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This site will introduce you some basic accounting principles, concept of accounting and accounting terminology. I have seen the students graduating with accounts are not been able to do the accounts in their company, I think there is gap between practical life and the bookish knowledge. I hope after reading our site, you will be able to do the accounts of any company.
What is an account?
It is a system to keep company's data organised, it is a system to sort transactions into records so called account books. When a company set up an accounting system, it is planned in a way the accounts should be to the best needs of the prevailing system means books prepared in a way that can be easily audited, books can be checked by tax departments moreover company management can see the working of their company through the books. We are to put our sales, purchases, expenses in record to calculate the profits and generate a balance sheet to show us the owner's capital, assets, liabilities, debtors and creditors.
Accounting system
Today most of the companys use accounting software where you can put entries by just knowing about the voucher to fill like a computer operator but knowing the accounts is totally different. We will here, teach you 'book keeping' manually in few simple steps that will help you do accounting on any operating software because now you have the complete understanding of what you are doing. Sitting on a software and putting entries can make you an operator but not the accountant.
Career in Accounting
Career in accounting means that you have the opportunity to work in any industry trade or any office. Accountants are an integral part of private, public and non profit organizations and even at an individual level - doing part-time jobs, tax return filing jobs and auditors job.
Entrepreneurial Potential
Accountants can be the best businessman because accountants are skilled at financial management, planning and analysing accounts. They can become leaders in the industry because of their financial expertise. A career in accounting has the potential to be incredibly rewarding: it could give you the chance to work in virtually any industry and could open up doors you didn't even know existed! Plus, at the end of the day you'll know that you are helping organizations of all sizes make smart financial and leadership decisions that will help them to succeed.
Purpose of this site
Purpose of this site is to give the students , entrepreneurs to give the complete understanding of accounting , book keeping so that they can do the accounts any where and on any platform , whether it is on any software or handmad
What is an account?
It is a system to keep company's data organised, it is a system to sort transactions into records so called account books. When a company set up an accounting system, it is planned in a way the accounts should be to the best needs of the prevailing system means books to be audited, books can be checked by tax departments moreover the company needs a balance sheet of what they have done in the whole year. An accounting system is the same all around India or the world. We are to put our sales, purchases, expanses in record to calculate the profits and generate a balance sheet to show us the owner's capital, assets, liabilities, debtors and creditors.
Accounting system
Today most of the company's use accounting software where you can put entries by just knowing about the voucher to fill entries like a computer operator but knowing the accounts is totally different. We will here, teach you book keeping by hand in few simple steps that will help you do accounting on any operating software because you have the complete understanding of what you are doing. Sitting on software and putting entries can make you an operator but not the accountant.
Learn Accounts
We will start with a story of a person, Mohan who want to start a yarn manufacturing unit in India with three partners, Yogesh , Gurmeet and Paramjit with all the four will have 25% share. They have decided to invest Rs. 10 lac each. They have installed their factory at a rental place at lease rent of Rs.10000/- per month. Machinery cost is Rs. 2000000/-, Electricals and fittings cost is Rs. 200000/- and they have arranged a working capital limits from a commercial bank amounting to Rs.2000000/-. The name of the company is decided as Gobind Woolens. Let the factory started the production on 1.6.2017.
All the partners have decides to use a software for accounting and maintain a day book which is a common for cash and general entries. They have also decided to issue a voucher of each transaction daily and then that voucher will get entered in the day book and then to the accounting software. Now they need to get vouchers printed for daily entries, a purchase file, Electricity Bill file, Telephone / mobile bill file, sale invoices bill file, file to keep daily vouchers, other purchases file than raw material purchase.
Every company maintains the accounts to evaluate their profits/losses, maintain stocks, maintain the list of debtors and creditors, maintain their tax liabilities and they are bound to maintain records also for Govt. Departments. Companies have to show their records any time if asked by Income tax or GST.
All the partners have decides to use a software for accounting and maintain a day book which is a common for cash and general entries. They have also decided to issue a voucher of each transaction daily and then that voucher will get entered in the day book and then to the accounting software. Now they need to get vouchers printed for daily entries, a purchase file, Electricity Bill file, Telephone / mobile bill file, sale invoices bill file, file to keep daily vouchers, other purchases file than raw material purchase.
Every company maintains the accounts to evaluate their profits/losses, maintain stocks, maintain the list of debtors and creditors, maintain their tax liabilities and they are bound to maintain records also for Govt. Departments. Companies have to show their records any time if asked by Income tax or GST.
What is accounting?
Accounting is a method of recording transactions.
Keeping financial records.
Internal Audit.
keeping record of stocks
keeping record of income, bank balances, daily cash, total expanses.
It is a systematic process of keeping record of all transactions to reveal profit or loss, firms assets, liabilities, owners equity, debtors and creditors.
Keeping financial records.
