W1003 Accounting Assignment of BBA

Contents
Introduction to what is accounting………………………………………………………………………………………6
Books of original entry………………………………………………………………………………………………………….6
 Purpose…………6
 Advantage……..7
Sales Day

What is accounting?
It is the process of recording the financial transactions, keeping track of a user's activity
while accessing the resources of network including the amount of time spent.
Accounting also entails providing a company's management with the information it
needs to keep the business financially healthy. It is a profession consisting of singles
having the formal education to carry out these tasks. It is the storing, sorting, retrieving,
summarizing, and presenting the information in various reports and analyses which
stays inside the company. Some of the information will originate from the recorded
transactions but some of the information will be appraisals and projections based on
different assumptions. Three examples of internal analyses and reports are budgets,
standards for controlling operations, and reckoning selling prices for announcing new
jobs. This area of accounting is known as management accounting. But the accounting
which presents the information in the form of general-purpose financial statements
(balance sheet, income statement, etc.) to people outside of the company are referred to
as financial accounting and it is a specialized branch of accounting that keeps track of a
company's financial transactions. Companies issue financial statements on a routine
schedule. The statements are considered external because they are given to people
outside of the company, with the primary recipients being stockholders. If a
corporation's stock is publicly traded, nonetheless, its financial statements tend to be
widely dispersed, and information will likely spread secondary recipients such as
competitors, customers, employees, labor organizations, and investment analysts.
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Books of original entry:-
They are the books where transactions are first recorded. The usability of books of
original entry avails the division of the ledger which supports management in data
analysis. They make it easier to recall information on debtors and creditors, saving time
and eliminating countless details from the ledger. There are various types of books of
original entry such as: Sales day book, Purchase day book, Sales return day book,
Purchase return day book. Cash book, General journal.
Purpose of original entry books:-
The purpose of original entry books is to receive any required piece of information
quickly and easily, to alter or to completely mark down fraud, scam etc, and to locate
any flaws and errors in the trail balance and the main purpose is to record of what you
did that day and to exercise control over each activity done. Preserving a original book
entry is very essential because it's shows 2 things: Debit and credit. If any transaction is
wrong from this point till to income statement profit not show a true profit because
original entry is wrong if it is maintaining then you easily finds where you are wrong.

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Advantages of original entry books:-
The advantages of original entry books accounts can be found more easily with the help
of the cross referencing nature of the books of original entry being kept. In case, if any
of the records are lost then the ledgers and the books of original entry acts as a backup
for each other. Nevertheless, it also acts as a 'listing device' for posting totals to
different accounts, therefore saving time and labor.
Sales Day Book: It is the book in which non-cash sales are recorded with details of
customer, invoices, amounts and date; these details are later posted to
each customer's history in the sales ledger. In other words a sales day book is a useful
book that lists all the invoices that were issued to customers in a singular day. The
details of credit sales are made by a businessman. Total of sales book shows the total
credit sales of goods during the period concerned. Commonly, the sales book is
totalized every month and is written up daily from the copies of invoices sent out. Sales
day book looks like this:
Sales Day Book
Date Customer name Invoice no SR
Aug 2 Mohammad 20 120
Aug 13 Ahmed 21 350
Aug 21 Ali 22 250
Aug 28 Ahmed 23 150
Total
870
A Sales day book is usually made up for a certain period, for a week or a month, at the
end of the period the sales day book is summed up and the entries transferred to the
accounts. A new sales day book will be started for the new period. The sales day book
shown on the table above has been produced for the month August. A new one would
be started for September invoices. At the end of the month the Day Book is summed,
SR. 870 in the above example, this amount is posted as a single entry to the credit side
of the sales account in the Nominal Ledger, whilst the individual invoice amounts are
debited to the individual customer personal accounts in the Sales Ledger. These results
are shown below.

