1 Some tip for solving any accounting problem Here I am giving you some tips for solving any
difficult accounting problems . 1. First of identify what is your real accounting problem . 2. Then see the category of your accounting problem . The major area of accounting is finance , cost and management . 3. Understand the full rules , regulations , principals , concepts etc relating to your accounting problem. 4. Make the relationship of your accounting problems with these accounting problems . 5. Make your rough solution of your accounting problem . 6. If you are getting more than one solution , then select any best solution 7. You can take also website search solution by writing solution of (your accounting problem ) Identify yourself for accounting career Here I am giving some necessary points for identify your self for the accounting career . 1. If you have lot of mathematical logic , then accounting is best career for you. 2. If you are interested in solving business finance problem , then accounting is the best career for you. 3. If you are really interested in learning new facts , then accounting is best career for you 4. If you can face every problem , then accounting is the best career for you . 5. If you want to service of mankind by getting accounting skills then accounting is best career for you. 6. If you can see new way of solving any problem then accounting is best career for you . 7. If you are practical in life then accounting is best career for you 8. If you realize the God’s best accounting work then accounting is best career for you . 9. If you do not want that Govt. will corrupt then accounting is best career for you . 10. If you hate error and mistake then accounting is best career for you . 11. If want to find all mistake in the system of other then accounting is best career for you. 12. If you want to carry the price level at optimum level then accounting is best career for you . 13. If you want to get professional responsibility , then accounting is best career for you . 14. If you take accounting as challenge , then accounting is best career for you . 15.If you believe in the thinking that every thing in whole world should record , then accounting is best career for you . 16. If you have high imagination power then accounting is best career for you . 17. If you can change according to new technology , then accounting is best career for you . 18. If you have positive thought and move the situation according to your thought and concept then accounting is best career for you . 19. If you fear from you past bad works and thinks that God has recorded and you will get punishment, then accounting is best career for you . 20. If you want to get administrative skill , then accounting is best career for you .
23. If you want fame and name with you professional work then accounting is best career for you . 24. If you believe in truth and correctness , then accounting is best career for you . 25. If you understand the importance of accounting , then accounting is best career for you. 26. If you take stress in recording then accounting is best career for you . 27. If you want to see always cash , then accounting is best career for you . 28. If you want to rich , then accounting is best career for you . 29. If you want to learn good dealing , accounting is best career for you . 30. If you want to good businessman accounting is best career for you . 31. If you want to prevent fraud from your system , then accounting is best career for you . 32. If you want to work peacefully then accounting is best career for you . 33. If you want to God’s quality in you , then accounting is best career for you . 34. If you have many idea for saving tax , expenses and other cost then accounting is best career for you . 35. If you see the work of accountant and think a dream of becoming accountant , then accounting is best career for you . 36. If you do not care of any problem and difficulties , then accounting is best career for you . 37. If you want to do work every time in office and in home then accounting is best career for you . 38. If you want to do social work by this skill , then accounting is best career for you . 39. If you want to learn each mistake , then you can see many mistake and learn lot of things , thus accounting career is best for you . 40. If you can struggle with numbers and rules and regulations and give best result in the form of profit and loss account and balance sheet , then accounting is best career for you . Voucher Classes are used to automate Accounting Allocations in transactions. It is a table for predefining the entries to make Invoice entry a simple task. This is particularly useful in sales invoicing where the nominal ledger accounts, to be credited for each item of sale is defined once. During voucher entry, the accounting credits for items sold are done automatically. Additional accounting entries like, tax, freight, and other charges can be predefined to be carried out untouched during actual invoicing. Voucher Classes are available for all major voucher types like: 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. Contra Payment Receipt Journal Sales Credit Note Purchases Debit Note Sales Order Purchase Order Delivery Note Stock Journal
