SEMINAR ON ACCOUNTING
CYCLE
Presented By: Sahil Bhutani (BBA-I)
ACCOUNTING CYCLE
JOURNALIn accounting, a first recording of financial transactions as they occur in time, so that they can then be used for future reconciling and transfer to other official accounting records such as the general ledger.
LEDGERLEDGER is a book of accounts in which data from transactions recorded in journals are posted and thereby classified and summarized.
TRIAL BALANCE
A bookkeeping worksheet in which the balances of all ledgers are compiled into debit and credit columns.
TRADING ACCOUNT
It is the first part or stage in determination of the result of the business and is concerned with finding out the gross profit or gross loss by taking into account the various trading activities.
PROFIT AND LOSS ACCOUNT For earning net profit, a businessman has to incur many more expenses in addition to the direct expenses. These expenses are not taken to trading account.
For this purpose, a profit and loss account is prepared separately.
BALANCE SHEET
A financial statement that summarizes a company's assets, liabilities and shareholders' equity at a specific point of time.
During January 2010 Ram transacted the following business:
Commenced business with cash 20,000 Purchased goods on credit from Nadu 1,00,000 Purchased goods for cash 4,000 Paid Gopal an advance for goods ordered 10,000 Received cash from Maruti as advance for goods ordered
by him 6,000 Purchased furniture, office use for cash 2,000 Paid Rent 1,000
During January 2010 Ram transacted the following business:
Received commission (in cash) 1,600
Goods returned to Nadu 2,000
Goods sold to Kishore 10,000 Paid for postage and telegrams
200 Goods returned by Kishore 2,000 Paid for stationery
1,200 Paid into Bank 5,000
During January 2010 Ram transacted the following business: Goods sold for cash 27,750 Bought goods for cash 3,000 Paid salaries by cheque
3,200 Paid rent 1,000 Drew cash for personal use 4,000 Deposited cash into Bank
12,000
Journal Entries in the books of Ram
Date Particulars L.F.
Amount Dr.
Amount Cr.
Cash A/c Dr. To Ram’s Capital A/c (Being the cash brought into business as capital)
20,00020,000
Purchase A/c Dr. To Nandu’s A/c(Being the goods purchased on credit)
1,00,0001,00,000
Purchases A/c Dr. To Cash A/c(Being the goods purchased for cash)
4,0004,000
Gopal A/c Dr. To Cash A/c (Being the amount paid to Gopal)
10,00010,000
Journal Entries in the books of Ram
Date Particulars L.F.
Amount Dr.
Amount Cr.
Cash A/c Dr. To Maruti A/c(Being the cash received from Maruti)
6,0006,000
Furniture A/c Dr. To Cash A/c(Being the furniture purchased for office use for cash)
2,0002,000
Rent A/c Dr. To Cash A/c(Being the wages paid)
1,0001,000
Cash A/c Dr. To Commission Received A/c (Being the commission received)
1,6001,600
Journal Entries in the books of Ram
Date Particulars L.F.
Amount Dr.
Amount Cr.
Nandu A/c Dr. To Purchase return A/c (Being goods returned to Nandu)
2,0002,000
Kishore A/c Dr. To Sales A/c(Being goods sold to Kamal on credit)
10,00010,000
Postages & Telegrams A/c Dr. To Cash A/c(Being the amount paid for postages & Telegrams)
200200
Sales returns A/c Dr. To Kishore’s A/c(Being the goods returned by Kamal)
2,0002,000
Journal Entries in the books of Ram
Date Particulars L.F.
Amount Dr.
Amount Cr.
Stationery A/c Dr. To Cash A/c(Being the amount paid for stationery)
1,2001,200
Bank A/c Dr. To Cash A/c(Being the amount deposited into Bank)
5,0005,000
Cash A/c Dr. To Sales A/c(Being the goods sold for cash)
27,75027,750
Purchases A/c Dr. To Cash A/c(Being the goods purchased for cash)
3,0003,000
Journal Entries in the books of Ram
Date Particulars L.F.
Amount Dr.
Amount Cr.
Salaries A/c Dr. To Bank A/c(Being the amount paid as salaries)
3,2003,200
Rent A/c Dr. To Cash A/c(Being the rent paid)
1,0001,000
Ram Drawings A/c Dr. To Cash A/c(Being the cash drawn for personal use)
4,0004,000
Bank A/c Dr. To Cash A/c(Being cash deposited)
12,00012,000
Ledger Postings
Dr. Cr.Date ParticularsJF
NoAmountRs.
Date Particulars JFNo
AmountRs.
To Balance c/d 20,000 By Cash A/c 20,000
Total 20,000 Total 20,000
Ram’s Capital A/c
Ledger PostingsDr. Cr.Date ParticularsJF
NoAmountRs.
Date Particulars JFNo
AmountRs.
To Capital A/c 20,000 By Purchases A/c 4,000 To Maruti's A/c 6,000 By Gopal A/c 10,000 To Commission A/c 1,600 By Furniture A/c 2,000 To Sales A/c 27,750 By Rent A/c 1,000 By Postage A/c 200 By Stationery A/c 1,200 By Bank A/c 5,000 By Purchases A/c 3,000 By Rent A/c 1,000 By Bank A/c 12,000 By Drawings A/c 4,000 By Balance c/d 11,950
Total 55,350 Total 55,350
Cash A/c
Ledger Postings
Dr. Cr.Date ParticularsJF
NoAmountRs.
Date Particulars JFNo
AmountRs.
To Cash A/c 5,000 By Salaries A/c 3,200
To Cash A/c 12,000 By Balance c/d 13,800 17,000 17,000
Bank A/c
Ledger Postings
Dr. Cr.Date ParticularsJF
NoAmountRs.
Date Particulars JFNo
AmountRs.
