, accounting systems, rules of debit and credit, journal entries, and the ledger posting process. Maintaining accurate accounting records is important for startups to track financial transactions and make informed business decisions.
Here are the journal entries for the given transactions:
June 1 Capital A/c Dr. 60,000
To Shankar (proprietor) A/c 60,000
(Being capital introduced by proprietor)
June 2 Bank A/c Dr. 30,000
To Capital A/c 30,000
(Being amount deposited in bank from capital)
June 4 Kamal A/c Dr. 10,000
To Purchases A/c 10,000
(Being goods purchased from Kamal on credit)
June 6 Shiram A/c Dr. 4,920
Discount A/c Dr. 80
To Bank A/c 5,000
The document provides 9 practical finance tips for entrepreneurs to confidently discuss finances with their CFO, including understanding key financial statements like the income statement, balance sheet, and cash flow statement; the differences between accounting and finance, revenues and expenses; as well as budgets, depreciation, and the differences between profits and cash. It aims to demystify financial concepts in a straightforward way for business owners.
This document provides an introduction to accounting. It defines accounting according to the AICPA as recording, classifying, and summarizing financial transactions and interpreting the results. The key functions of accounting are identified as recording, classifying, summarizing, analysis, interpretation, and communication. Accounting objectives are maintaining business records, calculating profit/loss, depicting financial position, and providing information to various user groups. Types of accounting information users are also outlined.
The document contains 20 questions and answers about various accounting concepts. Some key points covered include:
1. An account is a record of transactions relating to a particular item or event.
2. The difference between single and double entry accounting is that single entry does not follow strict rules of debit and credit, while double entry does and ensures the accounting equation balances.
3. Sources of a business refer to funds invested, like capital or equity, while resources are the assets acquired, like land, buildings or inventory. Sources become resources when funds are used to purchase assets.
That's a high-level summary of the document in under 3 sentences. It provides an overview of some of the main accounting concepts discussed
This document provides an overview of an accounting training workshop. It includes:
1) Objectives of helping participants understand key financial concepts and statements and make better business decisions.
2) An outline of course contents covering accounting principles, financial statement analysis, and key metrics.
3) Examples of accounting concepts discussed like the accounting equation, revenue and expense recognition, and the purpose of financial statements.
This document provides an introduction to book keeping and accounting. It discusses the meaning and objectives of accounting, and distinguishes between book-keeping and accounting. It also outlines the key users of accounting information, including external users like investors, creditors, and government agencies, as well as internal users like owners and management. The document serves to introduce foundational accounting concepts.
Finance is the language of business. To make effective business decisions, you have to understand and speak the terms in which business is measured. Top management decides on the basis of numbers. So, do you have a choice but to make the effort to start talking numbers confidently. This FREE eguide helps you take the first steps to financial intelligence.
Introduction to Basic Accounting ConceptKamrul Hasan
The document provides an overview of accounting history and concepts. It discusses how accounting originated with early civilizations keeping records of agricultural products. It then focuses on Luca Pacioli, called the "Father of Accounting", who in 1494 published the first description of the double-entry accounting system still used today. The document also defines key accounting terms like assets, liabilities, owner's equity, and the accounting equation. It explains how business transactions impact the accounting equation and provides an example transaction analysis.
This document contains an answer key for an exam on conceptual frameworks and accounting standards. It provides definitions for accounting terms like transactions, measurement bases, and the components of accounting (identifying, measuring, communicating). It also summarizes the areas of accounting practice (public, private, government), services offered by CPAs, and continuing professional development requirements for accountants.
This document contains an answer key for an exam on conceptual frameworks and accounting standards. It provides definitions for accounting terms like transactions, measurement bases, and the components of accounting (identifying, measuring, communicating). It also summarizes the areas of accounting practice (public, private, government), services offered by CPAs, and continuing professional development requirements for accountants.
Accounting is the systematic process of identifying, measuring, recording, classifying, summarizing, interpreting and communicating financial information. It involves recording business transactions in journals, posting them to ledger accounts, and preparing financial statements like the balance sheet and income statement. The accounting cycle starts with recording transactions and ends with preparing final accounts for the year, then repeats for the next year using the prior year's ending balances. Accounting provides financial information to both internal and external users for decision making.
The document provides an overview of the history and basics of accounting. It discusses the evolution of accounting from ancient times to modern practices. It also defines key terms like bookkeeping, accounting, and accountancy. Additionally, it outlines important accounting concepts like postulates, principles, and standards. The document traces the development of accounting standards in India and the roles of regulatory bodies like ICAI and SEBI in standard setting.
This document provides an overview of accounting concepts and principles. It defines accounting as the process of recording, classifying, and summarizing financial transactions and interpreting the results. It describes the evolution of accounting from ancient times to the development of the double-entry system. The key accounting concepts discussed include the accounting cycle, branches of accounting, users of accounting information, and accounting concepts and conventions such as the business entity, cost, and matching concepts. It also summarizes the classification of accounts, golden rules of double-entry accounting, and the objectives of accounting.
Businesses play a crucial role in society by satisfying needs and wants through the production and sale of goods and services. They are organized efforts that seek to make a profit. Businesses benefit society in several key ways:
They provide employment, incomes, and economic growth. Many businesses hire employees who receive wages or salaries, while business owners earn profits that contribute to their incomes. Overall, businesses play a large role in the economy.
Businesses also offer consumers choice through competition. With many businesses producing similar goods and services, consumers have options to choose from regarding brands, prices, and features. This competition drives innovation as businesses seek to develop new products and services.
However, operating a business takes risk. Ent
Syed Aqeel Raza Jafri considers himself not a poet but someone who strives to understand the depth of words and acquire knowledge through language. He believes poetry is a form of art that allows one to hold profound knowledge "in the cup" like holding the sea. While he has written thousands of poems, he finds his poetry on Allah's name most meaningful as it allows him to express knowledge in new or deeper ways. He leaves it up to readers and audiences to decide if his work makes him a poet.
INTRODUCTION TO THE SYSTEM OF ACCOUNTINGAQEEL RAZA
The book on System of Accounting level one is prescribed for information to start level accounting students and readers which i think will be useful to add knowledge in accounting.
My book "the system of accounting" volume iii having twelve chapters; the basis of accounting, employment, budgeting, depreciation, debts, purchases, sales, inventories, tax, import and export, consignment and questions and answers.
just made your self ...................................................................................................................................................................................................................................s...........................................................................................................................................................................................s.........................................
Accounting is the process of identifying, recording, and communicating economic events of an organization. It involves selecting relevant transactions, keeping records of them chronologically in journals and ledgers, and communicating this information through financial reports. Accounting provides critical information to both internal and external users to help with decision making. It has evolved over centuries to meet the growing information needs of businesses and their stakeholders. Modern accounting continues to develop global standards to ensure transparency and comparability across borders in today's globalized business environment.
Unit 4 - Digital Notes - MG 8091 EDP - VIII Sem Mech.pdfWorkCit
This document provides an overview of accounting concepts and processes for entrepreneurs. It defines accounting and discusses its objectives and scope. The key concepts covered include the business entity concept, money measurement concept, classification of accounts, accounting systems, rules of debit and credit, journal entries, and the ledger posting process. Maintaining accurate accounting records is important for startups to track financial transactions and make informed business decisions.
Here are the journal entries for the given transactions:
June 1 Capital A/c Dr. 60,000
To Shankar (proprietor) A/c 60,000
(Being capital introduced by proprietor)
June 2 Bank A/c Dr. 30,000
To Capital A/c 30,000
(Being amount deposited in bank from capital)
June 4 Kamal A/c Dr. 10,000
To Purchases A/c 10,000
(Being goods purchased from Kamal on credit)
June 6 Shiram A/c Dr. 4,920
Discount A/c Dr. 80
To Bank A/c 5,000
The document provides 9 practical finance tips for entrepreneurs to confidently discuss finances with their CFO, including understanding key financial statements like the income statement, balance sheet, and cash flow statement; the differences between accounting and finance, revenues and expenses; as well as budgets, depreciation, and the differences between profits and cash. It aims to demystify financial concepts in a straightforward way for business owners.
This document provides an introduction to accounting. It defines accounting according to the AICPA as recording, classifying, and summarizing financial transactions and interpreting the results. The key functions of accounting are identified as recording, classifying, summarizing, analysis, interpretation, and communication. Accounting objectives are maintaining business records, calculating profit/loss, depicting financial position, and providing information to various user groups. Types of accounting information users are also outlined.
The document contains 20 questions and answers about various accounting concepts. Some key points covered include:
1. An account is a record of transactions relating to a particular item or event.
2. The difference between single and double entry accounting is that single entry does not follow strict rules of debit and credit, while double entry does and ensures the accounting equation balances.
3. Sources of a business refer to funds invested, like capital or equity, while resources are the assets acquired, like land, buildings or inventory. Sources become resources when funds are used to purchase assets.
That's a high-level summary of the document in under 3 sentences. It provides an overview of some of the main accounting concepts discussed
This document provides an overview of an accounting training workshop. It includes:
1) Objectives of helping participants understand key financial concepts and statements and make better business decisions.
2) An outline of course contents covering accounting principles, financial statement analysis, and key metrics.
3) Examples of accounting concepts discussed like the accounting equation, revenue and expense recognition, and the purpose of financial statements.
This document provides an introduction to book keeping and accounting. It discusses the meaning and objectives of accounting, and distinguishes between book-keeping and accounting. It also outlines the key users of accounting information, including external users like investors, creditors, and government agencies, as well as internal users like owners and management. The document serves to introduce foundational accounting concepts.
Finance is the language of business. To make effective business decisions, you have to understand and speak the terms in which business is measured. Top management decides on the basis of numbers. So, do you have a choice but to make the effort to start talking numbers confidently. This FREE eguide helps you take the first steps to financial intelligence.
Introduction to Basic Accounting ConceptKamrul Hasan
The document provides an overview of accounting history and concepts. It discusses how accounting originated with early civilizations keeping records of agricultural products. It then focuses on Luca Pacioli, called the "Father of Accounting", who in 1494 published the first description of the double-entry accounting system still used today. The document also defines key accounting terms like assets, liabilities, owner's equity, and the accounting equation. It explains how business transactions impact the accounting equation and provides an example transaction analysis.
This document contains an answer key for an exam on conceptual frameworks and accounting standards. It provides definitions for accounting terms like transactions, measurement bases, and the components of accounting (identifying, measuring, communicating). It also summarizes the areas of accounting practice (public, private, government), services offered by CPAs, and continuing professional development requirements for accountants.
This document contains an answer key for an exam on conceptual frameworks and accounting standards. It provides definitions for accounting terms like transactions, measurement bases, and the components of accounting (identifying, measuring, communicating). It also summarizes the areas of accounting practice (public, private, government), services offered by CPAs, and continuing professional development requirements for accountants.
Accounting is the systematic process of identifying, measuring, recording, classifying, summarizing, interpreting and communicating financial information. It involves recording business transactions in journals, posting them to ledger accounts, and preparing financial statements like the balance sheet and income statement. The accounting cycle starts with recording transactions and ends with preparing final accounts for the year, then repeats for the next year using the prior year's ending balances. Accounting provides financial information to both internal and external users for decision making.
The document provides an overview of the history and basics of accounting. It discusses the evolution of accounting from ancient times to modern practices. It also defines key terms like bookkeeping, accounting, and accountancy. Additionally, it outlines important accounting concepts like postulates, principles, and standards. The document traces the development of accounting standards in India and the roles of regulatory bodies like ICAI and SEBI in standard setting.
This document provides an overview of accounting concepts and principles. It defines accounting as the process of recording, classifying, and summarizing financial transactions and interpreting the results. It describes the evolution of accounting from ancient times to the development of the double-entry system. The key accounting concepts discussed include the accounting cycle, branches of accounting, users of accounting information, and accounting concepts and conventions such as the business entity, cost, and matching concepts. It also summarizes the classification of accounts, golden rules of double-entry accounting, and the objectives of accounting.
Businesses play a crucial role in society by satisfying needs and wants through the production and sale of goods and services. They are organized efforts that seek to make a profit. Businesses benefit society in several key ways:
They provide employment, incomes, and economic growth. Many businesses hire employees who receive wages or salaries, while business owners earn profits that contribute to their incomes. Overall, businesses play a large role in the economy.
Businesses also offer consumers choice through competition. With many businesses producing similar goods and services, consumers have options to choose from regarding brands, prices, and features. This competition drives innovation as businesses seek to develop new products and services.
