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ISDC ACCOUNTING COLLEGE-75/76, Rahbar Tower, Ring Road, Mohammadpur, Dhaka-1207

Introduction
Basic Accounting
What is Accounting?

It is a systematic method of recording, analyzing and evaluating figurative information in
such a manner that the user of the information gets a fair and clear view regarding the
financial performance ogf the business.

BASIC ACCOUNTING FORMULA

Debit
ASSETS

CAPITAL

Credit

LIABILITIES
Credit

Debit

ASSETS = CAPITAL + LIABILITIES

FIXED ASSETS
ASSETS
Assets which have a long
life
bought
with
the
intention
to use
ISDC
ACCOUNTING
COLLEGE-9143342,
www.isdcedu.weebly.com
Resource
owned by
a business, which 8154724.
has a
them in the business and not
value
with the intention to simply sell
them

weebly. www. bank £1500.com has premises £25000. (Usually one year) goods 6. What is the effect on assets & liabilities? Effects upon Assets Liabilities Reduce Bank Debtors Increase Bank Debtors Increase Cash Loan Increase Stock Capital 7. Liability can be defined as: £8200 Effects upon Reduce Decrease Increase Decrease Identify the Assets Liabilities Capital £1250 £6600 £2800 £11000 £1150 £1120 £6540 £1120 £9550 A Cash balance £5420 B Loan from J owners C Buildings 8.ISDC ACCOUNTING COLLEGE-75/76. A sole trader D Customers ISDC ACCOUNTING COLLEGE-9143342. A Assets + LONG TERM LIABILITIES Capital = Liabilities B Liabilities – An= amount Capital Assets owed that does not have to be repaid within the = next C Capital accounting period (Usually liability Assets + Liabilities D Capital = for more than one year) Assets – Liabilities CURRENT LIABILITIES Which one of the following is a Amount owed by a business to liability? other organizations and individuals that should be paid within onefor A Creditors financial period. Mohammadpur. Ring Road. A firm receives money from its debtors by cheque. LIABILITIES Which of the following statement shows calculation of capital? The borrowing or loan taken by the business.isdcedu. B Motor correct figure: Vehicles CAPITAL =Cash at bank ASSETS LIABILITIES C The investment contributed by the Brain Storm to an organization Machinery to enable it to D proprietors function. 8154724. Dhaka-1207 Premises Land Building Fixture & Fittings Motor Vehicles Machinery Debtors/Credit Customers ASSETS Cash inCURRENT Hand Cash at Bank assets of an organization ClosingThe stock are constantly changing Prepaidthat Expenses Account Receivable their form and are circulating from cash to goods and cash again. Rahbar Tower. The amount of the value of assets £7850 Circle correct option for every given question and evaluate your knowledge ofthe a business less liabilities. What is the capital? Which of the following is not an asset? . stock £22500 and sundry creditors £5000.

Ring Road. 8154724.com . www. Rahbar Tower. Mohammadpur.ISDC ACCOUNTING COLLEGE-75/76.isdcedu. Dhaka-1207 Overall rating: you listen to my lecture 9-9>Bravo 7-9>Good 5-9>Average Below 4> Did JOURNAL ENTRIES Basic Accounting Left Hand side of (T) a/c increase in Asset Decrease in Liabilities Decrease in Capital DEBIT CREDIT Right Hand side of (T) a/c Decrease in Asset Increase in Liabilities Increase in Capital ISDC ACCOUNTING COLLEGE-9143342.weebly.

Dec 8 Sold some of the office furniture-not suitable for the firm. June 2 Paid £1800 of the opening cash into a June 5 Bought office furniture on credit from bank account for the business.ISDC ACCOUNTING COLLEGE-75/76. Betta Built Ltd for £120. transaction.com . Rahbar Tower. Dec 3 Bought office furniture by cheque£150 Dec 4 bought machinery £750 on credit from Dec 5 Bought a van paying by cheque £600 planers Ltd. £60 in cash EXERCISE 2. £750 by cheque. Dhaka-1207 Step (1) Indentify the items from the Step (2) Check which items are increasing Step (3) Using the concept of debit & credit.weebly. Dec 10 Paid the amount owing to planers Ltd Dec 21 Received the amount due from J Walker Dec 23 Bought more machinery by cheque £280. 8154724. ISDC ACCOUNTING COLLEGE-9143342.1 Prepare journal entries for the month ended 31 December 2008 in the books of G Powell to record the following transaction: Dec 1 Started business with £2500 in the bank.2 Prepare journal entries for the month ended 30 june 2008 in the books of C Williams to record the following transaction: June 1 Started business with £2000 in cash. or decreasing.isdcedu. Ring Road. Mohammadpur. EXERCISE 2. www. Journalize the transaction.for £60 on credit to J walker.