To Nandu 1,00,000 By Balance c/d 1,07,000
To Cash A/c 4,000
To Cash A/c 3,000
Total 1,07,000 Total 1,07,000
Purchases A/c
Ledger Postings
Dr. Cr.Date ParticularsJF
NoAmountRs.
Date Particulars JFNo
AmountRs.
To Purchase Returns A/c 2,000
By Purchases A/c 1,00,000
To Balance c/d 98,000
Total 1,00,000 Total 1,00,000
Nandu A/c
Ledger Postings
Dr. Cr.Date ParticularsJF
NoAmountRs.
Date Particulars JFNo
AmountRs.
To Balance c/d 37,750 By Kishore’s A/c 10,000
By Cash A/c 27,750
Total 37,750 Total 37,750
Sales A/c
Ledger Postings
Dr. Cr.Date ParticularsJF
NoAmountRs.
Date Particulars JFNo
AmountRs.
To Balance c/d 2,000 By Nandu’s A/c 2,000
Total 2,000 Total 2,000
Purchase Return A/c
Ledger Postings
Dr. Cr.Date ParticularsJF
NoAmountRs.
Date Particulars JFNo
AmountRs.
To Kishore’s A/c 2,000 By Balance c/d 2,000
Total 2,000 Total 2,000
Sales Return A/c
Ledger Postings
Dr. Cr.Date ParticularsJF
NoAmountRs.
Date Particulars JFNo
AmountRs.
To Cash A/c 10,000 By Balance c/d 10,000
Total 10,000 Total 10,000
Gopal’s A/c
Ledger Postings
Dr. Cr.Date ParticularsJF
NoAmountRs.
Date Particulars JFNo
AmountRs.
To Cash A/c 1,000 By Balance c/d 2,000
To Cash A/c 1,000
Total 2,000 Total 2,000
Rent A/c
Ledger Postings
Dr. Cr.Date ParticularsJF
NoAmountRs.
Date Particulars JFNo
AmountRs.
To Balance c/d 1,600 By Cash A/c 1,600
Total 1,600 Total 1,600
Commission Received A/c
Ledger Postings
Dr. Cr.Date ParticularsJF
NoAmountRs.
Date Particulars JFNo
AmountRs.
To Sales A/c 10,000 By Sales Return A/c 2,000
By Balance c/d 8,000
Total 10,000 Total 10,000
Kishore’s A/c
Ledger Postings
Dr. Cr.Date ParticularsJF
NoAmountRs.
Date Particulars JFNo
AmountRs.
To Cash A/c 200 By Balance c/d 200
Total 200 Total 200
Postage & Telegram A/c
Ledger Postings
Dr. Cr.Date ParticularsJF
NoAmountRs.
Date Particulars JFNo
AmountRs.
To Cash A/c 1,200 By Balance c/d 1,200
Total 1,200 Total 1,200
Stationery A/c
Ledger Postings
Dr. Cr.Date ParticularsJF
NoAmountRs.
Date Particulars JFNo
AmountRs.
To Cash A/c 3,200 By Balance c/d 3,200
Total 3,200 Total 3,200
Salaries A/c
Ledger Postings
Dr. Cr.Date ParticularsJF
NoAmountRs.
Date Particulars JFNo
AmountRs.
To Cash A/c 4,000 By Balance c/d 4,000
Total 4,000 Total 4,000
Drawings A/c
Ledger Postings
Dr. Cr.Date ParticularsJF
NoAmountRs.
Date Particulars JFNo
AmountRs.
To Balance c/d 6,000 By Cash A/c 6,000
Total 6,000 Total 6,000
Maruti’s A/c
Ledger Postings
Dr. Cr.Date ParticularsJF
NoAmountRs.
Date Particulars JFNo
AmountRs.
To Cash A/c 2,000 By Balance c/d 2,000
Total 2,000 Total 2,000
Furniture A/c
Trail BalanceParticulars Amount Dr. Amount Cr.Ram's Capital A/c 20,000Cash A/c 11,950 Bank A/c 13,800 Purchases A/c 107,000 Nandu 98,000Sales A/c 37,750Purchase Return A/c 2,000Sales Return A/c 2,000 Gopal 10,000 Rent A/c 2,000 Commission Received A/c 1,600Kishore 8,000 Postage & Telegram A/c 200 Stationey A/c 1,200 Salaries A/c 3,200 Drawings A/c 4,000 Maruti 6,000Furniture A/c 2,000 Total 165,350 165,350
Trading Account
Particulars Amount(Dr.)
Particulars Amount(Cr.)
To opening stock By Sales Less: Sales Returns
To Purchases Less :Purchase Returns
By Closing Stock
To Carriage
To Power
To Freight
To manufacturing Exp.
To factory Exp.
To Import Duty
To Royalty
To Gross profitTransferred to P&L A/C
TOTAL TOTAL
Profit And Loss AccountParticulars Amount(Dr
.)Particulars Amount(Cr.
)
To Salaries By Profit b/d
To Rent Rates & Taxes By Rent
To Printing & Stationary By Bad Debts Recovered
To Lighting By Profit on Sale of Assets
To Audit Fees By Miscellaneous Receipts
To Trade Exp.
To General Exp.
To Advertisement
To Bad Debts
To Bank Charges
To Donation & Charity
To Net ProfitTransferred to capital A/C
TOTAL TOTAL
Balance SheetLIABILITES AMOUN
TASSETS AMOUNT
Sundry Creditors Cash In Hand
Outstanding Exp. Cash At Bank
Unearned Income Sundry Debtors
Long Term Loans Closing Assets
Capital Add: Net Profit Add: Drawings
Accrued Income
Furniture
Loose Tools
Motor Vehicle
Plant Machinery
Land & Buildings
Goodwill
TOTAL TOTAL
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