Accounting, Lectures

1. Financial Accounting
1
Lecture – 12
Ali Traders
Trial Balance As On January 31, 20--
Title of Account Code Dr. Rs. Cr. Rs.
Cash Account 01 35,000
Bank Account 02 130,000
Capital Account 03 200,000
Furniture Account 04 15,000
Vehicle Account 05 50,000
Purchases Account 06 60,000
Mr. A (Creditor) 07 15,000
Sales 08 95,000
Mr. B (Debtor) 09 15,000
Salaries 10 5,000
Expenses 11 20,000
Expenses Payable 12 20,000
Total 330,000 330,000

2. Financial Accounting
2
Lecture – 12
Accounting Equation
Assets = Capital + Liabilities
Assets = 35,000+130,000+15,000+50,000+15,000= 245,000
Capital = 200,000
Liabilities = 15,000 + 20,000 = 35,000
Capital + Liabilities = 235,000

3. Financial Accounting
3
Lecture – 12
Ali Traders
Trial Balance As On January 31, 20--
Title of Account Code Dr. Rs. Cr. Rs.
Cash Account 01 35,000
Bank Account 02 130,000
Capital Account 03 200,000
Furniture Account 04 15,000
Vehicle Account 05 50,000
Purchases Account 06 60,000
Mr. A (Creditor) 07 15,000
Sales 08 95,000
Mr. B (Debtor) 09 15,000
Salaries 10 5,000
Expenses 11 20,000
Expenses Payable 12 20,000
Total 330,000 330,000

4. Financial Accounting
4
Lecture – 12
Balance Sheet of Ali Traders
Name of the Entity (Ali traders)
Balance Sheet As At (January 31, 20--)
Liabilities Assets
Particulars Amount
Rs.
Particulars Amount
Rs.
Capital 200.000 Fixed Assets 65,000
Profit and Loss Account 10,000 Furniture 15,000
Current Liabilities
Mr. A 15,000
Exp. payable 20,000
210,000
35,000
Vehicle 50,000
Current Assets
Mr. B 15,000
Bank 130,000
Cash 35,000
180,000
Total 245,000 Total 245,000

5. Financial Accounting
5
Lecture – 12
Balance Sheet of Ali Traders
Ali traders
Balance Sheet As At January 31, 20--
Particulars Amount Rs. Amount Rs.
Assets
Fixed Assets
Current Assets
65,000
180,000
Total 245,000
Liabilities
Capital
Profit and Loss Account
200,000
10,000 210,000
Current Liabilities 35,000
Total 245,000

6. Financial Accounting
6
Lecture – 12
Working Capital
Working Capital = Current Assets – Current Liabilities

7. Financial Accounting
7
Lecture – 12
Cost of Sales & Closing Stock
• Closing Stock – The Value of goods unsold at the end
of the accounting period.
• Cost of Sales = Purchases – Closing Stock.

8. Financial Accounting
8
Lecture – 12
Treatment of Closing Stock
• Closing Stock = 1,000
• Cost of goods sold => 60,000 - 1,000 = 59,000

9. Financial Accounting
9
Lecture – 12
Ali Traders Profit and Loss Account
Name of the Entity (Ali Traders)
Profit and Loss Account for the Month Ending January 31, 20--
Particulars Amount
Rs.
Amount
Rs.
Income / Sales / Revenue
Less: Cost of Goods Sold ( 60,000 - 1,000 ) (59,000)
95,000
(59,000)
Gross Profit
Less: Administrative Expenses (25,000)
36,000
(25,000)
Net Profit 11,000

10. Financial Accounting
10
Lecture – 12
Treatment of Closing Stock
• Closing Stock = 1,000
• Current assets => 180,000 + 1,000 = 181,000

11. Financial Accounting
11
Lecture – 12
Value of Stock Used =
Opening Stock
+ Purchases
- Closing Stock

12. Financial Accounting
12
Lecture – 12
Balance Sheet of Ali Traders
Ali traders
Balance Sheet As At January 31, 20--
Particulars Amount Rs. Amount Rs.
Assets
Fixed Assets
Current Assets (180,000 + 1,000)
65,000
181,000
Total 246,000
Liabilities
Capital
Profit and Loss Account
200,000
11,000 210,000
Current Liabilities 35,000
Total 246,000

13. Financial Accounting
13
Lecture – 12
Utilization of Fixed Assets
• Dividing total cost by life of the asset.
• Rs. 65,000 / 50 months = Rs. 1,300 monthly charge

14. Financial Accounting
14
Lecture – 12
Treatment of Depreciation
• Rs. 1,300 is treated as expense.
• Fixed assets => 65,000 - 1,300 = 63,700
• This net amount of Rs. 63,700 is referred to as Book
Value OR Written Down Value (WDV)

15. Financial Accounting
15
Lecture – 12
Ali Traders Profit and Loss Account
Name of the Entity (Ali Traders)
Profit and Loss Account for the Month Ending January 31, 20--
Particulars Amount
Rs.
Amount
Rs.
Income / Sales / Revenue
Less: Cost of Goods Sold ( 60,000-1,000 ) (59,000)
95,000
(59,000)
Gross Profit
Less: Administrative Expenses
Depreciation
(25,000)
(1,300)
36,000
(26,300)
Net Profit 9,700

16. Financial Accounting
16
Lecture – 12
Balance Sheet of Ali Traders
Ali traders
Balance Sheet As At January 31, 20--
Particulars Amount Rs. Amount Rs.
Assets
Fixed Assets (65,000 – 1,300)
Current Assets (180,000 + 1,000)
63,700
181,000
Total 244,700
Liabilities
Capital
Profit and Loss Account
200,000
9,700 209,700
Current Liabilities 35,000
Total 244,700

17. Financial Accounting
17
Lecture – 12
Distribution of Profits / Drawing

18. Financial Accounting
18
Lecture – 12
Balance Sheet of Ali Traders
Ali traders
Balance Sheet As At January 31, 20--
Particulars Amount Rs. Amount Rs.
Assets
Fixed Assets (65,000 – 1300)
Current Assets (181,000 - 5,000)
63,700
176,000
Total 239,700
Liabilities
Capital
Profit and Loss Account
Drawing
200,000
9,700
(5,000) 204,700
Current Liabilities 35,000
Total 239,700