However, operating a business takes risk. Ent
Syed Aqeel Raza Jafri considers himself not a poet but someone who strives to understand the depth of words and acquire knowledge through language. He believes poetry is a form of art that allows one to hold profound knowledge "in the cup" like holding the sea. While he has written thousands of poems, he finds his poetry on Allah's name most meaningful as it allows him to express knowledge in new or deeper ways. He leaves it up to readers and audiences to decide if his work makes him a poet.
This document discusses how life is like the sea and heart, facing inevitable tides and floods. It asks rhetorically what life and the heart would be without the natural cycles of tides affecting the sea and floods affecting rivers, suggesting both would be empty. Life and the heart must experience their highs and lows.
Peoples are at the heart of power according to the chapter. The chapter discusses peoples and their importance from a philosophical perspective on politics. It was written by Syed Aqeel Raza Jafri for his master's degree in politics.
The poetry is taken from my book ' Philosophical Politics' says that welfare is the essence of politics and without it, there is no politics, no wisdom, and no people.
This document discusses the relationship between welfare and politics. It argues that welfare is dependent on politics, as welfare programs cannot exist without the establishment of supportive political systems and policies. The chapter examines how welfare policies are shaped by political decisions and priorities.
The document discusses welfare and is divided into several sections. It examines different perspectives on welfare, such as whether it should be a universal basic income or based on means-testing. It also considers arguments around the role of government in providing welfare and supporting citizens in need.
This document contains information about Aqeel Raza, a poet and writer on philosophical politics. It discusses the relationship between philosophy and politics, stating that politics needs philosophy to function properly with wisdom. Philosophy helps politics stay on the right path and makes every politician a "doctor of philoso-pathy". It concludes by asserting that every politician is a doctor of philoso-pathy.
I am writing a book named Philosophical politics based on wisdom, peoples, and welfare which describes philosophically and hope to get the interest of political minds.
The book is based on my own thoughts and ideas whatever be of anyone is not necessary to agree to any thought and ideas of any mind.
A review of the growth of the Israel Genealogy Research Association Database Collection for the last 12 months. Our collection is now passed the 3 million mark and still growing. See which archives have contributed the most. See the different types of records we have, and which years have had records added. You can also see what we have for the future.
Chapter wise All Notes of First year Basic Civil Engineering.pptxDenish Jangid
Chapter wise All Notes of First year Basic Civil Engineering
Syllabus
Chapter-1
Introduction to objective, scope and outcome the subject
Chapter 2
Introduction: Scope and Specialization of Civil Engineering, Role of civil Engineer in Society, Impact of infrastructural development on economy of country.
Chapter 3
Surveying: Object Principles & Types of Surveying; Site Plans, Plans & Maps; Scales & Unit of different Measurements.
Linear Measurements: Instruments used. Linear Measurement by Tape, Ranging out Survey Lines and overcoming Obstructions; Measurements on sloping ground; Tape corrections, conventional symbols. Angular Measurements: Instruments used; Introduction to Compass Surveying, Bearings and Longitude & Latitude of a Line, Introduction to total station.
Levelling: Instrument used Object of levelling, Methods of levelling in brief, and Contour maps.
Chapter 4
Buildings: Selection of site for Buildings, Layout of Building Plan, Types of buildings, Plinth area, carpet area, floor space index, Introduction to building byelaws, concept of sun light & ventilation. Components of Buildings & their functions, Basic concept of R.C.C., Introduction to types of foundation
Chapter 5
Transportation: Introduction to Transportation Engineering; Traffic and Road Safety: Types and Characteristics of Various Modes of Transportation; Various Road Traffic Signs, Causes of Accidents and Road Safety Measures.
Chapter 6
Environmental Engineering: Environmental Pollution, Environmental Acts and Regulations, Functional Concepts of Ecology, Basics of Species, Biodiversity, Ecosystem, Hydrological Cycle; Chemical Cycles: Carbon, Nitrogen & Phosphorus; Energy Flow in Ecosystems.
Water Pollution: Water Quality standards, Introduction to Treatment & Disposal of Waste Water. Reuse and Saving of Water, Rain Water Harvesting. Solid Waste Management: Classification of Solid Waste, Collection, Transportation and Disposal of Solid. Recycling of Solid Waste: Energy Recovery, Sanitary Landfill, On-Site Sanitation. Air & Noise Pollution: Primary and Secondary air pollutants, Harmful effects of Air Pollution, Control of Air Pollution. . Noise Pollution Harmful Effects of noise pollution, control of noise pollution, Global warming & Climate Change, Ozone depletion, Greenhouse effect
Text Books:
1. Palancharmy, Basic Civil Engineering, McGraw Hill publishers.
2. Satheesh Gopi, Basic Civil Engineering, Pearson Publishers.
3. Ketki Rangwala Dalal, Essentials of Civil Engineering, Charotar Publishing House.
4. BCP, Surveying volume 1
This document provides an overview of wound healing, its functions, stages, mechanisms, factors affecting it, and complications.
A wound is a break in the integrity of the skin or tissues, which may be associated with disruption of the structure and function.
Healing is the body’s response to injury in an attempt to restore normal structure and functions.
Healing can occur in two ways: Regeneration and Repair
There are 4 phases of wound healing: hemostasis, inflammation, proliferation, and remodeling. This document also describes the mechanism of wound healing. Factors that affect healing include infection, uncontrolled diabetes, poor nutrition, age, anemia, the presence of foreign bodies, etc.
Complications of wound healing like infection, hyperpigmentation of scar, contractures, and keloid formation.
বাংলাদেশের অর্থনৈতিক সমীক্ষা ২০২৪ [Bangladesh Economic Review 2024 Bangla.pdf] কম্পিউটার , ট্যাব ও স্মার্ট ফোন ভার্সন সহ সম্পূর্ণ বাংলা ই-বুক বা pdf বই " সুচিপত্র ...বুকমার্ক মেনু 🔖 ও হাইপার লিংক মেনু 📝👆 যুক্ত ..
আমাদের সবার জন্য খুব খুব গুরুত্বপূর্ণ একটি বই ..বিসিএস, ব্যাংক, ইউনিভার্সিটি ভর্তি ও যে কোন প্রতিযোগিতা মূলক পরীক্ষার জন্য এর খুব ইম্পরট্যান্ট একটি বিষয় ...তাছাড়া বাংলাদেশের সাম্প্রতিক যে কোন ডাটা বা তথ্য এই বইতে পাবেন ...
তাই একজন নাগরিক হিসাবে এই তথ্য গুলো আপনার জানা প্রয়োজন ...।
বিসিএস ও ব্যাংক এর লিখিত পরীক্ষা ...+এছাড়া মাধ্যমিক ও উচ্চমাধ্যমিকের স্টুডেন্টদের জন্য অনেক কাজে আসবে ...
Main Java[All of the Base Concepts}.docxadhitya5119
This is part 1 of my Java Learning Journey. This Contains Custom methods, classes, constructors, packages, multithreading , try- catch block, finally block and more.
Leveraging Generative AI to Drive Nonprofit InnovationTechSoup
In this webinar, participants learned how to utilize Generative AI to streamline operations and elevate member engagement. Amazon Web Service experts provided a customer specific use cases and dived into low/no-code tools that are quick and easy to deploy through Amazon Web Service (AWS.)
हिंदी वर्णमाला पीपीटी, hindi alphabet PPT presentation, hindi varnamala PPT, Hindi Varnamala pdf, हिंदी स्वर, हिंदी व्यंजन, sikhiye hindi varnmala, dr. mulla adam ali, hindi language and literature, hindi alphabet with drawing, hindi alphabet pdf, hindi varnamala for childrens, hindi language, hindi varnamala practice for kids, https://www.drmullaadamali.com
How to Make a Field Mandatory in Odoo 17Celine George
In Odoo, making a field required can be done through both Python code and XML views. When you set the required attribute to True in Python code, it makes the field required across all views where it's used. Conversely, when you set the required attribute in XML views, it makes the field required only in the context of that particular view.
2. 2
THE SYSTEM OF ACCOUNTING
VOLIUM – I
Written by;
Syed Aqeel Raza
<THE SYSTEM OF ACCOUNTING < VOLIUM1< SYED AQEEL RAZA<aqeelraza@live.com>
3. 3
FATHER OF ACCOUNTING
Fra Luca Bartolomeo de Pacioli (1445–1517) was an Italian
mathematician, and seminal contributor to the field now known
as accounting. He is referred to as the Father of Accounting and
Bookkeeping (he was the first to publish a work on double-entry
system of book-keeping). He was also called Luca di Borgo after
his birthplace, Borgo Sansepolcro, Tuscany.
<THE SYSTEM OF ACCOUNTING < VOLIUM1< SYED AQEEL RAZA<aqeelraza@live.com>
4. 4
P R E F A C E
First and foremost, I want thank to Almighty Allah who attached
me to the Door-of-knowledge and encouraged me to serve
mankind by spreading education which made the human
supreme in creation.
The object of writing this book “The System of Accounting” is to
provide basic accounting concept in easy way of styles and
illustrations makes readers, students and business executives
acquainted with the concept of accounting.
This book is primarily written for the use of beginners of this
subject and for those who wish to have knowledge of it to keep
eyes on their finance applied in business.
At last in short, I shall say that this is my a little contribution
based on your suggestions.
I tried my best to avoid errors, but errors may be being human then
please notify and suggest anything for improvement with liberty on my
email addresses aqeelraza97@yahoo.com.
<THE SYSTEM OF ACCOUNTING < VOLIUM1< SYED AQEEL RAZA<aqeelraza@live.com>
5. 5
F O R W A R D
I am in great pleasure of presenting my Book “The
System of Accounting Volume 1 which I think, will
be proved different others because of the reason
that I tried utmost to select suitable words with
Urdu translation where necessary to make it
comprehensive to readers and the students of
commerce.
I hope my a little struggle for this noble cause will
be admirable with suggestions for improvement.
<THE SYSTEM OF ACCOUNTING < VOLIUM1< SYED AQEEL RAZA<aqeelraza@live.com>
7. 7
COPY RIGHT
Copy right of this book goes to writer and not
allows others to use its contents to publish but
downloads for reading and study
All the best to my readers
8. 8
DISCLAIMER
The name of book “The System of Accounting”,
contents, definition,and written material of this book is
of writer not copied from any source but taken
guideline from many other sources to complete thinking
and saving errors. The name, amount, addresses and
anything relating to personal in written materials are
imaginary and thinking of writer.
In the opinion of writer, same views or concepts of
accounting being the same subject with others may be
resemblance but difference in idea of writing and
presentation.
All the best to readers
9. 9
TABLE OF CONTENTS
LEVEL - I
PAGE
# LEVEL I
PAGE
#
INTRODUCTION INTRODUCTION
Meaning& Definition NATURE OF ACCOUNTS 24
ACCOUNTING 1 ASSETS 25
BOOKKEEPING 2 CurrentAssets 26
BUSINESS 3 FixedAssets 27
BusinessTerminology…..Service 4 Tangible Assets 28
BusinessTerminology…..Trading 5 Prepaid&Deferred Assets 29
BusinessTerminology…..Manufacturing 6 Intangible Assets 30
BUSINESSORGANIZATIONS 7 LIABILITIES 31
SOLE OWNERSHIP 8 Short TermLiabilities 32
PARTNERSHIP 9 Long Term Liabilities 33
COMPANIES/CORPORATIONS EQUITIES/PROPRIETORSHIP 34
- JointStock Companies 10 Internal Equities 35
- Pvt. LimitedCompanies 11 External Equities 36
- PublicLimitedCompanies 12 Capital 37
- Multinational Companies 13 Drawing 38
- State Corp./Nationalized Industries. 14 INCOME/REVNUE 39
FRANCHISES 15 Accrual BasisAccounting 40
CLASSIFICATIONOF ACCOUNTS 16 Cash BasisAccount 40
Real Accounts 16 Sale 41
Personal Accounts 16 Purchases 42
Nominal Accounts 16 EXPENSES 43
TRANSACTIONS 17 DirectExpenses 44
Cash Transaction 18 Indirect Expenses 45
CreditTransaction 19 ABBRIVATION USED IN ACCOUNTING 46-47
ENTRY 20
Single Entry 21 RULES FOR TRANSACTIONS 48
Double Entry 22
BUSINESSENTITY 23
<THE SYSTEM OF ACCOUNTING < VOLIUM1< SYED AQEEL RAZA<aqeelraza@live.com>
10. 10
INTRODUCTION
ACCOUNTING I
Accounting is the “language of business “and the art
of recording, summarizing and analyzing business
information in a significant manner in terms of
money, transactions and events. The accounting
provides eyes and ears for management and is the
key of success of every business. The most common
accounting reports are called financial statement.