Internal Audit.
keeping record of stocks
keeping record of income, bank balances, daily cash, total expanses.
It is a systematic process of keeping record of all transactions to reveal profit or loss, firms assets, liabilities, owners equity, debtors and creditors.
Some of the terms/words we must know when starting accounting.
Debtors
Debtor is a person to whom we have owed money or stock and he is liable to pay to us.
Creditor
Creditor is a person who has owed money or stocks to us and we are liable to pay them.
Credit
Credit is the goods or services or any amount comes to us as liability and we are bound to pay it. It is recorded on right site of accounting columns in ledgers and the vouchers of accounting software and recorded on the left side page of Day book.
Debit
An entry recording a sum owed by a company to other person or a company, listed on the left-hand side or column of an account and recorded right in the day book. Expenses are also debit entries.
Bad Debt
The amounts that are uncollectible. These are the loss of the company and needs write-off and directly affects the profit of the company.
Balance Sheet
Balance Sheet is a financial statement that summarizes company's assets and liabilities.
Assets:
Assets are the things that company owns, they are the resources of the company. A balance sheet is the financial statement of company's assets and liabilities. In accounts companies vehicles, machinery, cash in hand, securities and deposits, bank balance, debtors are all assets of the company.
Liabilities
Liabilities are the obligation of the company. Partners capital, bank loans, Sundary creditors unsecured loans are the liabilities of a company.
Sundry Creditors
Any person who supplies the goods or services or consumable items to a business firm on credit basis, will be called as sundry creditor.
Sundry Debtors
Sundry debtors might refer to a company's customers who make purchases on credit.
Trading Account
Trading account is the first stage in the process of preparing final accountsTrading account shows the gross profit or loss of the company where on one side opening stock value, total purchases during the period and the manufacturing process expenses are added and on the other side total sales and closing stock are added.
Profit and Loss
The account, through which annual net profit or loss of a business is ascertained, is called profit and loss account. Gross profit or loss of a business is ascertained through trading account and net profit is determined by deducting all indirect expenses (business operating expenses) from the gross profit through profit and loss account. Thus profit and loss account starts with the result provided by trading account.
Gross Profit
Gross profit is calculated by subtracting opening stock value plus purchases plus direct expenses from the sales plus closing stock
Net profit
Net profit is determined by deducting all indirect expenses (business operating expenses) from the gross profit through profit and loss account.
Trial Balance
A trial balance is a bookkeeping worksheet in which the balances of all ledgers are compiled into debit and credit columns. Preparing a trial balance for a company serves to detect any mathematical errors that have occurred in the double-entry accounting system.
Cash in Hand (C.I.H.)
The amount of money in the form of cash that a company has after it has paid all its costs. Written at the top of the assets side of a balance sheet to show the amount of money held by a company in the form of currency. Cash in hand is always debit entry in the ledger.
Day Book
A book in which the transactions of each day are recorded as they occur or an account book in which a day's transactions are entered for later transfer to a ledger. A day book can be maintained as cash transactions and the transfer entries.
(Note) Today most of the companies use software for accounting so I prefer a day book common for cash entries and journal entries.
(Note) Today most of the companies use software for accounting so I prefer a day book common for cash entries and journal entries.
Cash Book
A cash book is a financial journal that contains all cash receipts and payments, including bank deposits and withdrawals. Entries in the cash book are then posted into the general ledger
Ledger
The book in which accounts are maintained is called ledger. Generally, one account is opened on each page of this book. So, the books in which all the transactions of a business concern are finally recorded in the concerned accounts in a summarized form is called ledger.
1. It has two identical sides - left hand side (debit side) and right hand side (credit side).
2. Debit aspect of all the transactions are recorded on the debit side and credit aspects of all the transactions are recorded on credit side according to date.
3. The difference of the totals of the two sides represents balance. The excess of debit side over credit side indicates debit balance, while excess of credit side over debit side indicates the credit balance. If the two sides are equal, there will be no balance.
4. The closing balance of the current year becomes the opening balance of the next year.
1. It has two identical sides - left hand side (debit side) and right hand side (credit side).
2. Debit aspect of all the transactions are recorded on the debit side and credit aspects of all the transactions are recorded on credit side according to date.
3. The difference of the totals of the two sides represents balance. The excess of debit side over credit side indicates debit balance, while excess of credit side over debit side indicates the credit balance. If the two sides are equal, there will be no balance.
4. The closing balance of the current year becomes the opening balance of the next year.
Double Entry
The double entry system of accounting or bookkeeping means that every business transaction will involve two accounts (or more). For example, if you draw cash from bank - your bank balance will change and your cash increases. If you purchase goods - party account will change and the purchase also increases. When you issue cheque to make payment of that purchase - party account will change and your bank balance will decrease as payment is to pass from your bank.