by cheque. Mohammadpur.com . ISDC ACCOUNTING COLLEGE-9143342. 8154724. cash by cheque.isdcedu. June 19 Paid Super Motors a cheque for £800 June 21 A loan of £1000 cash is received from J Young Ltd. use. Jarvis.ISDC ACCOUNTING COLLEGE-75/76. www. Rahbar Tower. Ring Road.3 Prepare journal entries for the month ended 30 June 2008 in the books of C Walsh to record the following transaction: June 1 Started business with £5000 June 2 Bought van of £5000 paying by cheque June 5 Bought office fixtures £400 on credit from June 8 Bought van on credit from Super Motors June 12 Took £100 out of the bank and put it into June 15 Bought office fixtures paying by cash £80.weebly. EXERCISE 2. Dhaka-1207 June 8 Bought a van paying by cheque £950 June 12 Bought works machinery from Evans & June 18 Returned faulty office furniture costing June 25 Sold some of the works machinery for £75 June 28 Paid amount owing to Betta Built Ltd £58 June 30 Took £100 out of the bank for personal June 30 J Smith lent us £500 – giving us the money Sons on credit £560 £62 to Betta Built Ltd. £800 the cash till.

ISDC ACCOUNTING COLLEGE-9143342. £800. Mohammadpur.weebly. EXERCISE 2. Ring Road. www.com . this time on Betterview Machines £550 the cash till. credit from D Smith for £500 EXERCISE 2. March 17 Paid amount owing to Betterview March 24 Repaid part of Chow’s loan by cheque March 31 Bought additional machinery.ISDC ACCOUNTING COLLEGE-75/76. a bank account being opened and the cheque paid into it. Dhaka-1207 June 25 Paid £800 of the cash in hand into the June 30 Bought more office fixtures paying by bank account cheque £300. Machines £550 by cheque. March 2 Received a loan of £5000 from M Chow by cheque.4 Prepare journal entries for the month ended 30 March 2008 in the books of Jason Jarvis to record the following transaction: March 1 Started business with £1000 cash. March 3 Bought machinery for cash £60.isdcedu. Rahbar Tower.5 Prepare journal entries for the month ended 31 July 2008 in the books of Allen Border to record the following transactions: July 1 Started business with £10000 cheque and July 3 Bought land & building for £4000 by £8000 cash. cheque. March 5 Bought display equipment on credit from March 8 Took £300 out of the bank and put it into March 15 Repaid part of Chow’s loan by cash £100. 8154724.

` cheque. cheque £200. Brain Storm CIRCLE THE CORRECT OPTION FOR EVERY GIVEN QUESTION AND EVALUATE YOUR KNOWLEDGE ISDC ACCOUNTING COLLEGE-9143342.ISDC ACCOUNTING COLLEGE-75/76. Ring Road. 8154724.com . Mohammadpur. www. by cash. Rahbar Tower. Dhaka-1207 July 5 Bought office furniture of £1800 on credit July 9 Took £200 out of the bank and put it into July 12 Paid amount owing £800 to Aristrocrat Ltd July 15 Kumar lent us £500.isdcedu. by cheque.giving us the money July 18 Bought van on credit from ABC Ltd by July 23 Paid amount owing £1000 to Aristocrat by July 25 Paid £500 of the cash in hand into the July 28 Bought more office fixtures paying by from Aristocrat Ltd. cash.weebly. the cash till. bank account.

The entry to record the transaction by: Computer debited & Bank credited Bank debited & Computer credited Cash debited & Bank credited Computer debited & Cash credited Which one of the entries shows that a cheque was Received by the firm from a Roger? Roger debited & Smith credited Cash debited & Roger credited Roger debited & Bank credited Bank debited & Roger credited 6. Machinery Cash Machinery Creditors Which of the statement is true about journal entries: A) Every transaction involves only LEDGER ACCOUNT Basic Accounting Ledger Account is prepared for recording individual information of business transaction. Mr.weebly. Dhaka-1207 Increase in assets will: Credit the account Debit the account Will not be recorded None of the above For general administration purposes. Ring Road. are debited When assets increase. Cr. Cr. A) Cash debited & Capital credited B) Ben debited & cash credited C) Drawings debited & Capital credited D) Drawings debited & Cash credited 9. Increase in liabilities will: A) Credit the account B) Debit the account C) Will not be recorded D) None of the above 7. When journal entries are recorded the purchase of machine bought on credit? A) B) C) D) 10. None of the above. The entries would be: Which of the following statement is true? When liabilities increases.com . www. Mohammadpur. ISDC ACCOUNTING COLLEGE-9143342. liabilities are debited When assets increase. Dr. Creditors Machinery Creditors Machinery Cr. Rahbar Tower. are debited Which of the statement is a possible double entry? Bank debited & Bank credited Vehicle debited & Bank credited Both of the above.ISDC ACCOUNTING COLLEGE-75/76. the school bought a computer and made the payment by cheque. the entry would be: A) Capital debited & Cash credited B) Capital debited & Motor Car Credited C) Motor Car debited & Cash credited D) Motor car debited & Capital credited 8. Dr. Brown bring his private motor car into the business. 8154724. Cr. are credited When assets increase. Dr. Ben withdraws cash out the business for personal use. Dr.isdcedu.

