PATHWAY

SERIES
Process of Accounting

1
• Identifying business transactions

• Recording- Journal
2

3 • Classifying- Ledger

4
• Trial Balance

5
• Financial Statements
 FINANCIAL STATEMENTS
 Financial statements are the statements showing the financial position
and results of business operation at the end of the accounting period.

 The 2 basic financial statements are:

1. Profit and loss Account: It show the result of operations for a

particular period of time. Profit and loss A/c are also known as Income
Statement.
2. Balance Sheet: It shows the financial position at a particular point of
time. This shows the closing balance of asset, liability and capital in the
period.
 Trial Balance
Particulars Debit (₹) Credit (₹)
Building 2,00,000
Furniture 50,000
Cash 10,000
Purchase 3,50,000
Wages 35,000
salary 45,000
Rent 30,000
Insurance 12,000
Sales 5,00,000
Commission 2,000
Loan 30,000
Capital 2,00,000
7,32,000 7,32,000
 Trading and Profit and Loss Account
Particulars Amount Particulars Amount

Opening Stock XXX Sales XXX

Purchases XXX Closing Stock XXX
Direct Expenses XXX
Gross Profit c/d XXX
XXXX XXXX
Salary
XXX XXX
Rent Gross Profit b/d
XXX XXX
Stationery Interest Received
XXX XXX
Insurance Discount Received
XXX XXX
Advertisement Rent Received
XXX
Discount allowed
XXX XXX
Net Profit Net Loss
(Transferred to Capital A/c) XXXX (Transferred to Capital A/c) XXXX
 Balance sheet
Liabilities Amount Assets Amount
Capital Land XXX
Add: Net Profit Building XXX
Less: Net Loss Furniture XXX
Less: Drawings XXX Machinery XXX
Investment XXX
Loan XXX Stock XXX
Creditors XXX Debtors XXX
Bills Payable XXX Bills Receivable XXX
Bank OD XXX Cash in Hand XXX
Outstanding expense XXX Cash at Bank XXX

XXXX XXXX
 Trial Balance
Particulars Debit (₹) Credit (₹)
Building 2,00,000
Furniture 50,000
Cash 10,000
Purchase 3,50,000
Wages 35,000
salary 45,000
Rent 30,000
Insurance 12,000
Sales 5,00,000
Commission 2,000
Loan 30,000
Capital 2,00,000
7,32,000 7,32,000
 Trading and Profit and Loss Account
Particulars Amount Particulars Amount
 Balance sheet
Liabilities Amount Assets Amount
THANK YOU