Depreciation
Depreciation is the decrease of value of the assets. Buildings, machinery, equipment, furniture, fixtures, computers, outdoor lighting, parking lots, cars, and trucks are examples of assets that will last for more than one year, but will not last indefinitely. During each accounting period, a portion of the cost of these assets is being used up and value decreases. The portion being used up is reported as Depreciation Expense on the income statement. A fixed depreciation is allowed on the items and allowed to subtract from profits in the balance sheets by the income tax laws.
Book Keeping
Bookkeeping is the recording of the financial transactions and information pertaining to a business on day to day basis in a way that daily cash, bank balances, stocks, sales, purchases, debtor and creditor accounts could be checked any time. Book keeping is the most important part of any business.
Bank Reconciliation
Bank reconciliation is the petty adjustments required in the bank account of your books to make the actual bank balance in the bank statement and your bank account in your books same. When you get the bank statement from the bank, you see some bank charges in the statement and you are to put them in your books, this process of confirming the accounts is called as bank reconciliation.
There can be checks that have been written and recorded in the company's day book, but have not yet cleared in the bank account.
There can be checks that have been written and recorded in the company's day book, but have not yet cleared in the bank account.
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Book Keeping
Book keeping in accounts is the systematic recording of business transactions in appropriate books of accounts in a planned way so that an accountant can easily perform legal and tax management in a timely manner, accountant can give the party account to the owners immediately, accountant can make the balance sheet immediately when required, accountant can give the stock statements.
Book keeping is the most important part of any business. A skilled and compliant bookkeeper should be able to produce financial records that give business accurate information about its financial activities. These records are critical to the future success of any business. Not only are these records necessary for the business, they are also required by law. Today most of the companies are using accounting software for book keeping. Here we will teach you book keeping manually or you can use the accounting software.
We, herewith, teach you the book keeping process so that you can run your own business or do the accounts job. The purpose is that you must know the process of book keeping.
Bookkeeping doesn't only mean the recording of transactions in a systematic way but it is the maintaining the filing of transaction records e.g., your invoices filing, purchase bills, electricity bills, telephone bills, tax payment receipts, all need to be put in proper file.
We will start with a story of a person, Mohan who want to start a yarn manufacturing unit in India with three partners, Yogesh , Gurmeet and Paramjit with all the four will have 25% share. They have decided to invest Rs. 10 lac each. They have installed their factory at a rental place at lease rent of Rs.10000/- per month. Machinery cost is Rs. 2000000/-, Electricals and fittings cost is Rs. 200000/- and they have arranged a working capital limits from a commercial bank amounting to Rs.2000000/-. The name of the company is decided as Gobind Woolens. Let the factory started the production on 1.6.2017.
All the partners have decides to use a software for accounting and maintain a day book which is a common for cash and general entries. They have also decided to issue a voucher of each transaction daily and then that voucher will get entered in the day book and then to the accounting software. Now they need to get vouchers printed for daily entries, a purchase file, Electricity Bill file, Telephone / mobile bill file, sale invoices bill file, file to keep daily vouchers, other purchases file and raw material purchase.
Every company maintains the accounts to evaluate their profits/losses, maintain stocks, maintain the list of debtors and creditors, maintain their tax liabilities and they are bound to maintain records also for Govt. Departments. Companies have to show their records any time if asked by Income tax or GST or any other department.
Book keeping is the most important part of any business. A skilled and compliant bookkeeper should be able to produce financial records that give business accurate information about its financial activities. These records are critical to the future success of any business. Not only are these records necessary for the business, they are also required by law. Today most of the companies are using accounting software for book keeping. Here we will teach you book keeping manually or you can use the accounting software.
We, herewith, teach you the book keeping process so that you can run your own business or do the accounts job. The purpose is that you must know the process of book keeping.
Bookkeeping doesn't only mean the recording of transactions in a systematic way but it is the maintaining the filing of transaction records e.g., your invoices filing, purchase bills, electricity bills, telephone bills, tax payment receipts, all need to be put in proper file.
We will start with a story of a person, Mohan who want to start a yarn manufacturing unit in India with three partners, Yogesh , Gurmeet and Paramjit with all the four will have 25% share. They have decided to invest Rs. 10 lac each. They have installed their factory at a rental place at lease rent of Rs.10000/- per month. Machinery cost is Rs. 2000000/-, Electricals and fittings cost is Rs. 200000/- and they have arranged a working capital limits from a commercial bank amounting to Rs.2000000/-. The name of the company is decided as Gobind Woolens. Let the factory started the production on 1.6.2017.
All the partners have decides to use a software for accounting and maintain a day book which is a common for cash and general entries. They have also decided to issue a voucher of each transaction daily and then that voucher will get entered in the day book and then to the accounting software. Now they need to get vouchers printed for daily entries, a purchase file, Electricity Bill file, Telephone / mobile bill file, sale invoices bill file, file to keep daily vouchers, other purchases file and raw material purchase.