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Sales ledger –Mohammad [SL1]
Debit side [Dr] Credit side [Cr]
Date Details folio SR Date Details folio SR
Aug 2 SDB20 120
Sales ledger –Ahmed [SL2]
Aug13 SDB21 350
Aug28 SDB23 150
Sales ledger –Ali [SL3]
Aug21 SDB22 250
Nominal ledger –Sales Account [NL 1]
Aug 30 SDB total for
Aug
870
Sales Return Day Book:-
It is also called returns inwards book. It is used for recording goods returned to us by
our customers. In other words it is where a customer returns goods to the business.
When this happens the business will issue a Credit Note to the customer, imprints of
these are kept and used to enter the details into a sales returns day book. The ruling of
these books is exactly as for sales day book but as with it, sales return day book is used
to record all credit notes issued by the business for the period and then the Day Book
will be summed up at the end of the period and the details will be transferred to the
accounts and the total amount is posted as a single entry to the Debit side of the sales
returns account in the Nominal Ledger, whilst the individual credit note amounts are
credited to the individual customers personal accounts in the sales ledger.
The table for SRDB is shown below:

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Sales Return Day Book
Date Customer name Credit Note no SR
Aug 7 Mohammad C20 55
Aug 15 Ahmed C21 45
Total
100
At the end of the month the entries will be:
Mohammad- Sales ledger [SL 1]
Date Details folio SR Date Details folio
SR
Aug2 SDB20 120 Aug 7 SRDB C20 55
Ahmad- Sales ledger [SL 2]
SR
Aug13 SDB21 350 Aug 15 SRDB C21 45
Aug28 SDB23 150
Ali- Sales ledger [SL 3]
SR
Aug21 SDB22 250
Nominal ledger –Sales Account [NL 1]
SRDB Aug 870

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Nominal ledger –Sales Return Account [NL 2]
Debit side [Dr] Credit side
[Cr]
Aug 30 SDB total for Aug 100
Purchase Day Book:-
A purchase daybook is a book of original entry maintained to record only the credit
purchases. All the purchases are totaled at the end of the month. The Purchase daybook
is written up daily from all invoices received. Purchases book or purchases day book is
a book of original entry maintained to record credit purchases. At the end of each
month, the purchases book is totaled and the total shows the total amount of goods
purchased on credit. The invoices are consecutively numbered and noted in the
purchases book. The total of purchase book is debited to the purchase account and the
accounts of the suppliers of goods are credited with the amount standing against their
names. Ruling of purchase day book is different from a journal. Furthermore, Cash
purchases do not find place in purchase day book as they are listed in Cash book.
There are five columns in a purchase day book:
 Date
 Name of the supplier/ Quantity supplied/ Rate of quantity supply/ Description.
 Invoice number
 Ledger Folio
 Total amount to the supplier in respected currency
As each different supplier will have their own method of numbering, the Purchases Day
Book [PDB] invoice numbers will look different from each other as shown below on the
table:
Purchase Day Book
Date Name of Supplier Invoice number SR
Aug 2 Omar A1020 500
Aug 15 Safi 528 220
Aug 22 Bhatti 2145 290
Aug 29 Bhatti 1321 450
Total
1,460
If we return goods to a Supplier, these will be shown in a Purchase Returns Day Book
[PRDB] as represented below:
Purchase Returns Day Book

Date Name of Supplier Credit note SR
Aug 13 Omar CR/A1020 500
Aug 19 Safi CR/528 220
Total
720
The Credit Note numbers on the PRDB may also look quite different; this is also due
to each Supplier having their own numbering system. As with the Sales and Sales
Returns Day Books, the Purchase and Purchase Returns Day Books will be summed up
at the end of the month. The Purchases total for the month from the Purchases Day
Book will be posted as a single Debit entry on the Purchases Account in the Nominal
Ledger and each invoice total will be posted as Credit entries to the Supplier Accounts
in the Purchase Ledger. For the Purchases Returns total for the month from the
Purchases Returns Day Book, it will be posted as a single Credit entry to the Purchases
Returns Account in the Nominal Ledger and each individual Credit Note will be posted
as Debit entries to the Supplier Accounts in the Purchase Ledger. Here is an example:
Page 7 of 15
Omar- Purchases ledger [PL 1]
SR
Aug13 PRDB CR/A1020 600 Aug 2 PDB A1020 500
Safi- Purchases ledger [PL 2]
Date Details fol
io
SR Date Details folio
SR
Aug19 PRDB CR/ 528 420 Aug 15 PDB 528 500
Bhatti- Purchases ledger [PL 3]
SR
Aug 22 PDB 2145 290
Aug 29 PBD 1321 450

