Professional Ethics and Accounting

3rd TUTORIAL SUBMISSION

ALPESH UPADHYAY
PRN- 16010324209
DIVISION- “C”
BATCH- 2016-21

UNDER THE GUIDANCE

Of
Asst. Prof. D. Ganesh Kumar
ACCOUNTING
Accounting process starts with identifying the transactions to be recorded in the books of accounts.
Accounting identifies only those transactions and event which involves money. They should be of
financial character.

In the process of accounting, the first step is the recoding of the transaction in book of accounts. The
origin of a transaction is derived from the source document.

Source documents are the evidences of business transactions which provide information about the
nature of the transaction, the date, the amount and the parties involved in it. Transactions are
recorded in the books of accounts when they actually take place and are duly supported by source
documents.

1. CASH MEMO
When a trader sells goods for cash, he gives a cash memo and when he purchases goods for
cash, he receives a cash memo. Details regarding the items, quantity, rate and the price are
mentioned in the cash memo.

2. INVOICE OR BILL
When a trader sells goods on credit, he prepares a sale invoice. It contains full details
relating to the amount, the terms of payment and the name and address of the seller and
buyer. The original copy of the sale invoice is sent to the purchaser and its duplicate copy is
kept for making records in the books of accounts. Similarly, when a trader purchases goods
 on credit, he receives a credit bill from the supplier of goods.

3. VOUCHERS
A voucher is a written document in support of a business transaction. Vouchers are prepared
by an accountant and each voucher is counter signed by an authorized person of the
organization.
 4. RECEIPT
When a trader receives cash from a customer, he issues a receipt containing the date, the
amount and the name of the customer. The original copy is handed over to the customer
and the duplicate copy is kept for record.

BOOKS OF ORIGINAL ENTRY

The books in which a transaction is recorded for the first time from a source document are called
Books of Original Entry or Prime Entry. Journal is one of the books of original entry in which
transactions are originally recorded in a chronological (day-to-day) order according to the principles
of Double Entry System.

GOLDEN RULES FOR DEBIT AND CREDIT

1. Personal Accounts – a) Debit the receiver b) Credit the giver
2. Real Accounts – a) Debit what comes in b) Credit what goes out
3. Nominal Accounts – a) Debit all expenses and losses b) Credit all incomes and gains

JOURNAL
Journal is a date-wise record of all the transactions with details of the accounts debited and credited
and the amount of each transaction. Each transaction affects two accounts, out of which one
account is debited and the other account is credited. The name of the account to be debited is
written first, very near to the line of particulars column and the word Dr. is also written at the end of
the particulars column. In the second line, the name of the account to be credited is written, starts
with the word ‘To’, a few space away from the margin in the particulars column to the make it
distinct from the debit account. Format of journal given below:
Example of Jounal:
TYPE OF SUBSIDIARY BOOK

1. PURCHASE BOOK
Purchases Book records only credit purchases of goods by the trader.

2. SALES BOOK
Sales Book is meant for entering only credit sales of goods by the trader.

3. PURCHASE RETURN BOOK

Purchases Return Book records the goods returned by the trader to suppliers.

4. SALES RETURN BOOK

Sales Return Book deals with goods returned (out of previous sales) by the customers.
5. CASH BOOK
Cash Book is used for recording only cash transactions i.e., receipts and payments of cash.

5.1. Single Column Cash Book

Single column cash book (simple cash book) has one amount column in each side. All
cash receipts are recorded on the debit side and all cash payments on the credit side.

5.2. Double/Triple Column Cash Book

Large business concerns receive and make payments in cash and by cheques. Where
cash discount is a regular feature, a Triple Column Cash Book is more advantageous. This
cash book has three amount columns (cash, bank and discount) on each side.

Note: In Double Column Cash book is discount allowed column is not there.

5.3. Petty Cash Book

In order to make the task of the cashier easy, these small and recurring expenses are
recorded in a separate cash book called “Petty Cash Book”. The petty cash book is a book
where small recurring payments like carriage, cartage, postage and telegram, printing
and stationery etc., are recorded by the petty cashier, a person other than the main
cashier.
LEDGER
According to L.C. Cropper, ‘the book which contains a classified and permanent record of all the
transactions of a business is called the Ledger’. A Ledger is a book which contains all the accounts
whether personal, real or nominal, which are first entered in journal or special purpose subsidiary
books. Each ledger account is divided into two parts. The left hand side is known as the debit side
and the right hand side is known as the credit side. The words ‘Dr.’ and ‘Cr.’ are used to denote Debit
and Credit. Format of ledger is given below:

Example of ledger account:

TRIAL BALANCE
Trial balance is a statement which shows debit balances and credit balances of all accounts in the
ledger. Since, every debit should have a corresponding credit as per the rules of double entry
system, the total of the debit balances and credit balances should tally (agree). In case, there is a
difference, one has to check the correctness of the balances brought forward from the respective
accounts. “Trial balance is a statement, prepared with the debit and credit balances of ledger
accounts to test the arithmetical accuracy of the books” – J.R. Batliboi. Format of trial balance given
below:
FINAL ACCOUNTS
The final account of business concern generally includes two parts. The first part is Trading and Profit
and Loss Account. This is prepared to find out the net result of the business. The second part is
Balance Sheet which is prepared to know the financial position of the business.