Every company maintains the accounts to evaluate their profits/losses, maintain stocks, maintain the list of debtors and creditors, maintain their tax liabilities and they are bound to maintain records also for Govt. Departments. Companies have to show their records any time if asked by Income tax or GST or any other department.
Start Accounts
To start accounts purchase some files for records.
Purchase file
Electricity Bill file
Telephone / mobile bill file
sale invoices bill file
file to keep daily vouchers
other purchases file
Raw material purchase file
To start writing accounts we will use a journal voucher , a day/cash book and a software for accounting. I will not here explain particular software but you can use any software. I will try to explain to use manual ledger also. The purpose is to know the basic accounting principles.
Purchase file
Electricity Bill file
Telephone / mobile bill file
sale invoices bill file
file to keep daily vouchers
other purchases file
Raw material purchase file
To start writing accounts we will use a journal voucher , a day/cash book and a software for accounting. I will not here explain particular software but you can use any software. I will try to explain to use manual ledger also. The purpose is to know the basic accounting principles.
Journal Voucher
Day Book
Ledger
How to make entries
Let us say we started accounts on 1.7.2017 and received four cheque of Rs.10,00,000 each from all the three partners and Rs. 10000 cash from Mohan (Parter)
Entries to be done on 1.7.2017:
1. Cheques of Rs.1000000 received from all the four partners
2. Cash Rs. 10000 received from partner Mohan
3. Rs. 200000 invoice received from Gambhir Machinery for Machinery purchase
4. Cheque issued to Gambhir Machinery for Rs. 2000000.
5. Freight paid for machinery Rs.4000
6. Office expenses of Tea Rs. 200
Entries to be done on 1.7.2017:
1. Cheques of Rs.1000000 received from all the four partners
2. Cash Rs. 10000 received from partner Mohan
3. Rs. 200000 invoice received from Gambhir Machinery for Machinery purchase
4. Cheque issued to Gambhir Machinery for Rs. 2000000.
5. Freight paid for machinery Rs.4000
6. Office expenses of Tea Rs. 200
Posting in Ledger
After journal entries are made, the next step in the accounting cycle is to post the journal entries into the ledger. Posting refers to the process of transferring entries in the journal into the accounts in the ledger.
RULES FOR POSTING IN TO LEDGER
Posting the entries from day books to ledger is very important work. An accountant must keep in his mind the following rules while posting the entries:-
All entries to be posted from the day book
Posting of the entries must be date wise.
Date of entry in day books must be the date of entry in ledger.
All amounts shown in debit side in journal must be posted in debit side of a particular account. In 'particulars' column of ledger, the account head must start with 'To'.
All amounts shown in credit side in journal must be posted in credit side of a particular account. In 'particulars' column of ledger, the account head must start with 'By'.
After the entry, page number of journal from where the entry is posted, must be written in L/F column of account and the page number of ledger account must be written in L/F column of journal or day book.
RULES FOR POSTING IN TO LEDGER
Posting the entries from day books to ledger is very important work. An accountant must keep in his mind the following rules while posting the entries:-
All entries to be posted from the day book
Posting of the entries must be date wise.
Date of entry in day books must be the date of entry in ledger.
All amounts shown in debit side in journal must be posted in debit side of a particular account. In 'particulars' column of ledger, the account head must start with 'To'.
All amounts shown in credit side in journal must be posted in credit side of a particular account. In 'particulars' column of ledger, the account head must start with 'By'.
After the entry, page number of journal from where the entry is posted, must be written in L/F column of account and the page number of ledger account must be written in L/F column of journal or day book.
How to maintain a Ledger
1. Make an index of All the accounts (As in Image)
2. Maintain each account on single page
3. Post debit entries on debit side and credit entries on credit side.
2. Maintain each account on single page
3. Post debit entries on debit side and credit entries on credit side.
Inventory Management
Stock Register
Stock register is a register used to maintain company's stocks. It is a daily based system of maintaining inventory by updating daily purchase (incoming Stock) and subtracting sales(Outgoing stock). In a manufacturing units Production of finished goods and raw material issued for production are also maintained. Stock registers are maintained quantitatively.
Stock register is the most important part of accounting. It, not only help in getting closing stock value but in maintain the product data also.
There are mainly two methods of maintaining stocks.
1. Manual Stock register
2. Accounting Software
Manual Stock Register
Every sale and purchase entry from the daybook (if you are entering sale and purchase entries in day book also),purchase register and sale register is to be entered in stock register.
Each item of stocks to be maintained on separate page of stock register. First of all an index is made with item and page number.
Production and issued for production are also maintained in separate columns so that its total gives you the monthly production also.
In Case of Accounting Software
Sales and purchase automatically goes to stock registers. When You issue invoice you sect party name and the stock item, these are automatically entered in the sale book, ledger and the stock register.
