SYMBIOSIS LAW SCHOOL, PUNE

1 -Internal Assessment – Business Accounting-I

st

Name- PRANSHU BANSAL

Division- B
PRN- 21010126126
Batch- 2021-26

Q1.
1. The Double entry is based on Dual concept.
 Under the dual concept, every transaction has a debit and credit side. Suppose A sold
goods to B for 1000 cash. Now in books of A, cash is coming, and goods are going so
the entry will be Cash A/C Dr. to Sales A/C

2. Concept of conservatism follow play safe.

 The concept of conservatism states that always anticipate losses while compiling
accounts, but never profits. It instructs us to never underestimate losses and expenses
and to never overestimate profits.
For eg. The creation of account of doubtful debts is in accordance to the concept of
conservatism.

3. A solvent is a person whose assets are more than liabilities.

 A solvent person is who can repay his or her liability, and as they have more assets
than a liability, they can easily repay it.

4. Amount invested by proprietor Capital , amount withdrawn by the

proprietor from the business for personal use is Drawings.
 Capital is the amount with which a business is started given by the proprietor. As
business is a separate legal entity, it is treated as a liability that needs to be re-payed
to the proprietor. For example, A starts a business with 10,000/-
 Drawings are the amount proprietor withdraws from the business. As a business is a
separate entity, it is treated as a loan to the proprietor. For example, A withdraws
10,000/- from the business.

5. Bookkeeping is Science & Art.

 Accounting, like science, takes a systematic and ordered approach to determine an
entity's economic status.
 Art is the study of putting scientific principles into practice. Accounting is also an art
since it involves the application of predefined accounting rules and concepts in the
bookkeeping process of a business.

6. Expenditure incurred on purchase of fixed asset is Capital Expenditure

and Deferred Revenue expenditure not exhausted within one year.
 Capital expenditure examples are funds used to buy land or machinery.
 Revenue expenditure examples are funds used to pay salaries & wages.
 7. Different Branches of Accounting are Financial , Cost & Management
accounting.
 Financial accounting is that branch of accounting which reports financial transactions,
organizes, summarises and complicates them in a way that is beneficial to end users
of that financial information. It determines the profit or loss at the end of financial
period. The end product of financial accounting is profit and loss account and balance
sheet.
 Cost accounting is concerned with determining cost of products, processes, activities
and operations. The objective of cost accounting is to control cost and reduce it as
much as possible.
 Accounting is concerned with generating at organizing financial information in a way
that is useful to management of the company, and assist them in decision making.

8. Asset = Capital + Liability

 Suppose a company wants to manufacture a good, for that they purchase a machine
costing 10,000. They took 4,000 from the bank and spent 6,000 of their own in order
to purchase the machinery. Now their machinery is worth 10,000(assets), which is the
sum of 6,000(capital) and 4,000(liability).

9. Classification of Accounts on both approaches:

 Traditional- Real(cash a/c, fixed asset a/c), Nominal(product revenue a/c),
Personal(Creditor or debtor a/c).

 Modern- Capital, Expense or losses, Assets, Liability, Revenue or gains.

Q-2
Traditional Approach
S. Transactions Two aspects Accounts Categories Rules Account to Account to
No involved applied be debited be credited
.
1. Computer of Computer which is an Loss by theft & Real A/C & Debit all the Loss by theft Computer
asset is decreased due to Computer Nominal A/C expenses or
Rs. 10,000 is theft i.e increase in loss losses , Credit
stolen. what goes out.
2. Sold goods to Goods are decreased and Ram & Sales Personal A/C & Debit the Ram Sales
Ram as a Nominal A/C receiver ,
Ram on credit creditor(liability) Credit all the
Rs. 40,000 increased incomes or
gains
3. Paid Interest Interest on loan which is Interest on loan Nominal A/C & Debit all the Interest on loan Cash
 on loan an expense is decreased as & Cash Real A/C expenses or
it is paid and cash is going losses , Credit
Rs.10,000 out what goes out
4. Purchased Machinery is coming in Machinery & Real A/C Debit what Machinery Cash
and cash is going out Cash comes in ,
Machinery credit what
for Rs. 50,000 goes out.
in cash from
Prakash
Stores.
5. Withdrew There is an increase in Cash & Bank Real A/C Debit what Cash Bank
cash at hand and decrease comes in ,
cash from in cash at bank credit what
bank for goes out.
office use Rs.
20,000.
6. Wages due Wages due means liability Wages & Nominal A/C & Debit all the Wages Outstanding
is increasing and Outstanding Personal A/C expenses or wages
but not paid wages(expense) is also wages losses , credit
Rs. 5,000 increasing. the giver

Modern Approach
S. Transactions Two aspects Accounts Categories Rules Account to Account to
No involved applied be debited be credited
.
1. Computer of Computer which is an Loss by theft & Expenses or Debit increase Loss by theft Computer
asset is decreased due to Computer losses A/C & in expense ,
Rs. 10,000 is theft i.e increase in loss Asset credit
stolen. decrease in
assets
2. Sold goods to Goods are decreased and Ram & Sales Liablity A/C & Debit Ram Sales
Ram as a Revenue or decrease in
Ram on credit creditor(liability) gains A/C liability ,
Rs. 40,000 increased credit increase
in revenue
3. Paid Interest Interest on loan which is Interest on loan Expenses A/C & Debit increase Interest on loan Cash
an expense is decreased as & Cash Assets A/C in expense ,
on loan it is paid and cash is going Credit
Rs.10,000 out decrease in
assets
4. Purchased Machinery is coming in Machinery & Assets A/C Debit increase Machinery Cash
and cash is going out Cash in assets and
Machinery credit
for Rs. 50,000 decrease in
in cash from assets
Prakash
Stores.
5. Withdrew There is an increase in Cash & Bank Assets A/C Debit increase Cash Bank
cash at hand and decrease in assets and
cash from in cash at bank credit
bank for decrease in
office use Rs. assets
20,000.
6. Wages due Wages due means liability Wages & Expenses or Debit increase Wages Outstanding
is increasing and Outstanding losses A/C & in expenses , wages
but not paid wages(expense) is also wages Liability A/C Credit
increasing. increase in
Rs. 5,000 liability.