TRADING ACCOUNT
Trading means buying and selling. The trading account shows the result of buying and selling of
goods.

PROFIT AND LOSS ACCOUNT

After calculating the gross profit or gross loss the next step is to prepare the profit and loss account.
To earn net profit a trader has to incur many expenses apart from those spent for purchases and
manufacturing of goods. If such expenses are less than gross profit, the result will be net profit.
When total of all these expenses are more than gross profit the result will be net loss.
BALANCE SHEET
This forms the second part of the final accounts. It is a statement showing the financial position of a
business. Balance sheet is prepared by taking up all personal accounts and real accounts (assets and
properties) together with the net result obtained from profit and loss account.

On the left hand side of the statement, the liabilities and capital are shown. On the right hand side,
all the assets are shown. Balance sheet is not an account but it is a statement prepared from the
ledger balances. So we should not prefix the accounts with the words ‘To’ and ‘By’.

The Balance sheet of a business concern can be presented in the following two forms:

i. Horizontal form or the Account form

ii. Vertical form or Report form

1. HORIZONTAL FORM OF BALANCE SHEET

The right hand side of the balance sheet is asset side and the left hand side is liabilities side.
All accounts having debit balance will appear in the asset side and all those having credit
balance will appear in the liability side.
2. VERTICAL FORM OF BALANCE SHEET
In this, Balance Sheet is presented in a statement form
INTRODUCTION

Tata Consultancy Services Limited (TCS) is an Indian Multinational Information

Technology (IT) Services and Consulting company headquartered in Mumbai, Maharashtra,
India. It is a subsidiary of the Tata Group and operates in 149 locations across 46 countries’ is
the second largest Indian company by market capitalization. Tata consultancy services is now
placed among the most valuable IT services brands worldwide. In 2015, TCS was ranked
64th overall in the Forbes World's Most Innovative Companies ranking, making it both the
highest-ranked IT services company and the top Indian company. It is the world's largest IT
services provider. As of 2018, it is ranked eleventh on the Fortune India 500 list. In April
2018, TCS became the first Indian IT company to reach $100 billion in market
capitalization, and second Indian company ever (after Reliance Industries achieved it in
2007) after its market capitalization stood at ₹6,79,332.81 crore ($102.6 billion) on the
Bombay Stock Exchange.

Observation

Revenue for the year ending 31st December 2019 is Rs. 130797 Cr. whereas for the year ending 31st
December 2020 is Rs.139338 Cr. There is slight increase in the revenue in the 2020 by 8541 Cr.
irrespective of Covid- 19 pandemic.

The expenses for year ending 31st December 2020 are Rs. 97397 Cr. whereas for the year ending
2019 it was 90092 Cr. There is increase in the expenses of the company for the year ending 2020.
The said increase in expenses may be due to covid-19 pandemic. The total Comprehensive income
for the year ending 31st December 2020 Rs 33434 Cr. Whereas for the year ending 2019 it was Rs
30501 Cr. It is evident from the aforesaid data that there is increase of Rs. 2933 Cr. In regards to
total comprehensive income.
Observation
Formula for Calculating the Percentage Change:

1. [ (Current Year Value –Previous Year Value) / Previous Year Value] * 100
Share Capital: Share Capital= No. Of Shares

The face value of a share issued by TCS is Rs 1

It is Evident from the data that there is no increase in the share capital for the year ending
2018-18 & 2019-2020.

 TCS had375,23,84,706 shares during 2018-2019 financial year, amounting to

₹ 375 Crores.
 TCS had375,23,84,706 shares during2019-2020financial year,
amountingto₹375 Crores.
2. Short Term Loans:

A short-term loan is a type of loan that is obtained to support a temporary personal or

business capital need. As it is a type of credit, it involves a borrowed capital amount and
interest that needs to be paid by a given due date, which is usually within a year from getting
the loan.

TCS had no Short-Term Loans from the Year 201 to Year 2020.

3. Debentures: Debentures’ does not issue debentures for the year ending 2018-2019 &
2019-2020.
4. Bonds: TCS does not issue bonds.
5. Investments in Short Term Assets
 TCS had an 19.37% decrease in the Short-Term Assets from the Year 2018 to
Year 2019.
 TCS had an 9.7% decrease in the Short-Term Assets from the Year 2019 to
Year 2020.

Investment in short Term Asset include Mutual Fund, Corporate Bonds.

6. Investments in Long Term Assets:

 TCS had an 0.14% increase in the Long-Term Assets from the Year 2018 to
Year 2019.
 TCS had no change in the Long-Term Assets from the Year 2019 to Year
2020