For purchase you are to use the purchase voucher to enter the raw material or stock purchases, because purchase voucher is attached with the stock register.
Performa of manual Stock Register
Stock register is the most important part of accounting. It, not only help in getting closing stock value but in maintain the product data also.
There are mainly two methods of maintaining stocks.
1. Manual Stock register
2. Accounting Software
Manual Stock Register
Every sale and purchase entry from the daybook (if you are entering sale and purchase entries in day book also),purchase register and sale register is to be entered in stock register.
Each item of stocks to be maintained on separate page of stock register. First of all an index is made with item and page number.
Production and issued for production are also maintained in separate columns so that its total gives you the monthly production also.
In Case of Accounting Software
Sales and purchase automatically goes to stock registers. When You issue invoice you sect party name and the stock item, these are automatically entered in the sale book, ledger and the stock register.
For purchase you are to use the purchase voucher to enter the raw material or stock purchases, because purchase voucher is attached with the stock register.
Performa of manual Stock Register
EXERCISEEXERCISE-2
Vouchers in Accounts
Cash Voucher:
A cash voucher is a standard form used to document a petty cash payment. When someone wants to withdraw cash from the petty cash fund.
Journal Voucher
Journal voucher is prepared for the transactions which does not relate to sales, purchases. Journal vouchers can be prepared for the following transactions:-
1. Opening balances
2. Depreciation on fixed assets.
3. Purchase of any items relating to business expenditures on credit
4. Adjustment entries.
5. Closing entries.
6. Correction entries.
7. Transfer entries.
8. Provisions for expenditures
9. Accrual income.
10. Bank charges
11. Cheque entries
Performa of journal Voucher
A cash voucher is a standard form used to document a petty cash payment. When someone wants to withdraw cash from the petty cash fund.
Journal Voucher
Journal voucher is prepared for the transactions which does not relate to sales, purchases. Journal vouchers can be prepared for the following transactions:-
1. Opening balances
2. Depreciation on fixed assets.
3. Purchase of any items relating to business expenditures on credit
4. Adjustment entries.
5. Closing entries.
6. Correction entries.
7. Transfer entries.
8. Provisions for expenditures
9. Accrual income.
10. Bank charges
11. Cheque entries
Performa of journal Voucher
Debit & Credit
Under the double-entry system every business transaction is recorded in at least two accounts. One account will receive a "debit" entry, meaning the amount will be entered on the left side of that account. Another account will receive a "credit" entry, meaning the amount will be entered on the right side of that account. The initial challenge with double-entry is to know which account should be debited and which account should be credited. To explain debit and credit in accounting and bookkeeping you must know which account to be debited and which account to be credited.
To debit an account means to enter an amount on the left side of the account. To credit an account means to enter an amount on the right side of an account.
Generally these accounts are debited:
1. Expenses
2. Assets
3. Purchase
And these accounts are credited
1. Liabilities
2. Sales
The abbreviation for debit is dr. and the abbreviation for credit is cr. How cash entries are done:
* Whenever cash is received from a party, debit Cash.
* Whenever cash is paid out to a party or expense, credit Cash.
How Debit Credit entries are done in Journal Voucher
To debit an account means to enter an amount on the left side of the account. To credit an account means to enter an amount on the right side of an account.
Generally these accounts are debited:
1. Expenses
2. Assets
3. Purchase
And these accounts are credited
1. Liabilities
2. Sales
The abbreviation for debit is dr. and the abbreviation for credit is cr. How cash entries are done:
* Whenever cash is received from a party, debit Cash.
* Whenever cash is paid out to a party or expense, credit Cash.
How Debit Credit entries are done in Journal Voucher
Day Book
In bookkeeping and accounting, a journal is a record of financial transactions, entered as they occur. Entering transactions into a journal is usually the first step in the accounting cycle.
Such book in which all the transactions of the day are entered in the order of their occurrence is called as daybook.
We have suggested to use a day book in our book keeping page which is as below. We have suggested a daybook for all the cash and journal entries and then enter these entries into your software if you are using accounting software or you can post in ledger also.
Such book in which all the transactions of the day are entered in the order of their occurrence is called as daybook.
We have suggested to use a day book in our book keeping page which is as below. We have suggested a daybook for all the cash and journal entries and then enter these entries into your software if you are using accounting software or you can post in ledger also.
Cash Book
The book in which all cash transactions (either cash is received or paid) are recorded according to dates, is called 'Cash Book'.
Some company use a day book common with cash entries and the jounal entries. But some companies use cash book separately which contains only receipt of cash and paid cash entries.
Performa of Cash Book
Some company use a day book common with cash entries and the jounal entries. But some companies use cash book separately which contains only receipt of cash and paid cash entries.
Performa of Cash Book
Ledger
The book in which accounts are maintained is called ledger.
Generally, one account is opened on each page of this book, but if transactions relating to a particular account are numerous, it may extend to more than one page.
