FA Session 1

PAN African eNetwork Project
MFC
Financial Accounting
Semester - I
Dr. Anubha Srivastava
Copyright Amity University
1
Points to discuss Accounting concepts and conventions ,

Accounting standards and IFRS
Journal , subsidiary books , ledger and trial
balance
Rectification of errors
BRS
Capital and revenue items
Final accounts of sole trader
Meaning of Accounting
Accounting is a practice of recording, classifying, summarizing,
analyzing and interpreting the financial transactions and
communicating the results thereof to the persons interested in such
information.
1. Recording the business transactions of financial character in the
books. (preparation of first book called journal'
2. Classifying the recorded data of similar nature in one place
(preparation of second book called 'Ledger')
Summarizing the classified data to know the result of business operation
and its financial position (preparation of Trial balance, Income statement
and Balance sheet)
4. Analysis and interprets the summarized data in such a way to get a
meaningful judgment about the operational result an financial position of
the business
Various parties
Investors
Employees
Customer
Lenders /Financial institutions
Government
Suppliers
Competitors
Management
owners
Accounting conventions
Convention of Disclosure:-The disclosure of all significant information

is one of the important accounting conventions. It implies that
accounts should be prepared in such a way that all material
information is clearly disclosed to the reader. The term disclosure does
not imply that all information that any one could desire is to be
included in accounting statements. The term only implies that there is
to a sufficient disclosure of information which is of material in trust to
proprietors, present and potential creditors and investors.
Convention of Materiality:-It refers to the relative importance of an item

or even. According to this convention only those events or items
should be recorded which have a significant bearing and insignificant
things should be ignored. This is because otherwise accounting will be
unnecessarily over burden with minute details. There is no formula in
making a distinction between material and immaterial events. It is a
matter of judgment and it is left to the accountant for taking a decision.
Convention of Consistency: This convention means that accounting

practices should remain uncharged from one period to another. For
example, if stock is valued at cost or market price whichever is less;
this principle should be followed year after year. Similarly, if
depreciation is charged on fixed assets according to diminishing
balance method, it should be done year after year. This is necessary
for the purpose of comparison. However, consistency does not mean
inflexibility.
Convention of Conservatism:-This convention means a caution

approach or policy of "play safe". This convention ensures that
uncertainties and risks inherent in business transactions should be
given a proper consideration. If there is a possibility of loss, it should
be taken into account at the earliest. On the other hand, a prospect of
profit should be ignored up to the time it does not materialize. On
account of this reason, the accountants follow the rule 'anticipate no
profit but provide for all possible losses'. On account of this
convention, the inventory is valued 'at cost or market price whichever
is less.'
Accounting concepts
Monetary measurement-Accountants do not account for items
unless they can be quantified in monetary terms. Items that
are not accounted for (unless someone is prepared to pay
something for them) include things like workforce skill,
morale, market leadership, brand recognition, quality of
management etc.
Separate Entity-This convention seeks to ensure that private
transactions and matters relating to the owners of a business
are segregated from transactions that relate to the business.
Realization- With this convention, accounts recognize
transactions (and any profits arising from them) at the point
of sale or transfer of legal ownership - rather than just when
cash actually changes hands. For example, a company that
makes a sale to a customer can recognise that sale when the
transaction is legal - at the point of contract. The actual
payment due from the customer may not arise until several
weeks (or months) later - if the customer has been granted
some credit terms.
Going Concern-Accountants assume, unless there

is evidence to the contrary, that a company is not
going broke. This has important implications for
the valuation of assets and liabilities.
Dual aspect concept every transaction has duel
effect . E.g. Asset=liabilities + Capital.
Accrual concept-we record the transaction when
they become due , not when actually recd. E.g.
prepaid exp. Outstanding exp.
Cost concept This is based on going concern
concept , therefore asset purchased in past are
recorded at cost price .
IGAAP
The corporate accounting and financial statements are prepared
on the basis of GAAP , while there is no specific definition of
what is GAAP ,the accounts and statement are said to have
been drawn and presented on this basis when they comply with
the
Conceptual framework of financial statements
Accounting concept and principals
Requirements of companies act
AS formulated by ICAI
Directives of regulatory bodies like SEBI IRDA RBI etc.
Requirement of income tax act.
Conceptual framework
Defining accounting , rules of accounting, book
keeping , double entry system , type of primary
books, nature of accounting
Requirements of companies act

