Accounting Process

Financial
Transaction or
Events
Communicating
to users

Cash book
Purchase book
Analysis & Sales Book
Interpretation P/R Book
S/R Book
Journal Proper
Summarising Recording
Trial Balance
Trading,Profit &
loss
Balance sheet
Classifying
(posting into
ledger)
2
Purchase

Assets

Creditor
 Current Assets चालू सम्पत्तियाां
 Debtor, Bill Receivable, Stock
 Fixed Assets स्थायी सम्पत्तियााँ
 Tangible Assets द्रश्य
 Land, Plant & Machinery, Furniture
 Intangible Assets अदृश्य
 Copyright, Trademark , Good Will
 2.Liabilities
A.Non Current Liabilities
example: Loan from bank

B. Current Liabilities
example: Bank overdraft, creditor, Bills
payable
 Classification
of accounts

Impersonal
Personal A/c
A/c

Natural Artificial Representative Real Nominal

Outstanding
Firm prepaid ,advance Assets like
Exps & Losses
Individuals Company land building
Accrued Income & gain
Bank Machine
Rules Of Debit & credit ( Golden Rules)

Accounts Rules

Personal Dr. the receiver

Cr. the giver

Real Dr. what comes in

Cr. what goes out

Nominal Dr. all expenses

Cr. all gain
 Modern Rules of
Accounting

Accounts Increase Decrease

Assets Dr. Cr.
Liability Cr. Dr.
Expenses Dr. Cr.
Capital Cr Dr.
income Cr. Dr.
 Some Other Terms

Discount Depreciation

Outstanding Prepaid expenses

Expenses

Accrued/
Advance Income Outstanding Income
TERM Meaning
Outstanding Expenses Expenses incurred in accounting
period but not yet been paid
Prepaid Expenses Expenses paid in advance
Accrued income Income earned in accounting period
but not yet received
Unearned Income Income has been received before it
has been earned
Discount When customer are allowed a
reduction in the price of goods by
the business

Trade discount Discount allowed by the seller on

the basis of sales

Cash discount Discount allowed for timely

payment of due amount
 Accounting Equation

Assets = Capital + Liabilities

Example

Start business with cash Rs. 100000

Purchase goods for Rs. 20000

Purchase Furniture from Ram traders Rs. 50000

Sale of goods costing Rs.20000 for Rs. 30000

Cash paid to Ram traders

TRADING
A/C

PROFIT &
LOSS A/C

BALANCE
SHEET
 Journal : It is the primary books
of accounts in which transaction
are first recorded in a
chronological order.
Books of original
Entry

Date Particular L.F Dr Cr.

 Journal Entries
Date Particular L.F Dr. Cr.

1/1/2017 Business started with cash Rs. 200000

Cash A/c Dr.
To Capital 200000
200000
2/1/2017 Purchase goods for cash Rs.50000
Purchase A/c Dr. 50000
To Cash 50000

2/1/2017 Purchase goods from M/s Gupta Electronics

Rs.20000
Purchase A/c Dr . 20000
To M/s Gupta Electronics 20000

5/1/2017 . Sales goods for cash Rs.30000

Cash A/c Dr. 30000
To Sales 30000
Date Particular L. Dr. Cr.
F
7/1/2017 Sales goods to Mukesh on credit Rs.15000
MukeshA/c Dr. 15000
To Sales 15000

10/1/2017 Goods return to M/s Gupta Rs.5000

M/s Gupta Dr 5000
To Purchase Return 5000

11/1/2017 7.Goods return by Mukesh Rs.2000

Sales return A/c Dr. 2000
To Mukesh 2000

11/1/2017 Cash paid to M/s Gupta Rs.14500,discount

received Rs.500
M/s Gupta A/c Dr. 15000
To Cash 14500
To Discount Received 500
Date Particular L. Dr. Cr.
F
15/1/2017 Cash received from mukesh Rs.12000,discount
allowed Rs.1000
Cash A/c Dr. 12000
Discount Allowed Dr. 1000
To Mukesh 13000
17/1/2017 Cash deposit into bank Rs.100000
Bank A/c Dr. 100000
To Cash 100000

18/1/2017 Cash withdrawal from bank Rs.10000

Cash/Purchase Dr. 10000
To Bank 10000

20/1/2017 Machine purchased & payment made by cheque

Rs.80000
Machine A/c Dr. 80000
To Bank 80000

21/1/2017 13.Depreciation on Machine @10%

Depreciation A/c Dr. 800
To Machine 800
Date Particular L.F Dr. Cr.
22/1/2017 Cash withdrawal for personal use Rs.1000
Drawing A/c Dr.
To Cash/Bank/Purchase 1000
1000
25/1/2017 Salary & Rent Paid Rs.2500 & 3000
Salary A/c Dr. 2500
Rent A/c Dr. 3000
To Cash/Bank 5500

30/1/2017 Interest & Commission Received Rs.1500 &

2000
Cash/Bank A/c Dr. 3500
To Interest 1500
To Commission 2000
 Ledger

The ledger is a master record of all the account.

It is prepared from journal.
Its show the current balance of all accounts.
Trial balance & Final a/c are prepared from ledger.
Its summarise the effect of transaction upon assets ,
liabilities, capital, income & expenditure
 NAME OF THE ACCOUNT, e.g., Cash ACCOUNT

DR CR

DATE PARTICULAR Folio Rs. DATE PARTICULAR Folio Rs.

To By

DATE – Date of the transaction.

PARTICULAR- Name of the other account.

FOLIO- Page no. Book where the entry was first recorded.

AMOUNT- Amount of the transaction.

 1. Simple entry
Cash a/c Dr 15000
To Sales a/c 15000

Dr. Sales a/c Cr.

Particular Amount Particular Amount
By Cash a/c 15000

Dr. Cash a/c Cr.

Particular Amount Particular Amount

To Sales a/c 15000

2. Compound entry
Cash a/c Dr 15000
Ram a/c Dr 5000
To Sales a/c 20000
Dr. Sales a/c Cr.
Particular Amount Particular Amount
By Cash a/c 15000
By Ram a/c 5000

Dr. Cash a/c Cr.

Particular Amount Particular Amount
To Sale a/c 15000

Dr. Ram a/c Cr.

Particular Amount Particular Amount
To Sale a/c 5000
What is trial
Balance……???

It is a statement prepared with the DEBIT and CREDIT

balance of the ledger accounts.

•The total of DEBIT & CREDIT should be EQUAL.

•Its a list of balance of ledger a/c & cash books.
•It can be prepared on any date.
•Final a/c are made with the help of Trial balance.
 Format of Trial Balance

Particular L.F Dr. Cr.

ASSETS a/c **
**
LIABILITES a/c
DRAWINGS a/c **
**
CAPITAL a/c
DEBTOR a/c **

CREDITOR a/c **
EXPENSES a/c
**
INCOME a/c **
LOSSES a/c
**
PROFIT a/c **

Total *** ***

 Suspense Account

Suspense account is an account

in which the difference of trial
Balance is placed temporarily till
the errors are located and
rectified