All the transaction of the daybook, cash book are entered in the ledger account wise. We make the index first in a ledger then all the accounts whether it is expense account or partner account of a party account, all are opened in different pages of the ledger.
While posting the ledger entry from the day book, always write the folio number of the ledger folio in front of the entry in day book if you are using manual ledger.
In computer software you make all the accounts and enter the day book entries through general voucher or bank voucher or cash voucher. The entries goes autometially in that account as you select the particular account.
Performa of Ledger
Generally, one account is opened on each page of this book, but if transactions relating to a particular account are numerous, it may extend to more than one page.
All the transaction of the daybook, cash book are entered in the ledger account wise. We make the index first in a ledger then all the accounts whether it is expense account or partner account of a party account, all are opened in different pages of the ledger.
While posting the ledger entry from the day book, always write the folio number of the ledger folio in front of the entry in day book if you are using manual ledger.
In computer software you make all the accounts and enter the day book entries through general voucher or bank voucher or cash voucher. The entries goes autometially in that account as you select the particular account.
Performa of Ledger
Bank Reconciliation
Bank reconciliation is the petty adjustments required in the bank account of your books to make the actual bank balance in the bank statement and your bank account in your books same. When you get the bank statement from the bank, you see some bank charges in the statement and you are to put them in your books, this process of confirming the accounts is called as bank reconciliation.
There can be checks that have been written and recorded in the company's day book, but have not yet cleared in the bank account
There can be checks that have been written and recorded in the company's day book, but have not yet cleared in the bank account
Balance Sheet
Balance Sheet is a financial statement that summarizes company's assets and liabilities.
The balance sheet presents a company's financial position at the end of a specified date. Some describe the balance sheet as a "snapshot" of the company's financial position at a point in time.
Balance sheet is what partners or directors have invested in the company and assets the company have. It also shows the other liabilities may be secured or unsecured along with the debtors, cash in hand and the bank balances.
The balance sheet presents a company's financial position at the end of a specified date. Some describe the balance sheet as a "snapshot" of the company's financial position at a point in time.
Balance sheet is what partners or directors have invested in the company and assets the company have. It also shows the other liabilities may be secured or unsecured along with the debtors, cash in hand and the bank balances.
Performa Balance Sheet
How to make capital Account as shown as Annexture 'A' in Balance Sheet
Read the Capital account Below
We have taken some figures to explain the calculations.Calculations are made for net profit of Rs.1408.88 taken from Profit and loss account.
QUATITATIVE DETAILS OF PRINCIPAL ITEMS OF RAW MATERIAL AND FINISHED GOODS TO BE ATTACHED WITH THE BALANCE SHEET'S AUTID REPORT AS PART OF FORM 3CD
PERFORMA IS AS BELOW IN IMAGE
Read the Capital account Below
We have taken some figures to explain the calculations.Calculations are made for net profit of Rs.1408.88 taken from Profit and loss account.
QUATITATIVE DETAILS OF PRINCIPAL ITEMS OF RAW MATERIAL AND FINISHED GOODS TO BE ATTACHED WITH THE BALANCE SHEET'S AUTID REPORT AS PART OF FORM 3CD
PERFORMA IS AS BELOW IN IMAGE
HOW TO PREPARE BALANCE SHEET - Trial toBALANCE SHEET
Trading Account
The account which is prepared to determine the gross profit or gross loss of a business concern is called trading account.
It is basically (Closing stock + Sales) - (Opening Stock + Purchases + Direct Expenses)
The result of the business determined through trading account is not true result, It is not the actual Profit. The true result is the net profit or the net loss which is determined through profit and loss account. The trading accounting has the following features:
1. It is the first stage of final accounts of a trading concern.
2. It is prepared on the last day of an accounting period.
3. Only direct revenue and direct expenses are considered in it. E.g., If you are running a manufacturing unit, we will consider only direct expenses of manufacturing e.g., Freight, oils and lubricants, electricity , generator expense, wages etc. But there are so many other expenses of a company like sale promotion, office expenses, salaries etc.
4. Direct expenses are recorded on its debit side and direct revenue on its credit side.
5. All items of direct expenses and direct revenue concerning current year are taken into account but no item relating to past or next year is considered in it.
6. If its credit side exceeds it represents gross profit and if debit side exceeds it shows gross loss.
Purpose of Preparing Trading Account:
The profit or loss determined by a trading account is the gross result of the business but not the net result. If so, then a question arises - what is the use of preparing a trading account? This account is necessary because of the following advantages.
Gross profit of a business is very important data, since all business expenses are met out of it. So the amount of gross profit should be adequate to meet the indirect expenses of a business concern.