Accounting Vouchers Tally comprises of the following predefined Vouchers, to suit different business requirements for recording various transactions. Tally also allows you to create user-defined Vouchers (Voucher Types) as per your requirements. Contra Voucher Payment Voucher Receipt Voucher
Journal voucher Sales Voucher / Invoice Debit Note Voucher Credit Note Voucher Purchase Voucher / Invoice
Predefined Inventory Vouchers in Tally.ERP 9 Tally.ERP 9 comprises of the following predefined Vouchers, to suit different business requirements for recording various transactions. Tally also allows you to create user-defined Vouchers (Voucher Types) as per your requirements. Purchase order Sales order Receipt note Delivery note Rejections Out Rejections In Stock Journal Manufacturing Journal Physical Stock Predefined Non Accounting Vouchers in Tally.ERP 9 Tally.ERP 9 comprises of the following predefined Non-Accounting Vouchers, to suit different business requirements for recording various transactions. Tally also allows you to create user-defined Vouchers (Voucher Types) as per your requirements. The pre-defined Non Accounting Vouchers are: Memorandum Voucher Optional Voucher Reversing Journal Post-Dated Voucher Contra Entry As per the Accounting Principles, a Contra entry is a transaction involving transfer of cash between one Cash A/c to another or one Cash A/c to another Bank A/c i.e., is a transaction indicating transfer of funds from: Cash account to Bank account Bank account to Cash account Bank account to Bank account
Journal Entries Examples
Following are some examples of translations and Journal Entries, its analysis is done on the basis of rules of double entry system: 1. Cash brought in by proprietor as capital Rs. 30000 a) What comes in business will be debited Cash has come in business; cash account will be debited in journal entry. b) Who is giver will be credited Proprietor is giver of cash to business but he has business motive and he gives the money to business as capital. Journal Entry Cash Account Debit 30, 000 Proprietor’s capital Account Credit 30,000 2. Goods purchased on credit from Madan Lal Rs. 5,000
4 a) What comes in business will be debited Goods have come in business, so its financial value will be debited with the name of purchase account. b) Name of person is given from whom we bought the goods on credit, so Ist rule’s second part will be applied. Who is giver, will be credited. Madan lal is giver, so its account will be credited. Purchase account debit 5000 Madan Lal account credit 5000 3. Furniture purchased for cash Rs. 10000 a) What comes in business will be debited. In this transaction, furniture came in business, so we will open furniture account in the debit side of journal entry. b) Cash is also asset and we paid for purchasing of furniture. 2nd rule’s second part will be applied. Furniture Account Debit 10,000 Cash Account Credit 10,000 4. Goods sold on credit to Dev Raj Rs. 1600 a) Dev Raj is receiver of goods, so his personal account will be debited. b) Goods go out, so, goods or sale account will be credited. Dev Raj Account Debit 1600 Sale Account Credit 1600 5. Goods purchased for cash Rs. 4500 a) Goods come in, so goods or purchase account will be debited b) Cash goes out, so cash account will be credited. Purchase account debit 4500 Cash account credit 4500 6. Goods sold for cash Rs. 2100 a) Cash comes in, so cash account will be debited. b) Goods go out, so goods or sale account will be credited. Cash account debit 2100 Sale account credit 2100 7. Rent paid for shop to landlord 3000 a) Rent is an item of expenses, so it will be debited. b) Cash is an item of asset and it goes out, so it will be credited. Rent Account Debit 3000 Cash Account Credit 3000 8. Commission received in cash 2000