Translation
<THE SYSTEM OF ACCOUNTING < VOLIUM1< SYED AQEEL RAZA<aqeelraza@live.com>
11. 11
INTRODUCTION
BOOK-KEEPING
Book-Keeping is defined to record business dealings or
transactions under systematic prescribed procedures and
presentation in shape of money or money’s worth
instruments enables Accountant to extract complete
financial picture of a business.
Book-Keeping is the source of ascertain the working
results from the written records of transactions. It helps
and guides the management of the business to
determine their policies and to make decisions in
business operation.
Translation
<THE SYSTEM OF ACCOUNTING < VOLIUM1< SYED AQEEL RAZA<aqeelraza@live.com>
12. 12
INTRODUCTION
BUSINESS
Business means profit in term of money or money’s
worth thing through the satisfaction of human
wants under classification of Service, Trading and
Manufacturing. Any activity undertaken under
legal frame of work with the aiming of earning
profit is come under business classification such as
hawker, shopkeeper, wholesaler, dealer,
manufacturer, repair centre, banker etc.
.
Translation
<THE SYSTEM OF ACCOUNTING < VOLIUM1< SYED AQEEL RAZA<aqeelraza@live.com>
13. 13
INTRODUCTION
SERVICE
The term of business “service” describes work that
supports a business but does not produce tangible
commodity. In economics, a service is an intangible
commodity. The business engaged rendering their skills
or mechanical/technical services to his customers such as
dry cleaner, Machinery repairers, accountants,
advocates, auditors, doctors etc.
Translation
<THE SYSTEM OF ACCOUNTING < VOLIUM1< SYED AQEEL RAZA<aqeelraza@live.com>
14. 14
INTRODUCTION
Trading
The term of business “trading” describes the
business engaged in purchasing and selling of
commodities usually defined two kinds of business
wholesale or import & export who maintain a stock
and deliver their products to shops or large end
customers.
. Translation
<THE SYSTEM OF ACCOUNTING < VOLIUM1< SYED AQEEL RAZA<aqeelraza@live.com>
15. 15
INTRODUCTION
Manufacturing
The term of business “manufacturing” describes the
business engaged in producing merchandise most
commonly applied to industrial production in which
raw materials are transformed into finished goods on
a large scale. Such finished goods may be used for
other manufacturing concern or sold to wholesalers,
wholesalers in turn sell them to retailers and retailers
sell to end users.
.
<THE SYSTEM OF ACCOUNTING < VOLIUM1< SYED AQEEL RAZA<aqeelraza@live.com>
16. 16
INTRODUCTION
BUSINESS ORGANIZATION
There is need of an organization for operating of different nature of business and
job. A business organization may be defined as single individual or group of
persons having talent of different natures in order to provide goods and services to
make profit.
Actually in business, the sense of organization is a business unit operated by one
person, two or more persons making firm, concern, enterprise, company.
The main types of business organization are;
a) Sole Ownership
b) Partnership
c) Companies/Corporations
d) Franchises
Translation
<THE SYSTEM OF ACCOUNTING < VOLIUM1< SYED AQEEL RAZA<aqeelraza@live.com>
17. 17
INTRODUCTION
SOLE OWNERSHIP
This is a business owned by one person who
provides capital for the business and usually directs
and supervises its activities. The owner of the
firm/organization is known is “sole trader” who is
responsible for all losses and profits of the business.
Translation
<THE SYSTEM OF ACCOUNTING < VOLIUM1< SYED AQEEL RAZA<aqeelraza@live.com>
18. 18
INTRODUCTION
PARTNERSHIP
A partnership in business occurs when two or more
persons carry on business in common with a view to make
profit and every investor is called “partner.” The firm
itself is called “partnership. The partners usually provide
the capital and direct and supervise the activities of the
business or by anyone who will act for all or by an
employee. The investment or working of each partner may
be equal or not equal on the basis of profit and loss sharing ratio.
Translation
<THE SYSTEM OF ACCOUNTING < VOLIUM1< SYED AQEEL RAZA<aqeelraza@live.com>
19. 19
INTRODUCTION
COMPANY/CORPORATION
JOINT STOCK COAMPANIES
The joint stock company is an organization, whose capital is
contributed by several persons who owned under Companies
Act 1984. The investors are called “Share holders/Stock
holders.”
Translation
<THE SYSTEM OF ACCOUNTING < VOLIUM1< SYED AQEEL RAZA<aqeelraza@live.com
20. 20
INTRODUCTION
COMPANY/CORPORATION
PRIVATE LIMITED
The Private Limited Company consists of not less than two
persons and more than fifty persons. A private company must
have the word limited (Ltd.) included in its name. The shares in
this type of company cannot be offered to the public for sale.
The company is usually owned and operated by family
members.
Translation
<THE SYSTEM OF ACCOUNTING < VOLIUM1< SYED AQEEL RAZA<aqeelraza@live.com
21. 21
INTRODUCTION
PUBLIC LIMITED
The Public Limited Company consist minimum number of
persons is two. However, there is no limit as to the number of
persons that can be in a public company. It must have the word
Public Limited Company (PLC) at the end of its name. The
company can offer shares and debentures for sale to the general
public.
Translation
<THE SYSTEM OF ACCOUNTING < VOLIUM1< SYED AQEEL RAZA<aqeelraza@live.com
22. 22
INTRODUCTION
MULTINATIONAL CORPORATION
A multinational firm is one which owns controls and
operates enterprises in several countries in order to
increase market share and improve overall profits.
The parent company makes all the decisions which
are carried out by the management of the subsidiary
companies.
Translation
<SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
23. 23
INTRODUCTION
STATE CORPORATION/NATIONALISED INDUSTIRES
The State Corporation or nationalized industries are
owned, controlled and managed by the government
or state. The main of the public corporation is to
provide specific goods and/or services that meet the
need of the country, at a reasonable price.
Translation
<SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
24. 24
INTRODUCTION
FRANCHISES
A franchise is a right sold by one persons or firm called a franchisor. It is another
form of cooperation between a big firm and a sole trader. In franchising, a well-
known company allows someone to buy the right to use their trade names.
The potential franchisee pays to use the name, products or services of the major
company which receives a lump sum and a share of the profits of the business
sometimes called royalties.
The franchisee receives the majority of profits, but must also meet most of any
losses. In addition to allowing use of their name, products, techniques or services,
franchisors usually provide an extensive marketing back-up in return for the money
they receive.
Translation
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
25. 25
INTRODUCTION
CLASSIFICATION OF ACCOUNT
There are mainly three types of accounts.
1. Real Accounts
Accountsrelatedtoassets(tangible/touchableorintangible/none touchable) come under the category
of real account e.g. land, furniture, machinery, goodwill, patents etc. are real accounts.
2. Personal Accounts.
Accounts related to persons or organizations are called personal account.
3. Nominal Accounts
The nominal accounts represent losses, incomes, gains.
Translation
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
26. 26
INTRODUCTION
TRANSACTIONS
Any exchange of values is called “transaction “or
the process of doing business with another person,
company, etc. sub divided into cash transaction and
credit transaction.
Translation
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
27. 27
INTRODUCTION
Cash Transactions:
The transaction involves exchange of cash on the spot on receipt or
payment is called cash transaction as;
- Purchase of Merchandise, Land, Building, Furniture etc. on cash.
- Sold Merchandise, Furniture, Building, Equipment etc. on cash.
- Services rendered on cash.
- Received cash.
Translation
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
28. 28
INTRODUCTION
Credit Transactions:
The transaction in which exchange valves involve but cash
payment of receipt is not made immediately and to be made later
is called Credit Transactions as;
- Purchase of Merchandise, Land, Building,
Furniture etc. on credit.
- Sold Merchandise, Furniture, Building,
Equipment etc. on credit.
- Services rendered on credit.
- Paid cash
Translation
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
29. 29
INTRODUCTION
ENTRY
The posting of a business transaction in a book with the sequence of
date and with two kinds of changes “increase or decrease” known as
an entry. A written record of a commercial transaction is known as
“entry.”
Translation
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
30. 30
INTRODUCTION
SINGLE ENTRY
A single entry book keeping system is a method of one side
accounting entry relating with cash receipt and payment, bank
receipt and payment and the accounts receivable and payable. It
does not involve accounting equation “Assets=Liabilities Owner’s
equity.”
This system of entry is used in small business where the business
transactions are low in volume and uncomplicated.
Translation
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
31. 31
INTRODUCTION
DOUBEL ENTRY
The double entry system in book keeping means that every business
transaction involves two accounts (or more).
The double entry also allows for the accounting equation
“Assets=Liabilities Owner’s equity” to always be in balance
Another aspect of double entry is that the amounts entered into
general ledger accounts as debits must be equal to the amounts
entered as credits.
Translation
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
32. 32
INTRODUCTION
BUSINESS ENTITY
Business entity means a business, division, unit or other aspect of
an organization. For example, a company with different divisions
of the business might define each division as an entity. Also, each
department or team within an organization might be its own entity.
A product can be an entity, as well as a company's investments or
assets.
The owner and the business are two separate entities such as
owner as capital and the accounts, maintained by an accountant
is related with him and business is other.
Translation
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
33. 33
INTRODUCTION
NATURE OF ACCOUNT
The Account is a ledger record in a summarized form of all the
transactions showing debit and credit or increase or decrease in an
item based on assets, liabilities, proprietorship, revenues or
expenses. Each account has a separate name distinguish it from
other account.
Some examplesof accountingelement;
The value of furniture purchasedforthe businessidentifiedby Furniture a/c.
The amount isreceivable fromMr.X identifiedby Mr.X a/c.
The amount of Capital investedinthe businessidentifiedby Capital a/c.
The amount of expense incurredonaccountof salariesidentifiedby Salariesa/c.
The value of salesmade inbusinessidentifiedby SalesA/c.
The amount isavailable inthe bankidentifiedbyBanka/c.
The listof accountscan be endlessoraccordingto transactionorevent.
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
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INTRODUCTION
ASSETS
Actually some Resourcesor things such as merchandise, land, building, office
equipment, cash etc. are needed to run any business called Assets.
Any item of economic value convertible in cash owned by an individual or
company is an asset equal Liabilities + Proprietorship under following
categories.
- Long-term/Non-current/tangible assets (Land, building, plant,
equipment)
- Prepaid and deferred assets(expenditures for future costs suchas -
insurance, rent, interest)
- Intangible Assets (Trademarks, patents, copyrights, goodwill)
Translation
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
35. 35
INTRODUCTION
CURRENT/LIQUID/MOVEABLE ASSETS
An assetsuch as receivable,inventory, cash, securities,
prepaid expenses and other expenses that could be
convertedin cash in less than one year is current asset
or circulation asset.
Translation
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
36. 36
INTRODUCTION
FIXED/NON CURRENT/IMMOVABLE ASSETS
An Asset such as land, building, equipment,
machinery, vehicles, and other such items enable
owner to carry on its operations. In accounting, fixed
asset does not necessarily mean immovable, any asset
expected to last, or be in use; more than one year is
considered as fixed asset. These assets are shown at
their book value (purchase price less depreciation).
Translation
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
37. 37
INTRODUCTION
TANGIBLE ASSETS
Tangible Assets or touchable assets are cash, equipment, machinery, plant,
property and anything that has long term physical existence or is acquired for
use in the operations of the business and not for sale to customers. They can
be used as collateralto raise loans, and can be more readily sold to raise cash
in emergencies.
Translation
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
38. 38
INTRODUCTION
PREPAID AND DEFFEREDASSETS
Prepaidrecurring expenses such as insurance, interest
or rent carried forward as an asset under the
associatedserviceof benefit is receivedcalled deferred
assets.
Translation
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
39. 39
INTRODUCTION
INTANGIBLE ASSETS
Intangible assets are the long term resources of an entity but have
no physical existence such as trademarks, patents, copyrights,
goodwill. They derive their value from intellectual or legal rights. In
contrast to tangible assets, intangible assets cannot be destroyed by
fire, hurricane, or other accidents or disasters and can help build
back destroy tangible assets.