Performa trading account
It is basically (Closing stock + Sales) - (Opening Stock + Purchases + Direct Expenses)
The result of the business determined through trading account is not true result, It is not the actual Profit. The true result is the net profit or the net loss which is determined through profit and loss account. The trading accounting has the following features:
1. It is the first stage of final accounts of a trading concern.
2. It is prepared on the last day of an accounting period.
3. Only direct revenue and direct expenses are considered in it. E.g., If you are running a manufacturing unit, we will consider only direct expenses of manufacturing e.g., Freight, oils and lubricants, electricity , generator expense, wages etc. But there are so many other expenses of a company like sale promotion, office expenses, salaries etc.
4. Direct expenses are recorded on its debit side and direct revenue on its credit side.
5. All items of direct expenses and direct revenue concerning current year are taken into account but no item relating to past or next year is considered in it.
6. If its credit side exceeds it represents gross profit and if debit side exceeds it shows gross loss.
Purpose of Preparing Trading Account:
The profit or loss determined by a trading account is the gross result of the business but not the net result. If so, then a question arises - what is the use of preparing a trading account? This account is necessary because of the following advantages.
Gross profit of a business is very important data, since all business expenses are met out of it. So the amount of gross profit should be adequate to meet the indirect expenses of a business concern.
Performa trading account
Profit and Loss Account
It reveals the net profits or net Loss. This is the next step after preparing the Trading account. Profit and Loss Account is prepared to get the net profit or loss for the given period.
Profit and loss account starts with the credit of Gross profit from the trading account and then all the indirect expenses are debited. You can see below the list of expenses that goes to profit and loss account.
Performa Profit and Loss Account.
Profit and loss account starts with the credit of Gross profit from the trading account and then all the indirect expenses are debited. You can see below the list of expenses that goes to profit and loss account.
Performa Profit and Loss Account.
Accounting Question and Answers
Question 1- Cash in hand goes on which side of ledger - debit or credit?
Question 2- Credit bank balance in your account is asset or a liabilty?
Question 3- Why credit is always on right and debit on left in your ledger?
Question 4- Where Partner's capital goes in the Balance Sheet?
Question 5- When you reconcile the bank with your books, you found Rs. 200 as bank charges. How will you enter in your day book.
Question 6- You have online made a payment of Rs.10000/-for mobile bill from your partners's personal account as you were not getting the OTP and it was last day to make payment. How will you make the entry.
Question 7- What is trading account?
ANSWERS
Answer 1- Cash in hand is the debit entry in the ledger. Because it is alway receivable, cash in hand is an asset.
Answer 2- Credit bank balance is liability.
Answer 3- Credit is always on right and debit is on left in the ledger, the reason is this is the system made to follow in book keeping so that auditors, accountants and even we become habitual to check the account. It will not affect the basic accounting if written vise versa. It is a Rule to follow.
Answer 4- Partner's Capital is the liability of the company.
Answer 5- Credit Bank Rs. 200 and debit Bank charges account.
Answer 6- Credit Particular partners account for Rs. 10000/- and debit the Mobile expenses account Rs. 10000/-
Answer 7- Trading account is prepared mainly to know the profitability of the goods bought (or manufactured) sold by the businessman. The difference between selling price and cost of goods sold is the, gross earning of the businessman. Thus in order to calculate the gross earning, it is necessary to know:
(a) cost of goods sold.
Cost of the sold goods is its purchase price + the direct expenses like freight, octroi
(b) sales.
Question 2- Credit bank balance in your account is asset or a liabilty?
Question 3- Why credit is always on right and debit on left in your ledger?
Question 4- Where Partner's capital goes in the Balance Sheet?
Question 5- When you reconcile the bank with your books, you found Rs. 200 as bank charges. How will you enter in your day book.
Question 6- You have online made a payment of Rs.10000/-for mobile bill from your partners's personal account as you were not getting the OTP and it was last day to make payment. How will you make the entry.
Question 7- What is trading account?
ANSWERS
Answer 1- Cash in hand is the debit entry in the ledger. Because it is alway receivable, cash in hand is an asset.
Answer 2- Credit bank balance is liability.
Answer 3- Credit is always on right and debit is on left in the ledger, the reason is this is the system made to follow in book keeping so that auditors, accountants and even we become habitual to check the account. It will not affect the basic accounting if written vise versa. It is a Rule to follow.
Answer 4- Partner's Capital is the liability of the company.
Answer 5- Credit Bank Rs. 200 and debit Bank charges account.
Answer 6- Credit Particular partners account for Rs. 10000/- and debit the Mobile expenses account Rs. 10000/-
Answer 7- Trading account is prepared mainly to know the profitability of the goods bought (or manufactured) sold by the businessman. The difference between selling price and cost of goods sold is the, gross earning of the businessman. Thus in order to calculate the gross earning, it is necessary to know:
(a) cost of goods sold.
Cost of the sold goods is its purchase price + the direct expenses like freight, octroi
(b) sales.