8154724. Bank. Salaries & Other operating expenses. Insurance. Mohammadpur. www. Machinery Current Assets: Debtors. (X) ACCOUNT Sales Sales Balance b/d £ 1000 0 5000 1500 0 8600 Roger £ 3000 Rent Purchase 1200 2000 Balance c/d 8600 1500 0 Types of Account Sales. Ring Road. Office furniture.weebly. Postage & stationary. Bad debts. Dhaka-1207 Sold goods to Roger of £3000 Sold goods to Smith of £5000 Sold goods to Ales of £6000. Cash. Rahbar Tower. Carriage inward & Waterhouse expense Incomes: Discount received. profit & loss or trading a/c. Stock ISDC ACCOUNTING COLLEGE-9143342.com Closed by Trading Account Profit & Loss account Profit & Loss account Balance c/d Balance c/d . Purchase. Roger account Sales £ 300 0 £ Sales Smith account sales £ 500 0 Sales account £ £ £ Alex account £ 600 0 £ Roger Smith Alex 3000 5000 6000 How to close a ledger (T) account? At the end of financial period all the ledger (T) account are closed either by balance c/d. Return outward. Premises. Carriage outward.ISDC ACCOUNTING COLLEGE-75/76.isdcedu. This is the balance ready to be transferred in preparation of final account. Rent receivable Expenses: Discount allowed. Prepaid expense. Heat & Light. Bad debts recover. Return inward. Rent. Fixed Assets: Land & Building.

e. bank or from credit supplier. PURCHASE ACCOUNT is prepared Return faulty Goods of £600 to Mr Z Mr X ISDC ACCOUNTING COLLEGE-9143342. Drawings. Unpaid expenses Capital. Loan. 8154724. Bank OD. the products or supplies of a business on hand or in transit at any time.isdcedu. For manufacturing business types of inventory are raw materials. Ring Road. Debenture Balance c/d Balance c/d STOCK Basic Accounting Stock.com Mr Z . Ending stock treated as current assets in balance sheet Sold Goods of £3000 to Mr Y Debtor’s a/c Mr X Sales a/c £3000 debit Mr Y £3000 credit In case of goods sold for cash. i. SALE ACCOUNT is prepared Receive faulty Goods of £500 from Mr Y Mr X Return Inward a/c £500 debit Debtor’s a/c £500 credit Mr Y In case of goods returned from credit customer.ISDC ACCOUNTING COLLEGE-75/76. work in progress and finished goods.weebly. Dhaka-1207 Current Liabilities: Creditors. www. Mohammadpur. RETURN INWARD/SALES RETURN ACCOUNT is prepared Purchase Goods of £4000 from Mr Z Mr X Purchase a/c Creditor’s a/c £4000 debit Mr Z £4000 credit In case of goods purchased by cash. Rahbar Tower. bank or to credit customer.

Paid Ali Azmad by cheque in full settlement of his account.ISDC ACCOUNTING COLLEGE-75/76. Receives some of the faulty goods of £100 from Muzama Co. ISDC ACCOUNTING COLLEGE-9143342. Rahbar Tower. Cash Sales £500. Purchase goods of £450 from Malina Ltd.isdcedu.1 In the book of Bob Marley the following transaction took place for the month ended 30 January 2009: 1 Jan 2 Jan 9 Jan 11 Jan 12 Jan 13 Jan 14 Jan 19 Jan 20 Jan Started business with £10000 cash and £20000 bank Purchase goods of £1200 on credit from Ali Azmad. Cash purchase £300. Sold goods of £900 on credit to Muzama Co.com . 8154724. Ring Road. Purchase a motor vehicle of £3000 on credit from Toyota Ltd. RETURN OUTWARD / PURCHASE RETURN ACCOUNT is prepared EXERCISE 4. www.weebly. Dhaka-1207 Creditor’s a/c Reurned Outward a/c £600 debit £600 credit In case of goods returned to credit supplier. Mohammadpur.