5 a) Cash comes in, so cash account will be debited. b) Commission is an item of income, so commission account will be credited. Cash Account Debit 2000 Commission Account Credit 2000 9. Cash deposited into bank 5000 a) Bank is receiver of cash, so bank account will be debited. b) Cash goes out, so cash account will be credited. Bank Account Debit 5000 Cash Account Credit 5000 10. Cash withdrawn from bank for office use Rs. 2000 a) Cash comes in the business, so cash account will be debited. b) Bank is the giver, so bank account will be credited. Cash Account Debit 2000 Bank Account Credit 2000 11. Cash drawn by proprietor from business for personal use Rs. 3000 a) Proprietor is the receiver of cash, but business will give him as drawing which is decrease in his capital, so proprietor’s drawing account will be debited. b) Cash goes out, so cash account will be credited. Drawing Account Debit 3000 Cash Account Credit 3000 12. Goods given as charity Rs. 1000 a) Charity is an expense of business, so it will be debited. b) Goods go out, so goods or purchase account will be credited. Charity Account Debit 1000 Purchase Account Credit 1000 13. Bad Debts written off Rs. 500 a) Bad debt is loss of business due to not paying the amount by our debtors, so it will be debited. b) There is decrease in debtor. We are applying what goes from business, debtor is also our asset, if he does not pay, and it means this asset has gone from business, so its account will be credited. Bad Debt Account Debit 500 Debtor Account Credit 500 14. Bad debts recovered in cash Rs. 300 a) Cash comes in, so cash account will be debited. b) Bad debts recovered are an income, so its account will be credited. Cash Account Debit 300
6 Bad Debts Recovered Account Credit 300 15. Carriage paid on machinery ( expenses on purchase of asset ) Rs. 1000 a) Carriage on purchase of machinery is part of cost of machinery, so machinery account will be debited. b) Cash goes out, so cash account will be credited. Machinery Account Debit 1000 Cash Account Credit 1000 16. Depreciation on fixed assets Rs. 500 a) Depreciation on fixed assets is the loss of business, and every loss will be debited. b) There is a decrease in asset and we will apply what goes from business on it. So, asset account will be credited. Depreciation Account Debit 500 Fixed Asset Account Credit 500 17. Carriage paid on the behalf of buyer Rs. 1000 a) This is not our expenses, but this is increase our current asset and its name is debtor, so we will apply what comes in rule on it. b) Cash goes out, so cash account will be credited. Debtor account Debit 1000 Cash Account Credit 1000 18. Goods given as free samples Rs. 1500 a) Goods are given for advertising, advertising is an expense of business, and so advertising account will be debited. b) Goods go out at the cost price, so goods or purchase account will be credited. Advertising Account Debit 1500 Purchase Account Credit 1500 19. Interest allowed on capital Rs. 600 a) Interest is an expense of business, so it will be debited. b) There is an increase in the amount of capital. Capital is liability account, so increase in the amount of capital will be also shown in the credit side of journal entry. Interest on capital Account Debit 600 Capital Account Credit 600 20. Interest charged on drawings Rs. 500 a) Decrease in capital or increase in drawing will be debited. b) Interest on drawing is an income of business. Drawing Account Debit 500 Interest on drawing account Credit 500 21. Bank charges or interest charged by bank Rs. 200
7 a) Bank charges are the expenditures of business, so it will be debited. b) There is decrease in bank balance, so bank account will be credited. Bank charge Account Debit 200 Bank account Credit 200
22. Goods lost by fire Rs. 800 a) Goods lost by fire are the loss of business, so loss by fire account will be debited. b) There is decrease in goods or stock at cost, so purchase account will be credited. Loss by Fire Account Debit 800 Purchase Account Credit 800 23. Goods insured and a claim is admitted by insurance company in full or in part. a) Insurance company will be our debtor. Transaction has increase in debtors because we have to get money from insurance company. So, this account will be debited. b) Decrease in loss by fire, so this account will be credited. Insurance company Account Debit XXXX Loss by Fire Account Credit XXXX 24. Loan taken Rs. 1,00,000 a) Cash comes in, so cash account will be debited. b) Lender is giver, so his loan account will be credited. Cash Account Debit 1, 00,000 Lender’s loan Account Credit 1,00,000 25. Interest paid on loan. Rs. 1000 a) Interest is an expense of business, so it will be debited. b) Cash goes out, so it will be credited. Interest on loan Account Debit 1000 Cash Account Credit 1000 26. Interest on loan due but not paid in cash. Rs. 500 a) Interest is an expense of business, so it will be debited. b) Increase in creditors will be credited in journal entry. Interest on loan Account Debit 500 Loan or Creditor Account 500 27. Investment purchased Rs. 50,000 a) Asset in the form of investment comes in, so investment account will be debited. b) Cash goes out, so its account will be credited. Investment Account Debit 50000
