Fundamental of accounting
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Transcript of Fundamental of accounting
Siilas campusPresentation
Fundamental of AccountingBY- VINAY KUMAR VERMA
BBA/1/A/36
Index
Matching conceptFinal account without adjustment
Matching Concept
The matching concept is the basis on which the accrual accounting method keeping is built.
The matching concept is the based on the principle that the expenses for a particular accounting period should be matched with the revenues for that period only.
The purpose of the matching concept is to avoid misstating earnings for a period. reporting revenues for a period without reporting all the expenses that brought them could result in overstated or understated profit .
Matching concept recognition
In the US and in many other countries accounting concepts such as the matching concept and accrual accounting are recognized in the GAAP (Generally Accepted Accounting Principle) and organization behind GAAP (i.e. the Financial Accounting standard board, FABS). Other accounting concept similarly recognized including materially concept.
Final Account Meaning
Is quite natural that the businessman is interested in knowing whether his business is running on profit or loss and also the true financial position of his business. The main aim of Booking is to inform the proprietor, about the business progress and the financial position at the right time and in right way. Preparation of final account is highly possible only after the preparation of trial balance.
Types of Final Account
There is three types of Final Account :- Trading Account Profit and Loss Account Balance Sheet
Example
From the following trial balance of Anil kumar, prepare Trading and Profit & Loss account for the year ending 31 March, 2006 and balance sheet as on that date.
DEBIT BALANCE AMMOUNT CREDIT BALACE AMMOUNTOpening stock 31,350 Sales 4,02,160Purchases 2,80,000 Purchases Returns 1,150Sales Returns 2,000 Creditors 62,000Carriage Inward 8,710 Discount 90Wages 58,840 Capital 50,000Coal, gas, water 42,860Manufacture expenses
4,840
Debtors 67,900General Expenses 4,890Salaries 4,300Rent, Rates and taxes
1,910
Cash in Hand 70Drawings 3,000Total 5,15,400 Total 5,15,400Closing Stock As on 31st march 2006 Rs. 53,000
Particulars Amount Particulars AmountTo opening stock 31,350 By sales
4,02,160To purchases 2,80,000 Less : sales returns
2,0004,00,160
Less : purchases return 1,150 2,78,850 By closing Stock 53,800To carriage 8,710To wages 58,840To Coal, gas, water 42,860To manufacturing expenses 4,840To Gross profit c/d 28,510
4,53,960 4,53,960
To salaries 4,300 By Gross profit b/d 28,510To rent, rates and taxes 1,910 By Discount 90To general expenses 4,890To net profit trans. To capital a/c 17,500
28,600 28,600
Trading And Profit & Loss account For the year ending 31st march 2006
Liabilities Amount Assets Amount
Sundry Creditors 62,000 Cash in hand 70Capital 50,000
Cash at bank 4,730
Add: Net profit 17,500
Sundry debtors 67,900
67,500
Closing stock 53,800
Less : Drawings 3,000
64,500
1,26,500
1,26,500
Balance sheet As on 31st march 2006