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Process Of Recording Business Transactions Step 4: Preparation of final accounts

Step 3: Preparation of Trial Balance Step 2: Books of Final Entry

Step 1: Books of Original Entry

ACCOUNTING CYCLE Step 1 – Journalising (the transactions) Step 2 – Posting (to the ledger) Step 3 – Balancing (the accounts in the ledger) Step 4 – Trial Balance Step 5 – Income Statement Final Accounts Step 6 – Position Statement Figure showing various steps in the accounting cycle .

Records Maintained By An Organisation The books of accounts maintained by an organisation may be classified into two as a. a. Subsidiary Books . Cash Book 3. b. Journal 2. Books of Second entry / Final entry Books of Prime / Original Entry 1. Books of Prime / Original Entry b.

Rs.JOURNAL / DAY BOOK Format of a Journal Date Particulars Ledger Debit Credit Folio Rs. To…………. (Being…………) . …………….

CASH Debit: BOOK All Cash receipts and Bank receipts and Discount Allowed Credit: All Cash payments and Bank payments and Discount Received. Petty cash book . 1.. Three columnar cash book 4. The cashbook is classified into 4 types viz. Single column cash book 2. Two columnar cash book 3.

this is a principal book that contains all the accounts i. revenue and expenses. . liabilities and capital accounts but not in case of incomes and expenditures. The entries from the books of original entry are transferred to this book. To Balance b/d (Opening balance) By Balance c/d (Closing balance) -------- The opening and closing balances will appear only in case of assets. -------Date Particulars Folio Cr Amount Rs. Hence it is also called as a book of final entry.LEDGER Also called as General Ledger.e. accounts of Assets liabilities. All similar transactions are grouped under one account. Dr Date Particulars Folio Amount Rs.. There are a number of accounts in a general ledger. capital.

F. Amount Rs.Format of a single column cash book Dr Date Particulars To Balance b/d (Opening balance) Cr L. ------- By Balance c/d (Closing balance) ------- . Date Particulars L.F. Amount Rs.

F Discount Rs. Cash Rs. ------ Particulars L.Format of a double column cash book Dr Date Particulars L. Cr Cash Date Rs. To Balance b/d (Opening balance) By Balance c/d (Closing balance) ------ OR .F Discount Rs.

Bank Rs. ------ Date Particulars L.F Discount Rs. To Balance b/d (Opening balance) By Balance c/d (Closing balance) ------ OR . Cr Bank Rs.F Discount Rs.Format of a double column cash book Dr Date Particulars L.

Bank Rs. Bank Rs. To Balance b/d (Opening balance) By Balance c/d (Closing balance) ------ .Format of a double column cash book Dr Date Particulars L. ------ Date Particulars L.F Cr Cash Rs.F Cash Rs.

Cash Rs.F Disco -unt Rs. Cr Bank Rs.F Disco -unt Rs.Format of a three columnar cash book Dr Date Particulars L. Date Particulars L. Cash Bank Rs. To Balance b/d (Opening balance) ------ By Balance c/d (Closing balance) ------ OR .

. Dr Dt Particulars CBF Total Rs.Petty Cash Book It is a cash book in which all the petty cash expenses incurred daily by an organisation is recorded. Dt Particulars Vr. No Postage Conveyance Wages Business Promotion Cr Total Rs.

Total Amount Rs. Date Purchase invoice no. Ps.PURCHASES BOOK This is a subsidiary book in which all the credit purchases made by the organisation is recorded. Name of the supplier LF Details Rs. The monthly total from the purchase book is transferred to the General Ledger to the Purchases Account. Ps. .

Ps. Rs. . Ps. Date Debit Note No. Name of the supplier LF Details Total Amount Rs.PURCHASE RETURNS BOOK A book in which all the purchase returns (returns outwards) are recorded.

Ps. Ps. . Total Amount Rs. The monthly totals are transferred to the sales account in the General Ledger. Name of the purchaser LF Details Rs.SALES BOOK The credit sales are recorded in this book. Date Sales invoice no.

Ps. Total Amount Rs. Ps. . Date Credit Note No.SALES RETURNS BOOK A book of account in which all the sales returns (returns outwards) made by the organisation are recorded. Name of the Purchaser LF Details Rs.

e. The following are recorded in the journal proper: a. Opening Entries Closing Entries Transfer Entries Adjustment Entries Rectification Entries . d. b.JOURNAL PROPER Those journal entries that cannot be recorded in any of the subsidiary books are recorded in the journal proper. c.

Sl. . Ps. It contains all the debit and credit balances. Ps. Head of Account LF Debit Balance Rs. Credit Balance Rs.TRIAL BALANCE It is a statement that shows the balance in all the accounts in a ledger. No. A trial balance is a list of debit and credit balances of all the ledger accounts prepared on any particular date to verify whether the entries in the books of accounts are arithmetically correct or not.