8 Cash Account Credit 50000 28. Cash stolen from office. Rs. 6000 a) Cash stolen from office is loss of business, so this account will be debited. b) Cash goes out, so its account will be credited. Loss by Theft Account Debit 6000 Cash Account Credit 6000 29. Cash paid to a creditor in full settlement ( When cash discount is received) Amount due to Madan Lal Rs. 5000 paid him Rs. 4950 in full settlement. a) Decrease in creditors = Debit b) Decrease in cash = Credit c) Discount received is income of business = credit Madan Lal Account Debit 5000 Cash Account Credit 4950 Discount Received Account Credit 50 30. Cash received from a debtor in full settlement (When cash discount is allowed). Amount receivable from Dev Raj Rs. 1600, received from him Rs. 1570. a) Increase in cash = Debit b) Discount allowed is the loss of business = Debit c) Decrease in debtors = credit Cash Account Debit 1570 Discount Allowed Account Debit 30 Dev Raj Account Credit 1600
Journal Entries Examples of Depreciation There are many situation when you may face difficulty relating to passing the journal entries of depreciation. Today, we are trying to solve this problem by writing some journal entries examples of depreciation. Following are the journal entries of transactions and financial events relating to depreciation. All these journal entries have been passed on the basis of double entry system. 1. A company bought machinery for Rs. 10000 and depreciation rate is 10%. a) Depreciation on fixed assets is the loss of business, and every loss will be debited. b) There is a decrease in asset and we will apply what goes from business on it. So, Machinery (Fixed asset) account will be credited. Depreciation Account Debit 1000 Machinery Account Credit 1000
2. Financial year is 1st Jan. to 31st Dec. Above same machinery has been sold at Rs. 5000 on 31st march 2011. This machinery was purchased on 1 Jan. 2010. Depreciation rate is 10% and it is charged with diminishing balance method.
9 Above entry will be same in this case from 1 Jan. 2010 to 31st DEC. 2010. After this, we are telling you the procedure.
a) Depreciation is loss and with this up to sale date. It will be debit
b) Value of machinery will decrease, it will be credit.
Depreciation Account Debit 225 Machinery Account Credit 225
3. Rs. 10000 depreciation transfer to Profit and Loss account.
a) Profit and loss account complete the double entry record. All expenses and loss will be debit in its account. With this, all expenses and losses account will be closed. So, profit and loss account will be debit in this journal entry.
b) Depreciation account will be credit because with this depreciation account will be closed. Please do not create doubt about showing depreciation loss in credit side. This entry is the part of closing of accounts at the end of year.
Profit and Loss Account Debit 10000 Depreciation Account Credit 10000
4. A company bought machinery for Rs. 10000 and depreciation rate is 10%. Provision for depreciation account is maintained.
a) Depreciation on machinery is the loss of business, and every loss will be debited.
b) Provision for depreciation account will be credit because we are maintaining it. It means, we will not decrease the original cost of machinery at any time except time of sale. So, provision for depreciation will be just like liability of business. Like other liabilities, this liability account will also credit.
Depreciation Account Debit 1000 Provision for Depreciation Account Credit 1000
5. A company bought machinery for Rs. 10000 and depreciation rate is 10%. All depreciation will be transferred to accumulated depreciation account.
a) Depreciation on machinery is the loss of business, and every loss will be debited.
b) Accumulated depreciation account is just like provision for depreciation account and it will be credit because we are collected all depreciation in the form of accumulated depreciation. It means, we want to maintain our historical cost of machinery at any time except time of sale. So, accumulated depreciation will be contra account. So, it will be credited.
Depreciation Account Debit 1000 Accumulated Depreciation Account Credit 1000
6. You sell the Car at Rs. 5,00,000. Its accumulated depreciation is Rs. 50,000. Its original cost is Rs. 600000.
a) cash account will be debited because cash comes in the business. Everything which comes in the business will be debit under second rule of double entry system.
b) Accumulated depreciation account will be debit because with this, liability will decrease. Accumulated depreciation was our liability.
c) Profit and loss account will be debit because this is the loss on sale car.
d) Original Cost of car will be credit because car goes from business.
