April 7, 2023Sreejith S FIMS August 2008 1
Sreejith SFIMS
Introduction
Recording in Journal Ledger posting & balancing Trial balance preparation Final Accounts
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Fundamental Accounting Principle (equation)
Assets = Liabilities + Capital
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AssetsResources of BusinessResults of Past EventsFuture Economic Benefits
Fundamental Accounting Principle (equation)
Assets = Liabilities + Capital
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LiabilitiesPresent ObligationResult of past eventsSettlement in Future
Fundamental Accounting Principle (equation)
Assets = Liabilities + Capital
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CapitalOwner’s ContributionInternal Liability
Profit is the reward
Double Entry System
Every transactions have two aspects Benefits & Sacrifice Debit & Credit –Accounting
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Fundamental Accounting Principle (equation)
Assets = Liabilities + Capital
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Increase in Assets and Increase in Liability/Capital
Increase in one Asset and Decrease in other Asset
Decrease in Assets And Decrease in Liability
Decrease in One Liability and Increase in other Liability
Fundamental Accounting Principle (equation)
Assets = Liabilities + Capital
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Increase –Debit
Decrease - Credit
Increase – Credit
Decrease - Debit
IncomeIncrease in Economic
benefit during the accounting period in the form of in flows
Income - Credit
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Expenses
Decrease in Benefits During the accounting Period in the form of Outflow
Expenses - Debit
Debit – Credit Rule
Credit represents the sources of financingDebit represents the uses of financing
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Debit Credit
Increase Decrease
Debit Credit
Decrease Increase
Debit Credit
Expenses/ losses
Incomes/ Gains
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Asset Liabilities/Capital
Journal
All business transactions are firstly recorded
Chronological order Recording transactions in a Journal is
Known as Journalisation Double Entry System Each Transactions in a journal known as
Journal Entry
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Date Particulars LF Debit Amount
Credit Amount
June 1
Cash a/c Dr To Capital a/c
(being business started with Rs 1200000)
1200000
1200000
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Journal
June 1 : Commenced capital for the business Rs 1200000
Bank Loan Rs 800000 Purchased Land and Building Rs 600000 Transportation Exp Rs 5000 Purchased machinery Rs 400000 on Mortgage Raw materials Purchased Rs 80000 Advertising Exp 23000 Stationary 2000 Commission received Rs 5000 Full & Final Settlement of Mortgage Rs
480000
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Make Journal Entries For the transactions
Jan 08 Transaction1 Commenced Business
20000 2 Purchased goods on credit from Syam
150003 Purchased goods for cash
5004 Paid Gopal an advance for goods
10005 Received advance from Murhy for Goods
15006 Purchased furniture
10007 Paid Wages
2508 Received Commission
3009 Goods Returned to syam
10010 Goods Sold to Kamal
500011 Paid for postage and telegram
100 12 Goods Returned by Kamal
25015 Paid for stationary
100
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18 Paid into Bank 250
20 Goods Sold for cash 375
22 Bought goods for cash 500
25 Paid Salaries 350
28 Paid Rent 250
31 Drawings 500
General Ledger
Principle book of accounts Classifying all the items in Journal Grouping of all accounts It’s a summary device “T” Account It gives the cumulative effect
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Posting
Process of transferring - Business transactions
- From books of original entry- To the respective accounts in ledger
It aims to make a classified and summarised business transactions in appropriate accounts
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Rules - Posting
Separate accounts should opened
All the pertaining transactions should posted in the same account
Dual aspects should be posted on the respective side of accounts
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Date Particulars LF Debit Credit
June 1
Cash a/c Dr To Capital a/c(being business started with Rs 1200000)
12000001200000
Journal
Ledger
Date Particulars JF Amount Date Particulars JF Amount
June 1 To Capital 1200000
Cash a/c
Date Particulars JF Amount Date Particulars JF Amount
June 1
By Cash 1200000
Capital A/c
Dr
Dr
Cr
Cr
Balancing of an Account
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Ascertaining the net balance
Considering the two balances
Comparing the total of both sides
Balance is put on the side which is smaller
Balance is carried forwarded.
Balance is termed as debit/credit balance
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Date Particulars Amount Date Particulars Amount
June 1 22
To capital a/cTo bank a/c
200000100000
June 12 17 27
By bank a/cBy postage a/cBy Stationary a/c
20000 200 800
Cash a/c
Date Particulars Amount Date Particulars Amount
June 1 22
July 1
To capital a/cTo bank a/c
To balance b/d
200000100000
300000
279000
June 12 17 27
31
By bank a/cBy postage a/cBy Stationary a/c
By balance c/d
20000 200 800
279000300000
Cash a/c
Trial balance
Listing of all accounts & respective balance
A statement – Not an account Prepared on a particular date Shows the arithmetical accuracy
Debit/credit balance is extracted from ledger accounts on a particular Date
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Performa of Trial Balance
Particulars Debit (Rs)
Credit(Rs)
CashCapitalStockPurchaseSalesSalaryLoans and advances
Total
Xxxx
XxxxXxxxx
Xxxx
Xxxx
Xxxx
Xxxx
Xxxx
Xxxxx
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Trial Balance as on March
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Jan 08 Transaction
1 Commenced Business 1500000
2 Paid into Bank 800000
3 Furniture (goods) 500000
4 Purchased furniture(goods) from Ratan 200000
5 Purchased furniture (office purpose) 100000
6 Sold to j Mitra 200000
7 Bought goods 180000
8 Return to Ratan 5000
9 Return fro j mitra 20000
10 Taxi fare 1000
11 Sold to Kabiraj goods costing Rs 50000 a @ 10% Discount
12 Received commission from J Das 1500
13 Paid to Ratan 100000
18 Send to Bank 20000
20 Received a cheque of Rs 42000 from Kabiraj for full and final settlement
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Transaction
21
Received a cheque from J Mitra 50000
22
Loan to Naren 15000
23
Received Interest 1000
24
Rent 2000
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