Translation
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
40. 40
INTRODUCTION
LIABILITIES
Liabilities mean the claims of suppliers on account of
purchases for business operation under head of
account “A/c Payable with individual or company
names.
Translation
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
41. 41
INTRODUCTION
Short-term/CurrentLiabilities
In accounting, current liabilities are often understood
as all liabilitiesof the business that are to be settled in
cash with the fiscal year.
Translation
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
42. 42
INTRODUCTION
Long Term Liabilities
Long term liabilities are liabilities with a future benefit of over one
year such as notes payable that mature longer than one year.
The Examples of long-term liabilities are debentures, mortgage,
loans and other bank loans.
Long –term liabilities are a way to show that you have to pay
something off in a time period longer than one year.
Translation
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
43. 43
INTRODUCTION
EQUITIES
Equity is the ownership or investor’s interest on values of assets or
resources of a business. After liabilities have been accounted for,
the positive remainder is deemed the owners' interest in the
business.
Assets are the resources owned by business and equities are the
sources from which those assets have been acquired.
There are two types of equities.
1- Internal Equities
2- External Equities
Translation
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
44. 44
INTRODUCTION
EQUITIES
INTERNAL EQUITIES
The claim or interest/income of owner and
investor in the assets of the business to the
amount invested is known as “Capital”,
Proprietorship”, “Owner’s equities” or “Internal
equities.”
Translation
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
45. 45
INTRODUCTION
EQUITIES
EXTERNAL EQUITIES
The claim of suppliers or loan of institutions from the
business assets are external equities called
liabilities, owner’s equity or external equities.
Translation
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
46. 46
INTRODUCTION
CAPITAL
Cash or goods used in business to generate income by
investment of owner or partner are known Capital. In case of
public limited company, who has several investors and each
investor has shares of the company called share capital.
.
Translation
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
47. 47
INTRODUCTION
DRAWING
The proprietor or partner of the business withdraws cash or
commodities for his personal use are known “Drawings. In case of
limited companies/corporations, no one can withdraw any value
from the business.
.
Translation
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
48. 48
INTRODUCTION
REVENUE
Revenue is the amount of money that is brought into a company by its
business activities during a specific period, including discounts and
deductions of return merchandise. It is “top line” or “gross income”
from which costs are subtracted to determine net income.
In general, a transaction between two parties where the buyer
received goods, service and/or assets in exchange of money is sale.
In other words Revenue is also known as sales.
Translation
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
49. 49
INTRODUCTION
REVENUE
ACCRUAL OR CASH REVENUE
Accrual basis is a method of recording accounting transactions when
revenue earned and expenses incurred. The accrual basis Revenue
requires the use of allowances for sales returns, bad debts, and
inventory obsolescence, which are in advance of such items actually
occurring.
The Alternative method of recording revenue transactions is cash
basis.
Translation
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
50. 50
INTRODUCTION
SALE
A sale is the exchange of a commodity for money or service inreturnfor money
or the actionof selling something. If sale is made on cash basis known as “cash
sales”and sales under a certainunderstanding, oncredit, known“credit sales.”
Sales Return&Allowance
When a consumer is not satisfied withaproduct and expects toreceive the full
amount paid for the product known as Sales returnor if the seller gets the claim
from the consumer about the defect, damage etc., the seller allows some rebate
in price of suchgoods it is known as Sales Allowance.
Sales Discount
Sales discount is a reductioninthe price of a product or service that is offered
by the seller, inexchange for early payment by the buyer or to increase sales.
Translation
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
51. 51
INTRODUCTION
PURCHASES
The activity of acquiring goods or services for business is purchases.
The purchases may be made on cash basis, if payment made
immediately, “called cash” purchases and later on called “credit
purchases.”
If the any item of purchased returns due to certain reasons known as
Purchase Return. If the item is not according to sample or other
reasons, the supplier or seller cut short the price of such item known
as Purchase Allowance.
Purchase Discount is the rebate amount allowed on purchase by the
seller.
Translation
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
52. 52
INTRODUCTION
EXPENSES
An expense in accounting is the money spent orcost incurred in any entity’s efforts to
generate revenue. Expenses represent the cost of doing business in the sum total of the
activities directed towards making a profit.
Expenses associated with the main activity of the business are referred to as operating
expenses. Expenses associated with a peripheral activity are non-operating or other
expenses.
Operating expenses are often subdivided intocategories such as fixed and variable expenses
or into selling, general and administrative expenses.
Funds used to acquire or upgrade physical assets such as building and machinery also
called capital expenses.
Profit = revenue – expenses
Expenses are mainly divided into two categories:-
1- Direct Expenses 2- Indirect expenses
Translation
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
53. 53
INTRODUCTION
DIRECT EXPENSES
Direct expenses are expenses that are directly related to the creation
of a product or service or purchase of goods such as Purchase price
of goods, carriage on goods purchased, wages on goods, insurance of
goods in transit, custom duty, freight etc.
Translation
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
54. 54
INTRODUCTION
INDIRECT EXPENSES
Indirect expenses are expenses that have no relationship with
purchase of goods. Examples of indirect expenses include rent of
building, salaries to employees, legal charges, insurance of building,
depreciation, printing charges and so on.
Translation
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
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INTRODUCTION
ABBREVIATION USED IN ACCOUNTING
A/c Account
B/d Brought down
B/F Brought forward
C/D carried down
C/F carry forward
Dr. Debit
Cr. Credit
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
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INTRODUCTION
ABBREVIATION USED IN ACCOUNTING
ALPRE Assets, liabilities, proprietorship, revenue, expenses
JV Journal Voucher
Fol. Folio/page
Inv. Invoice
Memo Memorandum
N.L. Nominal Ledger
P.C.B. Petty Cash Book
C.B. Cash Book
P.D.B. Purchase Day Book
S.D.B. Sales Day Book
P&L Profit & Loss
S.L. Sales Ledger
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
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INTRODUCTION 48
RULES FOR TRANSACTIONS
1 ASSETS A INCREASES DEBIT DECREASES CREDIT
2 LIABILITIES L DECREASES DEBIT INCREASES CREDIT
3 PROPRIETORSHIP P DECREASES DEBIT INCREASES CREDIT
4 REVENUE R DECREASES DEBIT INCREASES CREDIT
5 EXPENSES E INCREASES DEBIT DECREASES CREDIT
= ALPRE ASSETS= LIABILITIES + PROPRIETORSHIP
ASSETS = EQUIUTIES
RESOURCES = SOURCES
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
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Volume – I
YEAR 2015
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
WRITTEN BY:
SYED AQEEL RAZA
60. 60
TABLE OF CONTENTS
< AFFECTS ON BUSINESS TRANSACTIONS>
Brief Introduction………………………………………………………………………………………..49
Analyzing, Equation, Rules Entry…………………………………………………………….51-70
Transactions…………………………………………………………………………………………………………………………………………… 50
The Accounting equation for a new company……………………………………………………………………………………….. 51
Mr. Frances starts his business with a capital investment of Rs. 100,000/=……………………………………………… 52
Taken shop on rent Rs.5, 000/= per month with deposit of Rs.10, 000/=, the rent paid in advance…..53-54
Purchased merchandise on cash Rs.50, 000/=…………………………………………………………………………………………..55
Cartage on merchandise Rs.1000/= paid…………………………………………………………………………………………………..56
Purchased merchandise of Rs.5000/= on credit from ABC & Co………………………………………………………..………57
Sold merchandise Rs.5, 000/= at cost for to a cash customer…………………………………………………….………………58
Sold merchandise for Rs.12, 000/= which costs to Rs. 10, 000/= to a cash customer…………..…………………..59
Cash paid to ABC & Co. Rs.2500/= as part payment……………………………………………………..…………………..60-61
Sold merchandise of Rs.10, 000/= on credit to AA & Co. at a profit of Rs.2000/=……………………………………62
Cash received Rs.5000/= as part payment from AA & Co. as part payment………………………….. ……….63-64
Merchandise returned to ABC & Co. Rs.1000/= and paid cash Rs. 1500/=…………………………..………………….65
Merchandise returned by Cash customer of Rs.2000/=…………………………………………… …………………….66-67
Paid salary Rs. 3000/= to employee…………………………………………………………………………… …………………68-69
Operated a bank account with Rs.5, 000/=……………………………………………………………………………….………….70
Accounting Equation………………………………………………………………………………………………………..………………….71
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
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AFFECTS ON BUSINESS TRANSACTIONS
Every business transaction affects the fundamental
accounting equation as to Assets = Liabilities +
Owners’ Equity or owners’ Equity + Liabilities=
Assets under rules of Debit and Credit or Increase or
Decrease in values.
Assets are the Resources of the business and
equities provide the source to acquire these assets.
Therefore, ASSETS = EQUITIES OR RESOURCES
=SOURCES.
The accounting equation can be expressed in three
ways:
Assets = Liabilities + Owners’ Equity
Liabilities = Assets – Owners’ Equity
Owners’ Equity = Assets – Liabilities
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62. 62
AFFECTS ON BUSINESS TRANSACTIONS
Here are following transactions showing the effect on accounting equation;
The Accounting equation for a new company
Jan 05, 2015: Mr. Frances starts his business with a capital investment of
Rs. 100,000/=.
Jan 06, 2015: Taken shop on rent Rs.5, 000/= per month with deposit of
Rs.10, 000/=, the rent paid in advance
Jan 07, 2015: Purchased merchandise on cash Rs.50, 000/=.
Jan 08, 2015: Cartage on merchandise Rs.1000/= paid.
Jan 08, 2015: Purchased merchandise of Rs.5000/= on credit from ABC & Co.
Jan 10, 2015: Sold merchandise Rs.5, 000/= at cost for to a cash customer.
Jan 15, 2015: Sold merchandise for Rs.12, 000/= which costs to Rs. 10,
000/= to a cash customer.
Jan 16, 2015: Cash paid to ABC & Co. Rs.2500/= as part payment.
Jan 17, 2015: Sold merchandise of Rs.10, 000/= on credit to AA & Co. at a
profit of Rs.2000/=.
Jan 20, 2015: Cash received Rs.5000/= as part payment from AA & Co. as
part payment.
Jan 22, 2015: Merchandise returned to ABC & Co. Rs.1000/= and paid cash
Rs. 1500/=
Jan 25, 2015: Merchandise returned by Cash customer of Rs.2000/=.
Jan 30, 2015: Paid salary to Rs. 3000/= to employee.
Operated a bank account with Rs.5, 000/=.
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
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AFFECTS ON BUSINESS TRANSACTIONS
The Accounting equation for a new company
The accounting Equation for a brand new
company looks like;
Since the business has only been planned not
yet invested it has neither assets nor liabilities.
Therefore,
ASSETS = LIABILITIES + Owner’s Equity
0 = 0 + 0
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
64. 64
AFFECTS ON BUSINESS TRANSACTIONS
Jan 05, 2015: Mr. Frances starts his business with a capital investment of Rs. 100,000/=.
When Mr. Frances was planning to start business, he had zero capital and as
soon as he put cash into business ,the value of capital has increased from zero
to Rs.100,000/= and the value of cash has also been increased by
Rs.100,000/=as an liquid assets.
Analysis:
1) Accounts involved = Cash -Frances, Capital
2) Nature of Accounts =Assets -Owner’s Equity
3) Increase or decrease =Increases -Increases
4) Rules of Debit and Credit =Debit -Credit
Accounting Equation:
ASSETS = LIABILITIES + Owner’s Equity
CASH Owner’s, Capital
+Rs.100, 000/= = 0 +Rs.100, 000/=
Accounting Rules:
Assets increases debit decreases credit.
Capital decreases debit increases credit.
Cash/Liquid Assets = Debit
Capital/Proprietorship = Credit
Recording of Entry:
Jan 05,Cash 100,000/=
Capital/Frances 100,000/=
(To record the Investment in the business)
65. 65
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
AFFECTS ON BUSINESS TRANSACTIONS
Jan 06, 2015: Taken shop on rent Rs.5, 000/= per month with cash deposit of Rs.10, 000/=, the
rent paid in advance.