Cash Account Debit 500000 Accumulated Depreciation Account Debit 50000 Profit and Loss Account Debit 500000 Car Account Credit 600000
7. 1st April 1997, Vishal acquires a 5 year's lease for Rs. 40000. It is decided for renewal of lease immediately after 5 years by setting up a depreciation fund. It is expected that investment will fetch interest at 5% p.a. sinking fund table shows that RS. 0.180975 invested each year will produce Rs. 1 at end of 5 years at 5% p.a.
Annual depreciation = 40000 X 0.180975 = Rs. 7239
a) Depreciation on lease is the loss of business, and every loss will be debited.
b) All depreciation will transfer to depreciation fund account. You know that depreciation cuts from profit. It decrease the profit but there is no outflow. Same amount, we will transfer in depreciation fund.
Depreciation Account Debit 7239 Depreciation Fund Account Credit 7239
(this entry will be passed five years)
When We also invest same depreciation fund money in depreciation fund investment.
a) We got investment, so depreciation fund investment account will be debit
b) Money goes from business. It means we will credit to cash account
Depreciation Fund Investment Account Debit 7239 Cash Account Credit 7239
(this entry will be passed five years)
When we receive interest on depreciation fund investment
a) We receive money of interest. So, bank or cash account will be debit.
b) Interest on depreciation fund investment account is our income. So, it will be credit
Bank Account Debit 7239 X 5% = 362 Interest on Depreciation Fund Investment Account Credit 362
(this entry will be passed five years)
8. At the expiry of the lease i.e. on 31st march, 2002, the depreciation fund investment are sold Rs. 31205 and immediately renewed for a further period of 5 years by a payment of Rs. 44000. Pass journal entries.
When we get cash on sale of depreciation fund investment
a) Cash will come on the sale, so cash account will be debit
b) Depreciation fund investment will go from our business, so depreciation fund investment account will credit
Cash Account Debit 31205 Depreciation Fund Investment Credit 31205
When Profit on sale of investment will be transfer to depreciation fund account
Depreciation Fund Investment Account Debit 4 Depreciation Fund Account Credit or Profit and loss Account 4
( Entry just on the basis of balance adjustment)
9. You have one piece of property for which you originally paid Rs. 10,000. Let's also assume after six years the property is fully depreciated and you sell it for Rs. 1,000.
We will not pass the depreciation entry because this property is fully depreciated. It means total depreciation of its working life has been transferred to profit and loss accounts. We just show as profit because total cost will already become nil.
Cash Account Debit Rs. 1000 Profit and Loss Account Rs. 1000
10. Provide depreciation of Rs. 20000 on Factory Machine. Pass the adjusting entry in final accounts
a) Manufacturing account will be debit because all the expenses relating to production will be debit in this account.
b) Depreciation account is already debited in day book. Now, this account is closed by transferring to the debit side of manufacturing account because this is the part of production expenses.
Manufacturing Account Debit 20000 Depreciation on Factory Machine 20000
Non current Assets Examples
12 If you study the balance sheet's asset side, you find two type of assets. One is current assets and other is non current. All assets which are not current, will be non-current assets. We take benefits of these assets more than one year. Following are its main examples. 1. Fixed Assets All fixed assets are non-current assets. For example, land, building, furniture, plant, equipment, vehicles etc. 2. Intangible Assets All intangible assets are also non-current assets. For example, goodwill, patent, copyright, trademark and other rights for more than one year. 3. Long Term Investment Long term investment will also be non-current asset because it will liquidate after one year. When we will sell it, we can its benefit. It may be profit or loss. 4. FD in Bank If we deposited money at bank for more than one year in the form of FD, this will be our non-current asset. 