GST
CHAPTER WISE RATE WISE GST SCHEDULE (DOWNLOAD PDF)
The Goods and Services Tax (GST) has been one of the key things that has caught the attention of the market given its implications on earnings of companies. The government has kept a large number of items under 18% tax slab. The government categorised 1211 items under various tax slabs. Here is a low-down on the tax slab these items would attract:
No tax
Goods
No tax will be imposed on items like fresh meat, fish chicken, eggs, milk, butter milk, curd, natural honey, fresh fruits and vegetables, flour, besan, bread, prasad, salt, bindi. Sindoor, stamps, judicial papers, printed books, newspapers, bangles, handloom, etc.
Services
Hotels and lodges with tariff below Rs 1,000, Grandfathering service has been exempted under GST.
5%
Goods
Items such as fish fillet, cream, skimmed milk powder, branded paneer, frozen vegetables, coffee, tea, spices, pizza bread, rusk, sabudana, kerosene, coal, medicines, stent, lifeboats will attract tax of 5 %,
Services
Transport services (Railways, air transport), small restraurants will be under the 5% category because their main input is petroleum, which is outside GST ambit.
12%
Goods
Frozen meat products , butter, cheese, ghee, dry fruits in packaged form, animal fat, sausage, fruit juices, Bhutia, namkeen, Ayurvedic medicines, tooth powder, agarbatti, colouring books, picture books, umbrella, sewing machine, cellphones will be under 12 % tax slab.
Services
N on-AC hotels, business class air ticket, fertilisers, Work Contracts will fall under 12 per cent GST tax slab
18%
Goods
Most items are under this tax slab which include flavoured refined sugar, pasta, cornflakes, pastries and cakes, preserved vegetables, jams, sauces, soups, ice cream, instant food mixes, mineral water, tissues, envelopes, tampons, note books, steel products, printed circuits, camera, speakers and monitors.
Services
AC hotels that serve liquor, telecom services, IT services, branded garments and financial services will attract 18 per cent tax under GST.
28%
Goods
Chewing gum, molasses, chocolate not containing cocoa, waffles and wafers coated with choclate, pan masala, aerated water, paint, deodorants, shaving creams, after shave, hair shampoo, dye, sunscreen, wallpaper, ceramic tiles, water heater, dishwasher, weighing machine, washing machine, ATM, vending machines, vacuum cleaner, shavers, hair clippers, automobiles, motorcycles, aircraft for personal use, will attract 28 % tax - the highest under ..
Services
5-star hotels, race club betting, cinema will attract tax 28 per cent tax slab under GST
No tax
Goods
No tax will be imposed on items like fresh meat, fish chicken, eggs, milk, butter milk, curd, natural honey, fresh fruits and vegetables, flour, besan, bread, prasad, salt, bindi. Sindoor, stamps, judicial papers, printed books, newspapers, bangles, handloom, etc.
Services
Hotels and lodges with tariff below Rs 1,000, Grandfathering service has been exempted under GST.
5%
Goods
Items such as fish fillet, cream, skimmed milk powder, branded paneer, frozen vegetables, coffee, tea, spices, pizza bread, rusk, sabudana, kerosene, coal, medicines, stent, lifeboats will attract tax of 5 %,
Services
Transport services (Railways, air transport), small restraurants will be under the 5% category because their main input is petroleum, which is outside GST ambit.
12%
Goods
Frozen meat products , butter, cheese, ghee, dry fruits in packaged form, animal fat, sausage, fruit juices, Bhutia, namkeen, Ayurvedic medicines, tooth powder, agarbatti, colouring books, picture books, umbrella, sewing machine, cellphones will be under 12 % tax slab.
Services
N on-AC hotels, business class air ticket, fertilisers, Work Contracts will fall under 12 per cent GST tax slab
18%
Goods
Most items are under this tax slab which include flavoured refined sugar, pasta, cornflakes, pastries and cakes, preserved vegetables, jams, sauces, soups, ice cream, instant food mixes, mineral water, tissues, envelopes, tampons, note books, steel products, printed circuits, camera, speakers and monitors.
Services
AC hotels that serve liquor, telecom services, IT services, branded garments and financial services will attract 18 per cent tax under GST.
28%
Goods
Chewing gum, molasses, chocolate not containing cocoa, waffles and wafers coated with choclate, pan masala, aerated water, paint, deodorants, shaving creams, after shave, hair shampoo, dye, sunscreen, wallpaper, ceramic tiles, water heater, dishwasher, weighing machine, washing machine, ATM, vending machines, vacuum cleaner, shavers, hair clippers, automobiles, motorcycles, aircraft for personal use, will attract 28 % tax - the highest under ..
Services
5-star hotels, race club betting, cinema will attract tax 28 per cent tax slab under GST
Dr ARORA 9888171301
Key item divided market secured under this investigation incorporates endoscopes, agent gadgets and perception frameworks. what is the living wage
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