Analysis:
1) Accounts involved = Prepaid Rent -Cash
2) Nature of Accounts =Assets -Assets
3) Increase or decrease =Increases -Decreases
4) Rules of Debit and Credit =Debit -Credit
5) Accounts involved = Shop Deposit -Cash
6) Nature of Accounts =Assets -Assets
7) Increase or decrease =Increases -Decreases
8) Rules of Debit and Credit =Debit -Credit
Accounting Equation:
ASSETS = LIABILITIES + Owner’s Equity
Frances, Capital
Cash + 100000 = +100000
Shop Deposit +10000 - 10000
Prepaid Rent + 5000 - 5000 =
Balance +15000 + 85000 = +100000
In this entry, the pre-paid rent which assumed assets before consumption increased in Assets
and the cash has been paid which is decreasing in assets. The shop deposit is a recoverable
asset increasing in assets and the cash paid against it decreasing in assets.
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
66. 66
AFFECTS ON BUSINESS TRANSACTIONS
Accounting Rules:
Assets increases debit decreases credit.
Prepaid Rent/Current Assets = Debit
Shop Deposit/Fixed Assets = Debit
Cash/Assets = Credit
Recording of Entry:
Compound entry:
Jan, 06 Prepaid Rent 5,000/=
Shop Deposit 10,000/=
Cash 15,000/=
(To record the payment of shop deposit & rent in advance)
Broken Entry:
Jan, 06 Prepaid Rent 5,000/=
Cash 5,000/=
(Paid shop rent in advance)
Shop Deposit 10,000/=
Cash 10,000/=
(Cash paid for shop deposit)
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
67. 67
AFFECTS ON BUSINESS TRANSACTIONS
Jan 07, 2015: Purchased merchandise on cash Rs.50000/=
Analysis:
1) Accounts involved = Merchandise - Cash
2) Nature of Accounts =Assets -Assets
3) Increase or decrease =Increases -Decreases
4) Rules of Debit and Credit =Debit -Credit
Accounting Equation:
ASSETS = LIABILITIES + Owner’s Equity
Frances, Capital
Cash + 100000 = +100000
Shop Deposit +10000 - 10000
Prepaid Rent + 5000 - 5000 =
Merchandise +50000 - 50000 =
Balance +65000 + 35000 = +100000
Accounting Rules:
Assets increases debit decreases credit.
Merchandise/Current Assets = Debit
Cash/ Current Assets = Credit
Recording of Entry:
Jan 07,Merchandise 50,000
Cash 50,000
(To record purchased merchandise on cash)
This transaction affects the accounting equation as to increase in assets and decrease in
assets cash too and no change is made in equities side of the equation.
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
68. 68
AFFECTS ON BUSINESS TRANSACTIONS
Jan 08, 2015: Cartage on merchandise Rs.1000/= paid.
Analysis:
1) Accounts involved = Cartage -Cash
2) Nature of Accounts = Expense -Assets
3) Increase or decrease = Increases -Decreases
4) Rules of Debit and Credit = Debit -Credit
Accounting Equation:
ASSETS = LIABILITIES + Owner’s Equity
Frances, Capital
Cash + 100000 = +100000
Shop Deposit +10000 - 10000
Prepaid Rent + 5000 - 5000 =
Merchandise +50000 - 50000 =
Cartage - 1000 = -1000
Balance +65000 + 34000 = +99000
Accounting Rules:
Expense increases debit decreases credit.
Assets increases debit decreases credit.
Cartage/Expense = Debit
Cash/Current Assets = Credit
Recording of Entry:
Jan, 08 Cartage Rs. 1000
Cash Rs. 1000
(To record paid Cartage for merchandise carried to shop)
The Asset “Cash” is decreased and the Expense decreases in owner’s Equity or from owner’s profit.
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
69. 69
AFFECTS ON BUSINESS TRANSACTIONS
Jan 08, 2015: Purchased merchandise of Rs. 5000/= on credit from ABC & Co.
Analysis:
1) Accounts involved = Merchandise - A/c Payable (ABC & Co.)
2) Nature of Accounts =Assets -Liabilities
3) Increase or decrease =Increases -Increases
4) Rules of Debit and Credit =Debit -Credit
Accounting Equation:
ASSETS = LIABILITIES + Owner’s Equity
Frances, Capital
Cash + 100000 = +100000
Shop Deposit +10000 - 10000
Prepaid Rent + 5000 - 5000 =
Merchandise +50000 - 50000 =
Cartage - 1000 = -1000
Merchandise + 5000
A/c P/A ABC Co = +5000
Balance +70000 + 34000 = +5000 +99000
Accounting Rules:
Assets increases debit decreases credit.
Liabilities decreases debit increases credit.
Merchandise/Assets = Debit
A/c Payable (ABC & Co.) /Liabilities = Credit
Recording of Entry:
Jan 08,Merchandise 5000
A/c Payable (ABC & Co.) 5000
(To record merchandise purchased on credit)
This transaction affects the accounting equation as to increase assets/merchandise and
increase in liabilities A/c payable ABC & Co. by equal amount.
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
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AFFECTS ON BUSINESS TRANSACTIONS
Jan 10, 2015: Sold merchandise Rs.5, 000/= at cost for to cash customer.
Analysis:
1) Accounts involved = Sale - Cash
2) Nature of Accounts =Revenue -Assets
3) Increase or decrease =Increases -Increases
4) Rules of Debit and Credit =Credit -Debit
Accounting Equation:
ASSETS = LIABILITIES + Owner’s Equity
Cash Frances, Capital
Cash + 100000 = +100000
Shop Deposit +10000 - 10000
Prepaid Rent + 5000 - 5000 =
Merchandise +50000 - 50000 =
Cartage - 1000 = -1000
Merchandise + 5000
A/c P/A ABC Co = +5000
Merchandise sold -5000 + 5000
Balance +65000 + 39000 = +5000 +99000
Accounting Rules:
Assets increases debit decreases credit.
Revenue decreases debit increases credit.
Cash/Assets = Debit
Sale = Credit
Recording of Entry:
Jan 10,Cash 5000
Sale 5000
(To record merchandise sold without profit & loss)
This transaction affects the equation as to increase in assets/cash and decrease in
merchandise. The sale is connected with revenue but reducing the stock of merchandise
affecting profit and loss and taken into account directly in merchandise.
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
71. 71
AFFECTS ON BUSINESS TRANSACTIONS
Jan 15, 2015: Sold merchandise for Rs.12, 000/= which costs Rs. 10,000/= to a cash customer.
Analysis:
1) Accounts involved = Sale = Cash =Profit
2) Nature of Accounts =Revenue =Assets =Capital
3) Increase or decrease =Increases =Increases =Increases
4) Rules of Debit and Credit =Credit =Debit =Credit
Accounting Equation:
ASSETS = LIABILITIES + Owner’s Equity
Cash Frances, Capital
+ 100000 = +100000
Shop Deposit +10000 - 10000
Prepaid Rent + 5000 - 5000 =
Merchandise +50000 - 50000 =
Cartage - 1000 = -1000
Merchandise + 5000
A/c P/A ABC Co = +5000
Merchandise sold -5000 + 5000
Merchandise sold -10000 + 12000 +2000 (Profit)
Balance +55000 + 51000 = +5000 +101000
Accounting Rules:
Assets increases debit decreases credit.
Revenue decreases debit increases credit.
Capital decreases debit increases credit.
Cash/Current Assets = Debit
Sales/Revenue = Credit
Capital/Profit = Credit
Recording of Entry:
Jan 15,Cash 12000
Sales 10000
Capital 2000
(To record merchandise sold on profit)
This transaction affects the equation as to increase in assets/cash, decrease in merchandise
and increase in owner’s equity by profit.
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
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AFFECTS ON BUSINESS TRANSACTIONS
Jan 16, 2015: Cash paid to ABC & Co. Rs.2500/=as partpayment.
Analysis:
1) Accounts involved = A/c Payable - Cash
2) Nature of Accounts =Liabilities -Assets
3) Increase or decrease =Increases -Decreases
4) Rules of Debit and Credit =Credit -Credit
Accounting Equation:
ASSETS = LIABILITIES + Owner’s Equity
Cash Frances, Capital
+ 100000 = +100000
Shop Deposit +10000 - 10000
Prepaid Rent + 5000 - 5000 =
Merchandise +50000 - 50000 =
Cartage - 1000 = -1000
Merchandise + 5000
A/c P/A ABC Co = +5000
Merchandise sold -5000 + 5000
Merchandise sold -10000 + 12000 +2000 (Profit)
ABC & Co. - 2500 -2500
Balance +55000 + 48500 = +2500 +101000
Accounting Rules:
Assets increases debit decreases credit.
Liabilities decreases debit increases credit.
A/c Payable/Liabilities = Debit
Cash/Assets = Credit
Recording of Entry:
Jan 16,ABC & Co. (A/c Payable) 2500
Cash 2500
(To Record cash paid to ABC & Co. as part payment)
This transaction affects the equation as to decrease in liabilities and decrease in cash/assets
with equal amount.
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
73. 73
AFFECTS ON BUSINESS TRANSACTIONS
Jan 17, 2015: Sold merchandise of Rs.10, 000/= on credit to AA & Co. at a profit of Rs.2000/=.
Analysis:
1) Accounts involved = Sale - A/c Receivable (AA & Co.)
2) Nature of Accounts =Revenue -Current Assets
3) Increase or decrease =Increases -Increases
4) Rules of Debit and Credit =Credit -Debit
Accounting Equation:
ASSETS = LIABILITIES + Owner’s Equity
Cash Frances, Capital
+ 100000 = +100000
Shop Deposit +10000 - 10000
Prepaid Rent + 5000 - 5000 =
Merchandise +50000 - 50000 =
Cartage - 1000 = -1000
Merchandise + 5000
A/c P/A ABC Co = +5000
Merchandise sold -5000 + 5000
Merchandise sold -10000 + 12000 +2000 (Profit)
ABC & Co. - 2500 -2500
Merchandise sold -10000
A/C R/A +12000 +2000 (Profit)
Balance +57000 + 48500 = +2500 +103000
74. 74
AFFECTS ON BUSINESS TRANSACTIONS
Accounting Rules:
Assets increases debit decreases credit.
Revenue decreases debit increases credit.
Capital decreases debit increases credit.
A/c Receivable/Current Assets = Debit
Sales/Revenue = Credit
Profit/Capital = Credit
Recording of Entry:
Jan 16,AA & Co. (Receivable) 12000
Sale 10000
Capital 2000
(To Record merchandise sold on credit to AA & Co. on profit of Rs.2000)
This transaction affects the equation as to increase in assets, increase in sales/revenue and
increase in capital by Rs.2000/=
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
75. 75
AFFECTS ON BUSINESS TRANSACTIONS
Jan 20, 2015: Cash received Rs.5000/= as part payment from AA & Co.
Analysis:
1) Accounts involved = A/c Receivable = Cash
2) Nature of Accounts =Assets =Assets
3) Increase or decrease =Decreases =Increases
4) Rules of Debit and Credit =Credit =Debit
Accounting Equation:
ASSETS = LIABILITIES + Owner’s Equity
Cash Frances, Capital
+ 100000 = +100000
Shop Deposit +10000 - 10000
Prepaid Rent + 5000 - 5000 =
Merchandise +50000 - 50000 =
Cartage - 1000 = -1000
Merchandise + 5000
A/c P/A ABC Co = +5000
Merchandise sold -5000 + 5000
Merchandise sold -10000 + 12000 +2000 (Profit)
ABC & Co. - 2500 -2500
Merchandise sold -10000
A/C R/A +12000 +2000 (Profit)
A/c R/A (AA & Co) -5000 +5000
Balance +52000 + 53500 = +2500 +103000
Accounting Rules:
Assets increases debit decreases credit.
Cash/Assets = Debit
A/c Receivable (AA & Co.) = Credit
Recording of Entry:
Jan 16, Cash 5000
A/c Receivable AA & Co. 5000
(To Record the part payment received by AA & Co.,)
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
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AFFECTS ON BUSINESS TRANSACTIONS
Recording of Entry:
Jan 22 A/c payable (ABC & Co.) 2500
Purchase Return 1000
Cash 1500
(To Record merchandise returned to ABC & Co. & paid balance payment)
This transaction affects the equation as to increase in cash/assets and decrease in Account
Payable (ABC & Co.).
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
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AFFECTS ON BUSINESS TRANSACTIONS
Jan 25, 2015: Merchandise returned by Cash customer of Rs.2000/=.