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Nominal ledger -Purchases Account [NL 3]-
SR
Aug
30
PBD
August
1460
Nominal ledger -Purchases Return Account [NL 4]
SR
Aug 30 PRDB August 720
General Journal:-
Journal is the first successful step of the double entry system. Journal has the following
features: Transactions are recorded chronologically. So, journal is called as
a chronological book and as the transactions are recorded on the same day it happens
so, journal is also called a day book. For each transaction the names of the two
concerned accounts indicating which is debited and which is credited, are clearly
written into consecutive lines. This makes ledger - posting easy. That is why journal is
called "assistant to ledger" or "subsidiary book". Narration is written below each
entry. The amount is written in the last two columns - debit amount in debit column and
credit amount in credit column.
Advantages of Journal:
First of all, as soon as the transaction takes place it is recorded increasing less risk of
data’s being deleted from the accounting books. Secondly, as the transactions are kept
recorded in journal chronologically with narration, it can be easily ascertained when and
why a transaction has taken place, thirdly, for each and every transaction which of the
two concerned accounts will be debited and which account credited, are clearly written in
journal. So, there is no chance of committing any mistake in writing the ledger, Since all
the details of transactions are recorded in journal, it is not necessary to repeat them in a
ledger. As a result ledger is kept tidy and brief. Last but not the least, a journal shows the
complete story of a transaction in one entry. And any mistake in ledger can be easily
detected with the help of journal.

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There are five columns in a Journal:
 Date
 Amount of debit entry
 Amount of credit entry
 Ledger folio
 Description of transaction

Example of a Journal:

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Solution of a Journal:
Cash Book:
Cash book is a financial journal that contains all cash receipts and payments, including bank
deposits and withdrawals. Entries in the cash book are then posted into the general ledger. It
is periodically arranged with the bank observations as an internal style of auditing.

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Cash Book consists of:
 Single column Cash Book
 Double Column Cash Book
 Triple Column Cash Book
 Petty Cash
Example of Single column Cash Book-
Solution for Single column Cash Book-

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Example of Double column Cash Book
Solution for Double column Cash Book-

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Example of Triple column Cash Book-
May 1
Balance brought down from April: Lm
Cash Balance 29
Bank Balance 654
May2
B.King pays us by cheque Lm117, after having deducted
Lm3 cash discount.
May 8
The business pays R.Long account of Lm100 by cheque
less 5% cash discount.
May11
Withdrew Lm100 cash from the bank for business use.
May16
N. Campbell pays us Lm273 by cheque after deducting
Lm7 cash discount
May25
Paid wages in cash Lm92.
May28
D. Shand pays us in cash Lm38 after deducting Lm3
cash discount
May29
The business pays U. Barrow his account of Lm60 by
cheque less 5% cash discount
May30
The business pays A.Allen by cheque Lm429 after
deducting Lm11 cash discount.
Solution for Triple column Cash Book-
Dr Cash Book
Cr
Dr Disc Cash Bank Cr Disc. Cash Bank
May-01
29 654 May-08 R.
5 95
Balance b/d
Long
May-02 B. King 3 117 May-11
Cash ©
100
May-11 Bank © 100 May-25
Wages
92
May-16 N.
Campbell
7 273 May-29 U.
Borrow
3 57
May-28 D.
Shand
2 38 May-30 A.
Allen
11 429
May-31
Balance c/d
75 363
12 167 1,044 19 167 1,044
Jun-01 Balance
b/d
75
363

Petty Cash-
Businesses usually keep small amounts of cash to meet small payments such as
stationery costs or entertainment expense. Such payments are handled by petty cash.
Page 14 of 15
Example of Petty Cash
On 1st January, petty cash of $100 is introduced.
Petty cash register shows the following payments in the month of January:
Petty cash is reimbursed on 31st January.
3rd January Tea $10
15th January Stationery $50
27th January Plumber $20
Solution for Petty Cash

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Reference-
 http://www.accountingcoach.com/financial-accounting/explanation
 http://www.accounting4management.com/sales_day_book.htm
 http://www.businessdictionary.com/definition/sales-day-book.
html#ixzz2thffq39x
 http://www.ask.com/question/what- is-a-purchase-daybook
 http://www.accounting4management.com/sales_returns_book.htm
 http://www.accountingexplanation.com/journal.htm
 http://www.wisegeek.com/what-is-a-general-journal.htm
 https://www.ventureline.com/accounting- glossary/G/general-journal-definition/
 http://www.investopedia.com/terms/c/cash-book.asp
 http://www.kkhsou.in/main/management/cash_book.html

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