5. Other Fixed Deposits If we deposited our money in long term projects like Kisan Vikas patra or other Govt. schemes. All will be non-current assets. Journal Entries Tips 1st Tip : Learn Basics of Journal Entries It is my own opinion that without learning of basics of journal entries, you can not pass a very simple transaction. In basics, you must learn three types of accounts, one is personal account, second is real account and third is nominal account All types of account will goes to in these main three accounts. Now, you have to understand that every transaction has two part and two sides will affected with this transaction. One account will be debit and other will be credit. For example, you have provided provision of bad debt as 10% on your total debtor of Rs. 10000. Now, you duty is to pass this transaction. How will you do this. It is so simple. First we are seeing, there is no receiver or giver in this transaction, there is also, nothing is coming or going from business and third we are also seeing, there is nothing expense or income in this case. It is just reservation for future. You it surely affect one side of provision of bad debt account means we have to show closing balance of provision for bad debt account as Rs. 1000 and on this basis, we can calculate the journal entry of transferring net loss of business due to bad debt and new provision. After this we pass the journal entry Profit and loss account Dr. XXXX Provision for bad debt account Cr. XXXX 2st Tip : To read more and more journal entries examples. Reading more and more journal entries will make you perfect in accounting and journal entries. Like reading anything, reading of journal entries should be part of your daily learning. Today, I read the word eloquence, it means fluent, forcible, elegant or persuasive speaking. If I will not read more and more words, how can I perfect in it? Same thing will apply on journal entries also. So, read my some of journal entries example at here. 3rd Tip : Learn Difficult Journal Entries It is easy to pass simple business transaction, but it is difficult to pass the journal entries of some of difficult business transactions. If you don't know how to pass difficult journal entries, read Prof. Augustins's tips at here. 4th Tip : Try to Know "Why Journal Entries are Important in Accounting?
13 This is a very popular statement in accounting industry. Every one is talking about journal entry, but what exactly journal entry is and why journal entry is king. Truly speaking for me journal entry is nothing but every thing. Did you succeed to pass it….! Yes, Journal is everything in accounting. Journal entry is very important in accounting, because in accounting the only way to start to record raw financial data. Only after crossing this step, raw data converts in useful accounting information. 5th Tip : Get a Lesson from Rectification of Error When a professional CA finds error and rectifies it, you must get a lesson from this. It will prove your skill of passing journal entries. SUNDRY - Miscellaneous small or infrequent customers that are not assigned individual ledger accounts but are classified as a group. SUNDRY CREDITORS - refers to companies or individuals to which money is owed. SUNDRY DEBTOR - is an entity from who amounts are due for goods sold or services rendered or in respect of contractual obligations. Also termed: debtor, trade debtor, and account receivable. Debtors are the one to whom you have sold good on credit, and they have to pay for that in future. Debtors are the current Asset. Creditors are the one from whom you have purchased good on credit, and you have to for the same in future. Creditors are the current Liability. Accounting Vouchers in Tally Contra Voucher (F4) : This Voucher is used for fund transfers between Cash and Bank accounts only. Like Fund transfer from one Bank / Cash account to another Bank / Cash account, Cash Deposit / Withdrawals into/from Bank The following Vouchers can be done through the Contra Vouchers : (a) Cash Deposited into Bank (b) Cash Withdrawal from the Bank ( c ) Funds Transfer from One Bank to another Bank (d) Cash Transfer to Petty Cash Memo Voucher (Ctrl + F10): As the name implies, it is a Non-Accounting voucher whose entries do not affect your accounts at all. The entries in this voucher are not posted into ledgers, instead are stored in a separate Memo Register. A Memo Voucher can be converted into a regular voucher, to be included in your books of accounts. Suspense Accounts : Suppose an employee takes an advance for his traveling expenses. Until and unless the expenses are incurred, the actual expenditure details cannot be worked out. A Memo Voucher can be entered for advance and can be turned to a Payment Voucher after receiving the details of the expenditure incurred. Journal Vouchers (F7): It is for adjustment between any two ledgers. No outside parties, like Debtors, Creditors, Branches/Divisions are involved. These are for rectification entries in which as any kind of adjustment for non-cash or bank transactions are recorded here. Credit Note Voucher (Ctrl + F8) – Sales Return Credit Note are used for giving credit to the party, for example, when a buyer returns the goods (SALE RETURN) or allows himself Credit due to rate difference or Discount or Due to some adjustment. Debit Note Voucher ( Ctrl + F9) – Purchase Return Debit Notes are used for Debiting party accounts, for example, in case of purchase return or when your supplier has granted you Credit due to different reasons. This voucher type will be available after configuration of F11 features.