Analysis:
1) Accounts involved = Sale Return - Cash
2) Nature of Accounts = Contra Revenue -Assets
3) Increase or decrease =Decreases -Decreases
4) Rules of Debit and Credit =Debit -Credit
Accounting Equation:
ASSETS = LIABILITIES + Owner’s Equity
Cash Frances, Capital
+ 100000 = +100000
Shop Deposit +10000 - 10000
Prepaid Rent + 5000 - 5000 =
Merchandise +50000 - 50000 =
Cartage - 1000 = -1000
Merchandise + 5000
A/c P/A ABC Co = +5000
Merchandise sold -5000 + 5000
Merchandise sold -10000 + 12000 +2000 (Profit)
ABC & Co. - 2500 -2500
Sale -10000
A/C R/A +12000 +2000 (Profit)
A/c R/A -5000 +5000
Mer.Return -1000
A/c P/A ABC & Co. -1500 -2500
Merchandise S/R +2000 -2000
Balance +53000 + 50000 = 0 +103000
Accounting Rules:
Assets increases debit decreases credit.
Revenue decreases debit increases credit
Sale Return/Contra Revenue = Debit
Cash/Assets = Credit
Recording of Entry:
Jan 25: Sale Return 2000
Cash 2000
(To Record merchandise returned by Cash customer)
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
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AFFECTS ON BUSINESS TRANSACTIONS
Accounting Rules:
Expense increases debit decreases credit.
Assets increases debit decreases credit.
Salaries/Expense = Debit
Cash/Assets = Credit
Recording of Entry:
Jan, 30Salaries Rs. 1000
Cash Rs. 1000
(To record salary paid to employee)
The Asset “Cash” is decreased and the Expense decreases in owner’s Equity or from owner’s
profit.
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
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AFFECTS ON BUSINESS TRANSACTIONS
Operated a bank account with Rs.5, 000/=.
Analysis:
1) Accounts involved = Bank -Cash
2) Nature of Accounts = Assets -Assets
3) Increase or decrease = Increases -Decreases
4) Rules of Debit and Credit = Debit -Credit
Accounting Equation:
ASSETS = LIABILITIES + Owner’s Equity
Cash Frances, Capital
+ 100000 = +100000
Shop Deposit +10000 - 10000
Prepaid Rent + 5000 - 5000 =
Merchandise +50000 - 50000 =
Cartage - 1000 = -1000
Merchandise + 5000
A/c P/A ABC Co = +5000
Merchandise sold -5000 + 5000
Merchandise s -10000 + 12000 +2000 (Profit)
ABC & Co. - 2500 -2500
Merchandise sold -10000
A/C R/A +12000 +2000 (Profit)
A/c R/A -5000 +5000
Mer.Return -1000
A/c P/A ABC & Co. -1500 -2500
Merchandise +2000 -2000
Salaries -3000 -3000
Bank Account +5000 -5000
Balance +58000 + 42000 = 0 +100000
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
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AFFECTS ON BUSINESS TRANSACTIONS
Accounting Rules:
Assets increases debit decreases credit.
Bank/Assets = Debit
Cash/Assets = Credit
Recording of Entry:
Jan, 30Bank Rs. 1000
Cash Rs. 1000
(To record cash deposited into bank)
The Asset “Cash” is decreased and bank account increases)
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
83. 83
AFFECTS ON BUSINESS TRANSACTIONS
ACCOUNTINGEQUATION
ASSETS = LIABILITIES + OWNER’SEQUITY
CASH 42,000
BANK 5,000
SHOPDEPOSIT 10,000
ACCOUNTRECEIVEABLE 7,000
PREPAIDRENT 5,000
MERCHANDISE 31,000 = 0 + 100,000
TOTAL 100,000 = 0 + 100,000
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
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TABLE OF CONTENTS
< ACCOUNTING CYCLE>
Accounting Cycle…………………………………………………………….72-73
1- Source Documents…………………………………………………74-76
I -Cash Memo………………………………………………………………..77-79
Ii - Invoice………………………………………………………… ………….80-82
Iii - Instruments of Banks……..………………………… ……………83
a) Cheque Book……………………………………………… …………..83-85
b) Deposit Slip………………………………………………………………….86
c) Funds Transfer Form…………….………………… ……………..87-89
4-Vouchers………………………………………………………… ………90
a) Cash Payment voucher………………………… ……………….91
b) Cash Receipt Voucher………………………… ………………..92
c) Bank Payment Voucher……………………… ………………..93
d) Bank Receipt Voucher…..…………………… ……………….94
e) Petty Cash Voucher…..……………………… ………………..95
2- JOURNAL……………..……………………………… ……………..96
Kinds of Journals………………………………… ……………………..97
88. 88
ACCOUNTING CYCLE
ACCOUNTING CYCLE
Accounting cycle means the collective processing of
accounting events of a firm repeated in the same order
in each accounting period. The business accounting cycle
is for one year in length. The steps begin when a
transaction occurs and end with its inclusion in financial
statements.
Here are following steps in accounting cycle:-
1-Source Document
2-Journal
3-Leger
4-Trial Balance unadjusted
5-Adjustments
6-Trial Balance Adjusted
7-Closing Entries
8-Worksheet
9-Finance Statement
10- Post Closing Trial Balance
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
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ACCOUNTING CYCLE
1-Source Document
The source document which describes the transactions
and events moves accounting cycle. The Cash Memo,
Invoice, Bill, Statement, Bank Instrument or any other
paper in black and white enables accountant to support
and proof the transaction incurred are source
documents. The accounting cycle involves sale,
purchase, inventory or any other system adopted by
company creating source documents manually or
electronically under trading, servicing and
manufacturing businesses.
The accounting cycle cannot move without source
document.
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
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ACCOUNTING CYCLE
Some source documents with their specimen using in
accounting are narrated below:-
1-CASH MEMO
2-INVOICE/BILL
3-INSTRUMENTS OF BANK
a)Cheque
b)Deposit Slip
c)Funds Transfer Form
4) VOUCHERS
a) Cash Payment Voucher
b) Petty Cash Voucher
c) Bank Payment Voucher
d) Cash Receipt Voucher
e) Bank Receipt Voucher
f) Journal Voucher
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
93. 93
ACCOUNTING CYCLE
1-CASH MEMO
Cash Memo is the document of source when sale,
purchase or service is made in cash on the spot for
business, the seller have to give written instrument like
Cash Memo to the person purchased goods or acquired
services. The cash memo is made in duplicate or
triplicate according to the requirement of business.
Generally the Cash Memo contains:
Name, address and deals in of supplier or rubber
stamp, name and address of the purchaser, serial
number, date, quantity, description, rates of goods,
amount
Goods once sold will not be back. E. &.O.E. means
if there is any mistake in cash memo that is subject
to correction.
The cash memo must be signed by the duly
authorized person.
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
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ACCOUNTING CYCLE
In case of trade discount or cash discount, sales tax and
anything is shown separately or designed according to
nature of business of firm.
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
95. 95
ACCOUNTING CYCLE
CASH MEMO
S.No. Date
M/S.
Qty. Particulars Rate Amount
Total
Goods once sold will not be back. E.&.O.E.
Signature
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
96. 96
ACCOUNTING CYCLE
2-INVOICE:
Invoice is the commercial document that controls the
sale of a product, inventory and taxes. It may be on cash
or credit. In case of credit, the amount will be receivable
by the purchaser or payable to the seller for a certain
period. The Invoice is made in duplicate or triplicate
according to the requirement of business manually or
electronically.
The Invoice is also known as bill, statement, sales invoice
or sales tax invoice.
It may usually contain as per specimen or design
according to nature of business of firm.
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
98. 98
ACCOUNTING CYCLE
COMPANY LOGO Invoice No.
Date
COMPANY NAME P.Order No.
(Company Slogan)
(Address)
No., Street, City, code
Phone, Fax
e-mail
SALES TAX NO.
To
Name
Company Name
Address
Phone No.
SALES TAX NO.
S.NO. QUANTITY DESCRIPTION RATE AMOUNT
SUB TOTAL
SALES TAX
TOTAL
THANK YOU FOR YOUR BUSINESS
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
99. 99
ACCOUNTING CYCLE
3- INSTRUMENTS OF BANK
a) Cheque Book
A small book containing 25, 50, and 100 leaves preprintedinstruments issuedby
bank to enable account holder to withdraw or transfer an amount from his
account.
The cheque book contains two portion of each leave one the large portion or
main portion called cheque which is presented into bank for payment the
amount writtenandanother small portioncalledcounter folio remains with the
account holder for record of withdrawals.
A cheque is an order, signed by account holder (drawer) to place an order to
bank (drawee) to pay a certain sum of money to the person’s name written on
the cheque (payee).
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
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ACCOUNTING CYCLE
b) Deposit Slip
The bank deposit slip or pay-in-slip is a small
preprinted form used to transfer funds by way of cash
or cheque into account to fill the information in the
required fields.
The pay-in-slip contains either two portion or in
duplicate. The small portion or duplicate copy of the
deposit slip is returned by bank to account holder
after acknowledge the amount in cash or cheque and
affixing the seal and officer’s signature.
Today computerized electronic machines are making
the same job.
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
103. 103
ACCOUNTING CYCLE
c) FUNDS TRANSFER FORM
The Bank issues preprinted form for making demand draft, pay order, funds
transfer to other account of out station and other countries electronically.
The accountholder has to fill the form and deposit the cash or cheque for the
purpose. The bank or financial institution returns the small portion of form to
depositor after acknowledging the amount in cash and cheque with seal and
signature. The charges for rendering services are deducted by bank.
Internet Banking is also useful for transfer funds from one account to another
account throughout country or worldwide.
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
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ACCOUNTING CYCLE
4) VOUCHERS
A written record of payment and receipt by way of cash
and bank is called voucher supported by evidence or
events that a transaction has taken place. To record
liabilities and adjustment journal voucher is used.
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a)-Cash Payment Voucher
CASH PAYMENT VOUCHER
Name of Company
Date
Voucher No.
C.B. Folio
DEBIT A/c
PAID TO
On account of Amount
Rs. Ps.
TOTAL
RUPEES
Prepared by: Checked by: Authorized by: Received By:
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
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ACCOUNTING CYCLE
b)-Cash Receipt Voucher
CASH RECEIPT VOUCHER
Name of Company
Date
Voucher No.
C.B. Folio
CREDIT A/c
Received
from
On account of Amount
Rs. Ps.
TOTAL
RUPEES
Prepared by: Checked by: Authorized by: Received By:
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
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ACCOUNTING CYCLE
c)-Bank Payment Voucher
BANK PAYMENT VOUCHER
Name of Company
Date
Voucher No.
C.B. Folio
DEBIT A/c
PAID TO
On account of Amount
Rs. Ps.
TOTAL
RUPEES
Prepared by: Checked by: Authorized by: Received By:
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
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ACCOUNTING CYCLE
d) -Bank Receipt Voucher
BANK RECEIPT VOUCHER
Name of Company
Date
BP.V NO.
C.B. Folio
CREDIT A/c
Received
from
On account of Amount
Rs. Ps.
TOTAL
RUPEES
Prepared by: Checked by: Authorized by: Received By:
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
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ACCOUNTING CYCLE
e- Petty Cash Voucher
Name of Company
PETTY CASH VOUCHER
No.
Paid to
Rupees Rs.
on account of
Prepared by: Checked by: Authorized by: Received By:
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ACCOUNTING CYCLE
2-Journal
A journal is a book or computer file in which monetary
transactions systematically are entered the first time
they are processed in chronological sequence to control
large number of transactions of a day.
A daily record of events or business is referred to diary as
private journal.
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
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ACCOUNTING CYCLE
KINDS OF JOURNALS
1-GENERAL JOURNAL
2-CASH BOOK
3-PETTY CASH BOOK
4-CASH RECEIPT JOURNAL
5-CASH PAYMENT JOURNAL
6-PURCHASE JOURNAL
7-PURCHASE RETURN AND ALLOWANCES
JOURNAL
8-SALES JOURNAL
9-SALES RETURN AND ALLOWANCES
JOURNAL
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
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ACCOUNTING CYCLE
1-GENERAL JOURNAL
In accounting, a first step for recording of financial
transactions is General Journal where double entry
book keeping entries are recorded by debiting one or
more account and crediting another one or more
accounts with the same total amount under accounting
equation.
A general journal entry includes the date of the
transaction, the titles of the accounts debited and
credited, and an explanation of the transaction also
known as narration.
There are some other journals used for special purposes
called Special Journals same as General Journal or book
of original entry.
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
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ACCOUNTING CYCLE
PAGE NO.
GENERAL JOURNAL
DATE DESCRIPTION REF. DEBIT CREDIT
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ACCOUNTING CYCLE
2-CASH BOOK
The Cash Book is usually maintained all cash receipts and
cash major payments including bank deposits and
withdrawals.
The cash book is periodically reconciled with the bank
statement as an internal auditing.
Large business organizations that have a number of
transactions of cash payments and cash receipts use cash
receipt and cash payment journals.
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
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ACCOUNTING CYCLE
3-PETTY CASH BOOK
Petty cash is a small amount of discretionary funds in the
form of cash used for payment of expenses. Because of
the inconvenience, cost of writing, signing, saving time
and energy of cashier, petty cash book is written where
cashier issues a cheque or cash from main cash book as
petty cash funds to petty cashier. The book keeping entry
for this initial fund would be to debit Petty Cash Funds
and credit bank account or main cash account
automatically.
Petty Cash Book contains five normally columns namely
(1) Receipt (2) Date (3) Description (4) Voucher Number
(5) Payments link to separate head of account.
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
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ACCOUNTING CYCLE
4-CASH RECEIPT JOURNAL
The Cash Receipt Journal is used to record cash receipt
only designed by the requirements of business and
below is commonly used;-
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
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ACCOUNTING CYCLE
CASH RECEIPT JOURNAL
DATE DESCRIPTION
OTHER ACCOUNTS:
Cr. SALES
A/C RECEIVABLE:
Cr. SALES CASH RECEIPT
Ref. Amount Cr. Ref. Amount DISCOUNT DR.
Dr.
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
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ACCOUNTING CYCLE
5-CASH PAYMENT JOURNAL
The Cash Payment Journal known as “Multi Columns
Cash Payment Journal” is used to record major cash and
bank payments in various ways designed according to the
requirement of the business.
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
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125. 125
CASH PAYMENTS JOURNAL
DATE DESCRIPTION
Voucher
OTHER
ACCOUNTS Purchases Trnas- A/C PAYABLE Purchase CASH PAYMENTS
No. Ref. Amount portation Ref. Amount Discount
Dr. Dr. Dr. Dr. Cr. Cr.
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
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ACCOUNTING CYCLE
6- PURCHASE JOURNAL
The Purchase Journal is used for recording transactions
relating to credit purchases of merchandise and not for
cash purchases as cash purchases of merchandise are
recorded in Cash Book or Cash Payment Journal.
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
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ACCOUNTING CYCLE
PURCHSASE JOURNAL
Page No.
DATE NOVICE NO. NAME OF SUPPLIER
POST
AMOUNT
Ref.
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
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ACCOUNTING CYCLE
7-PURCHASE RETURN AND ALLOWANCES JOURNAL
Purchase Return and Allowances Journal is a Book known
as Purchase Return outwards book and purchase return
day book, wherein purchaser records all the debit
memorandum of parties of Purchase returns to seller for
certain reasons. Buyer sends a debit note to the seller
contains the quantity of goods returned and reasons for
return of goods.
The Purchase return and allowances journal is the
summary of parties whom goods has returned and the
claim of returns has been adjusted making General
Journal Entry by debiting Account Payable and crediting
Purchase Return and Allowances under reference.
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
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ACCOUNTING CYCLE
PURCHASE RETURN AND ALLOWANCES JOURNAL
Page No.
DATE CREDIT MEMO NO. NAME OF SUPPLIER
POST
AMOUNT
Ref.
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
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ACCOUNTING CYCLE
8-SALES JOURNAL
The Sales journal is used to record credit sales of
merchandise and not for cash sales.
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
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ACCOUNTING CYCLE
SALES JOURNAL
Page No.
DATE ACCOUNT DEBITED INVOICE NO.
POST
AMOUNT
Ref.
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
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ACCOUNTING CYCLE
9-SALES RETURNS AND ALLOWANCES JOURNAL
Sales Return and Allowances Journal is a book, known
as Sales Return Inwards Book or Sales Return Day Book,
wherein seller records only all the credit memorandum
of Parties of sales returns to him by his customers for
sold reasons.
The sale return and allowances journal is the summary
of parties who returned the goods and the claim of
returns has been adjusted making General Journal
Entry by debiting Sales Return and Allowances and
crediting Account receivable under reference.
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
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ACCOUNTING CYCLE
SALES RETURNS AND ALLOWANCES JOURNAL
Page No.
DATE ACCOUNT CREDITED
CREDIT POST
AMOUNT
MEMO Ref.
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
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ACCOUNTING CYCLE
DEBIT AND CREDIT MOMORANDUM
If any defect in commodities found, the purchaser will
inform the supplier for deduction of amount payable by
debit memorandum. If the supplier accepts the request,
he will issue a credit memorandum for deduction of
amount receivable.
The debit memorandum reduces the liability to vendor
and credit memorandum reduces accounts receivable to
vendor.
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
138. 138
ISSUED BY PURCHASER
SPECIMEN OF DEBIT MEMORANDUM
KARACHI TRADING COMPANY
P.O. BOX 990,
KARACHI- PAKISTAN
Debit Memorandum NO. 001
To: Date: January 10,2015
M/s. Azad Traders
S.I.T.E., Karachi
We are debiting your account with the value of under mentioned goods
returned;
Qty. Particulars Amount(Rs.)
5 Radio sets @ Rs.100 as per invoice. 500.00
No. 002 dated 12.1.2015
Less
Returned goods being of inferior
quality
via Malik Transport Co. E.&O.E.
Signature
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
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ACCOUNTING CYCLE
ISSUED BY SELLER
SPECIMEN OF CREDIT MEMORANDUM
AZAD TRADERS
S.I.T.E.,
KARACHI-PAKISTAN
To: Credit Memorandum No. 10
Karachi Trading Co., Date: January 15,2015
P.O. BOX 990,
KARACHI- PAKISTAN
We are crediting your account with the value of under mentioned goods
Received from you for the reason stated in your Debit Note.
Qty. Particulars Amount(Rs.)
5
Radio sets @ Rs.100 as per Debit
Note No. 500.00
No. 0012 dated 10.1.2015
Less
Returned (goods being of inferior
quality)
E.&O.E.
Signature
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
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ACCOUNTING CYCLE
3-GENERAL LEDGER
General journal shows debit and credit the accounts
head but the actual increase or decrease is ascertained in
an individual account and the group of accounts is known
as LEDGER or as book of final entry.
There are three types of accounts in ledger;
1-Standard Form
2-Skeleton Form “T” Shape.
3-Self Balancing Form
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
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ACCOUNTING CYCLE
GENERAL LEDGER
COMPANY NAME LEDGER
Account of
DEBIT CREDIT Dr. BALANCE
DATE PARTICULARS FOLIO Rs. Rs. or Rs.
Cr.
Standard Form of Ledger Account
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
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ACCOUNTING CYCLE
GENERAL LEDGER
COMPANY NAME LEDGER
Account of
DATE PARTICULARS FOLIO DEBIT DATE PARTICUALRS FOLIO CREDIT
Standard Form of Ledger Account
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
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ACCOUNTING CYCLE
Cash Acc: No.
Specimen of Skeleton Form or "T" Shape Form
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
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ACCOUNTING CYCLE
GENERAL LEDGER
COMPANY NAME LEDGER
Account of
DATE PARTICULARS FOLIO DEBIT PARTICUALRS FOLIO CREDIT
Specimen of self balancing form
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
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ACCOUNTING CYCLE
4-TRIAL BALANCE (UNADJUSTED)
All the ledger accounts are summarized into a statement
at the end of a period such as month, quarter or year
known as TRIAL Balance. An unadjusted trial balance is
the one which is summarized before any adjustments
made in ledger accounts.
The debit and credit result of account balance is taken or
kept in its proper place account related to;
Debit Balance Credit Balance
Assets Contra Assets
Expenses Liabilities
Prepaid expenses Capital
Drawing Revenue
The Trial balance is formed in two as to Standard Form
and Skeleton Form specified below;
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
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ACCOUNTING CYCLE
TRIAL BALNACE
AT THE END OF THE YEAR JUNE,30 2014
TITLE OF ACCOUNT
Account DEBIT CREDIT
No. Rs. Rs.
Specimen of trial Balance standard form
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
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ACCOUNTING CYCLE
COMPANY NAME
TRIAL BALNACE
AT THE END OF THE YEAR JUNE,30 2014
ASSETSCONTRAASSETLIABILITIESPROPRIETORSHIPINCOMEEXPENSES
Specimen of trial Balance Skeleton form
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
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ACCOUNTING CYCLE
5-ADJUSTMENT
In order to present a true and fair view of the financial
position, an entry is made in accounts which does not
record a transaction but made to rectify errors, missed
recording, not recorded properly or wrong amounts were
recorded previously or some transactions are recorded
only at the end of the year. These transactions or entries
are related with the adjustment, reversing, correction of
errors.
Below is the most common adjustment;
ACCRUED EXPENSES/UNRECRODED EXPENSES
PREPAID EXPENSES
DEPRESCIATION EXPENSES
BAD DEBITS/UNCOLLECTIBLE
UNUSED SUUPLIES OR MERCHANDISE
ACCRUED INCOME/UNRECORD EXPNESES.
UNEARNED REVENUE
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
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ACCOUNTING CYCLE
6-TRIAL BALANCE (ADJUSTED)
After adjusting and positing the entries into ledger
accounts, re-trial balance is prepared called adjusted trial
balance.
Like the unadjusted trial balance, the adjusted trial
balance accounts are listed usually in or order as “assets,
liabilities, and equity, income and expenses accounts.”
An adjusted trial balance is formatted exactly like an
unadjusted trial balance.
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
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ACCOUNTING CYCLE
7- CLOSING ENTRIES
Revenue, expense and capital withdrawal (dividend) accounts are temporary
accounts need to rest at the end of the accounting period through Income
Summary or Expense and revenue summary. Closing entries are the journal
entries usedtotransfer the balances of these temporary accounts topermanent
accounts. The closing journal entries may be in the form of a compound journal
entry if there are several accounts to close.
The sequence of closing process is as under:
1. Close the revenue accounts to Income Summary
2. Close the expense account to Income Summary
3. Close Income Summary to Retained Earnings
4. Close Dividends to Retained Earnings
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
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ACCOUNTING CYCLE
EXAMPLES
1. Close the revenue accounts to Income Summary
DATE ACCOUNTS DEBIT CREDIT
mm/dd Revenue XXXX.XX
Income Summary XXXX.XX
2. Close the expense account to Income Summary
DATE ACCOUNTS DEBIT
mm/dd Income Summary XXXX.XX
Expenses
3. Close Income Summary to Retained Earnings
DATE ACCOUNTS DEBIT CREDIT
mm/dd Income Summary XXXX.XX
Retained Earnings XXXX.XX
4. Close Dividends to Retained Earnings
DATE ACCOUNTS DEBIT CREDIT
mm/dd Retained Earnings XXXX.XX
Dividends XXXX.XX
4. Unrecorded expenses or accrued expenses
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
DATE ACCOUNTS DEBIT CREDIT
mm/dd Expense Account XXXX.XX
Accrued Expense XXXX.XX
161. 161
ACCOUNTING CYCLE
8- WORKSHEET
The worksheet means working paper containing different types of information
or accounting data prepared to minimize errors in the permanent record of
accounting, simplify work and for testing of ledger accounts, adjusting entries
and financial accounts.
The worksheet or working paper specimen below is very useful providing
information for;
Financial statement
Owner’s equity
Posting of adjusting entries in the accounting records
Recording of closing entries
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZAaqeelraza@live.com
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ACCOUNTING CYCLE
9-FINANCIAL STATEMENTS
At the end of the accounting period, financial statements
as income statement and Balance sheets are prepared to
close up all the financial activities during the year.
All the expenses and revenue accounts are closed by
Income Statement or Expense and Revenue Summary
showing Net Income or Net Loss for the period.
All the Assets, Liabilities and Proprietorship accounts are
presented in Balance Sheet.
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
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ACCOUNTING CYCLE
COST OF MERCHANDISE
The rule of cost of merchandise in profit and loss
summary is important to find out the net income or loss.
The amount of cost of merchandise sold is obtained by
the process of the following;
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
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ACCOUNTING CYCLE
COST OF MERCHANDISE SOLD STATEMENT
AT THE END OF THE YEAR 201..
COST OF MERCHANDISE SOLD
Merchandise Inventory (Opening) xxxx.xx
Purchases xxxx.xx
Less: Purchase Returns & Allows. xxx.xx
Less: Purchase Discount (+)xxx.xx (-)xxxx.xx
NET PURCHASES xxxx.xx
Add: Transportation in;
Cartage xxx.xx
Import Duties xxx.xx
Custom Duties xxx.xx
Clearing & forwarding Exp. xxx.xx
Freight Charges xxx.xx (+)xxx.xx
COST OF MERCHANDISE AVAILABLE FOR SALE xxxx.xx
LESS: MERCHANDISE INVENTORY (ENDING) (-)xxxx.xx
COST OF MERCHANDISE SOLD xxxx.xx
(Transferred to Profit & Loss Account)
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
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ACCOUNTING CYCLE
INCOME STATEMNET
PROFIT AND LOSS STATEMENT
AT THE END OF THE YEAR 201
SALES REVNUE:
Sales
Less: Sales Return & Allowances xxxx.xx
Less: Sales discounts xxxx.xx
(-)xxxx.xx
NET SALE xxxx.xx
LESS : COST OF MERCHANDISE SOLD (-)xxxx.xx
GROSS PROFIT OR LOSS (+/-)xxxx.xx
LESS EXPENSES
Operating Expenses xxxx.xx
General Expenses xxxx.xx
Financial Expenses xxxx.xx (-)xxxx.xx
NET PROFIT OR LOSS (+/-)xxxx.xx
(Transferred to Capital Account)
If net sales exceed the cost of merchandise sold, it means
that there is gross income and if it is less to cost of
merchandise sold, there is gross loss. And for this,
expenses increase or decrease the gain or loss.
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
171. 171
ACCOUNTING CYCLE
BALANCE SHEETS
COMPANY NAME
BALANCE SHEET AS AT 30.06.2015
ASSETS Amount EQUITIES Amount
CURRENT ASSETS CURRENT LIABILITIES
Cash in hand xxxx.xx Accounts Payable xxxx.xx
Cash at Bank xxxx.xx Bank Over draft xxxx.xx
Accounts Receivable xxxx.xx Salaries Payable xxxx.xx
Stock xxxx.xx Wages Payable xxxx.xx
Unexpired Insurance xxxx.xx Utilities Payable xxxx.xx
Unexpired Rent xxxx.xx
XXXX.XX XXXX.XX
NON-CURRENT ASSETS LONG TERM LIABILITIES
Land xxxx.xx Mark-up xxxx.xx
Building xxxx.xx Loan xxxx.xx
Furniture & Fixtures xxxx.xx XXXX.XX
Office Equipment xxxx.xx OWNER'S EQUITY
Less: Accumulated Depreciation (F&F) (-)xxxx.xx Capital xxxx.xx
Less: Accumulated Depreciation (OE) (-)xxxx.xx Less: Drawing (-)xxxx.xx
TOTAL XXXX.XX TOTAL XXXX.XX
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
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ACCOUNTING CYCLE
10-POST CLOSING TRIAL BALANCE
A post closing trial balance contains only the balance
sheet accounts and their amounts i.e. assets, liabilities,
owner equities. It is prepared after closing the expenses
and revenue accounts.
The preparation of post-closing trial balance is the last
step of the accounting cycle and gives the assurance that
sum of debits equal the sum of credits before the start of
new accounting period. It provides the opening balances
for the next ledger accounts of the new accounting
period.
This is the end of the accounting cycle and in the next
accounting period; the accounting cycle will be repeated
again as before.
The following is the example of closing trial balance;
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
174. 174
ACCOUNTING CYCLE
COMPANY NAME
POST CLOSING TRIAL BALANCE
AT THE END OF THE YEAR JUNE, 30 201…
TITLE OF ACCOUNT
DEBIT CREDIT
Rs. Rs.
Cash xxxx.xx
Accounts receivable xxxx.xx
Stock xxxx.xx
Prepaid Insurance xxxx.xx
Prepaid Rent xxxx.xx
Land xxxx.xx
Building xxxx.xx
Furniture & Fixtures xxxx.xx
Office Equipments xxxx.xx
Accounts Payable xxxx.xx
Bank overdraft xxxx.xx
Salaries Payable xxxx.xx
Wages payable xxxx.xx
Utilities Payable xxxx.xx
Mark up xxxx.xx
Loan xxxx.xx
Capital xxxx.xx
TOTAL XXXX.XX XXXX.XX
<THE SYSTEM OF ACCOUNTING < VOLUME 1< SYED AQEEL RAZA<aqeelraza@live.com>
175. 175
ENDING WORDS
ON
ACCOUNTING CYCLE
Accounting covers all the department of life, the life
cannot move or survive without food and food comes
from money, money comes from doing business,
business needs accountancy and accountancy has
process like cycle revolves all finances resulting in
financial statements showing the true and fair financial
position enables businessman to take further decisions
on business movement.
The Accounting cycle which starts once has no break
either to carry on or wind up the business activities.
I tried a little to describe the subject concisely to follow
the concept within no time.
Your comments and support is assurance of writing
further.
Author
177. 177
It is my pre-words to accounts making that accounts
making in the system of accounting is like to build
home, set characters to any story, apply labor to
job, to make map of any plan or any work for
completion needs hands. I think anything has many
hands to make something. Whence the word makes
to joint alphabet thence the accounts makes the
building of accounting under umbrella of ALPRE and
provides cycling power to it afterwards.
Your comments and encourages is better than fruit.
179. 179
THE SYSTEM OF ACCOUNTING
ACCOUNTS MAKING
TABLE OF CONTENTS
Accounts making note 157-160
1-ASSSETS 160-163
1.1 Fixed Assets 163
1.1.1 Land 163-165
1.1.2 Building 166+168
1.1.3 Plant & Machinery 169-170
1.1.4 Furniture & Fixtures 171-173
1.1.5 Office Equipment 174-175
1.1.6 Other Assets 176-178
1.2 Current Assets 178
1.2.1 Cash in Hand 179-180
1.2.2 Cash at Bank A/c 181-182
1.2.3 Account ReceivableA/c 183-185
1.2.4 Purchase Merchandise A/c 186-187
184. 184
ACCOUNTS MAKING
ACCOUNTS MAKING
In the System of Accounting there are five principle of
recording transactions wherein Assets, Liabilities, Equities,
Revenues and Expenses increasing or decreasing under rules
of debit and credit as Assets and Expenses increases debit and
decreases credit and Liabilities, Equities and Revenues
increases credit and decreases debit. Assets, Liabilities and
Equities are the permanent member of double entry
accounting Equation “Assets=Liabilities + Equities” revolving
accounting cycle round the years and Expense and Revenue
related accounts are the temporary members of accounting
equation perform to calculate Profit and Loss Account, the
profit and loss relate to owners’ equity and the owners’ equity
is the part of accounting equation. The Expenses and
Revenues and related accounts are for making profit & loss
account do not move accounting cycle or transfer their
balances to next accounting year. The expense and revenue
accounts are related with single entry, the old accounting
system used or using in small businesses where to earn and
expense daily or to avoid record accounting applied
procedures.
<THE SYSTEM OF ACCOUNTING < VOLIUM1< SYED AQEEL RAZA<aqeelraza@live.com>
185. 185
ACCOUNTS MAKING
The Accounts making in the system of accounting is too
essential to reach the goal of accounting equation or to close
up them for accounting cycle. The thousands of account are
made under matching of five accounting principles; the
accounting principle plays the rules of head and controls huge
accounts created under them.
On creating accounts Land, Building, Furniture, Plant,
Machinery, Equipment, we find out that they relate to
Principle head “Asset” means the value to business or things
which we have in our possession, if we make accounts of
account payable, loan, advance, mark up etc. indicate the
debt and debt comes under Principle account “Liabilities”, and
so on, on making capital, profit & loss account etc we reach on
the decision that these accounts relate to Owners’ Equity, the
principle account head.
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On making accounts sales, revenues, other incomes etc., we
find out they indicate income from business operation and
come under accounting principle head “Revenues” and like
this, if we make account, salaries expenses, cartage,
conveyance, wages expense, advertising expense, insurance
Expense so on, we ascertain that they relate to expenses of
five principle head of account. Expenses reduce income that
earned from doing business.
In the system of accounting there are three businesses are
described which are trading, manufacturing and servicing
have same concept of accounting system and requires the five
principle of accounting head but sub accounts relating to five
principal of accounting head mostly are common and not
common can be made according to the nature of business,
business activities, events and needs, and for the
manufacturing business, manufacturing process involves
machineries, equipments, finished goods, advertising,
promotion etc. accounts, for trading and servicing businesses
common accounts and some uncommon accounts are made.
<THE SYSTEM OF ACCOUNTING < VOLIUM1< SYED AQEEL RAZA<aqeelraza@live.com>
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In order to have knowledge and definition of accounts, I am
discussing individually on accounts most commonly used in
the system of accounting.
The System of Accounting has five principal head which are
Assets, Liabilities, Proprietorship, Revenue and Expenses
wherein Assets, Liabilities and Proprietorship are permanent
accounts rounding accounting cycle and Revenue and
Expenses are temporary accounts end on Income & loss
account or provide the source of income or loss to capital
account.
Here we discuss thoroughly each principal head, its sub
accounts and related with accounts mostly used in accounts
making;-
1-ASSETS
Assets are the resources of the business and equities are
sources, sources provide finances to resources for conversion
capital into assets enable business to start functioning. Assets
are the main head which generate sub heads and sub heads
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further generate related accounts according to the nature of
the business.
Many terms of assets are used in accounting such as fixed
assets, tangible assets, non-current assets, immoveable
assets, long term resources having live more than one year,
and these are recorded at book value or on purchase price
decreasing depreciation and placed sub head of ASSETS in
financial statement .Other assets are current assets, liquid
assets, value assets, moveable assets, intangible assets and
short term assets having life under one year.
Some assets are contra assets which reduces the value of
assets.
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Much Kind of assets according to the nature of business are in
accounts or can give name or make account to any asset
purchased or acquired for business.
<THE SYSTEM OF ACCOUNTING< VOLIUM1< SYED AQEEL RAZA<aqeelraza@live.com>
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Here are the details and description some of assets relating to
fixed assets, tangible assets, non-current assets, immoveable
assets, long term assets.
1-FIXED ASSETS
1- Land
2- Building
3- Plant & Machinery
4- Furniture & Fixtures
5- Office Equipment
6- Other Assets
1.1.1 LAND A/c
Land is required mostly in manufacturing concerns producing
raw material or convert raw material into finished goods for
home country and out countries and having huge production,
labor, materials and process.
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The land is fixed, non- current, tangible, long term resources
or immovable asset of the business and the permanent
member of accounting cycle and shown in balance sheet as
land. There is no depreciation is charged on land and the value
of land is recorded as book value or purchase value instead of
market value.
Banks offer loan on mark up or on demand finance against
mortgage of land to assess market value of the land.
The account of land is made under head Fixed Assets and
according to accounting rules as asset increases debit
decreases credit it will be debited and other account which is
cash or bank also an asset is credited. There is no affect on
accounting equation is made as cash converted into asset
“Land,” and this action is called asset for asset entry or
conversion entry.
Entry;
Land
Cash/Bank
(Purchase land by cash/bank)
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1.1.2 BUILDING A/c
After purchasing of land, the building is needed to be
constructed and designed according to the nature or work of
business keeping in view all the aspects of health and safety
of workmen.
The expense on construction of building is capital
expenditure, and capital expenditure is converted into asset
as Building Account. Money spending any kind on all repairs
and maintenance on building is charged as expenses under
head Repair & Maintenance Building.
The building is fixed, non- current, tangible asset, long term
resources or immoveable asset of the business and the
permanent member of accounting cycle and shown in balance
sheet as Building. The value of building is recorded as book
value or construction value instead of market value, and
depreciation is charged on building.
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Therefore, the account of building is made under head Assets
and sub head Fixed Assets and according to accounting rules
asset increases debit decreases credit it will be debited and
other account which is cash or bank also an asset is credited.
There is no affect on accounting equation as cash converted
into asset (Building) and this action is called asset for asset
entry or conversion entry.
Entry;
Building Debit
Cash/Bank Credit
(Purchase building by cash/bank)
<THE SYSTEM OF ACCOUNTING< VOLIUM1< SYED AQEEL RAZA<aqeelraza@live.com>