Section 209 of the companies act requires that
every company need to keep record of
transactions .
E.g. all sales and purchases , money recd, and
paid ,asset and liability
Besides as per section 210 it requires that
board of director should prepare annual
accounts
AS formulated by ICAI
AS are the rules prescribed to be followed in order to
bring uniformity in the financial statements.
AS 1:
Disclosure of accounting policies:
AS 2:
Valuations of Inventories:
AS 3:
Cash Flow Statements
AS 4:
Contingencies and events occurring after the
Balance Sheet Date
AS 5:
Net Profit or loss for the period, Prior period
items and Changes in accounting Policies.
AS 6:
Depreciation accounting.
AS 7: Construction Contracts.
AS 8: Accounting for Research and
Development
AS 9: Revenue Recognition.
AS 10: Accounting For Fixed Assets.
AS 11: The Effect of Changes In Foreign
Exchange Rates.
AS 12: Accounting For Government Grants.
AS 13: Accounting for Investments.
AS 14: Accounting For Amalgamation.
AS 15: Employee Benefits.
AS 16: Borrowing Cost.

AS 17: Segment Reporting.
AS 18: Related Party Disclosures.
AS 19: Accounting For Leases.
AS 20: Earning Per Share.
AS 21: Consolidated Financial Statement.
AS 22: Accounting For Taxes on Income.
AS 23: Accounting for Investment in
associates in Consolidated Financial
Statement.
AS 24: Discontinuing Operation
AS 25: Interim Financial Reporting.

AS 26: Intangible assets.
AS 27: Financial Reporting on Interest in joint
Ventures.
AS 28: Impairment Of assets.
AS 29: Provisions, Contingent, liabilities and
Contingent assets.
AS 30: Financial instrument,
AS 31: Financial Instrument: presentation.
AS 32: Financial Instruments, Disclosures and
Limited revision to accounting standards.
Directives of regulatory bodies like

SEBI IRDA RBI etc
A copy of full accounts to each shareholder

Cash flow statements
Change in company name
Related part disclosure
Loans , advances etc.
IFRS
List of IFRS statements
IFRS 1: First time Adoption of International Financial Reporting
Standards
IFRS 2: Share-based Payment
IFRS 3 :Business Combinations
IFRS 4 :Insurance Contracts
IFRS 5 :Non-current Assets Held for Sale and Discontinued
Operations
IFRS 6 :Exploration for and Evaluation of Mineral Resources
IFRS 7 :Financial Instruments: Disclosures
IFRS 8: Operating Segments
IFRS 9:Financial Instruments
Accounting
cycle
Accounting equation
Assets (what it owns)
Liabilities (what it owes to others)
Owners Equity (the difference between assets and liabilities)
Asset = capital + liability
Or
Asset = liability
Or
Asset outside liability=Owners capital
Or
Asset outside liability = Owners capital owners drawing + net profit or loss
Or
Asset outside liability =owners capital owners drawing + income /expenses
Double entry system
The double-entry accounting system records financial transactions in

relation to asset, liability, income or expense related to it through accounting
entries.
Any accounting entry in the-double entry accounting system has two effects:
one of increasing one account, the other of decreasing another account by
an equal amount.
If the accounting entries are recorded without error, at any point in time the
aggregate balance of all accounts having positive balances will be equal to
the aggregate balance of all accounts having negative balances.
The double-entry bookkeeping system ensures that the financial transaction
has equal and opposite effects in two different accounts.
Accounting entries use terms such as debit and credit to avoid confusion
regarding the opposite effect of the accounting entry e.g. If an accounting
entry debits a particular account, the opposite account will be credited and
vice versa
Golden rules of accounting
Real Account: All Asset Accounts .It Includes both Tangible assets like
Cash, car, Furniture and Intangible assets Like Goodwill, Patents.
The Accounting rule for Real Account is
Debit What Comes In and Credit What Goes Out
Personal Accounts : All Accounts which can be attached to an individual or

Organization.
Accounting Rule for Personal Account is
Credit the Benefit Giver and Debit the Benefit Receiver
Nominal Accounts: All Income, Expense, Profit, Losses accounts are

Nominal Account.
Debit All Losses and Expenses and Credit all Incomes and Profits
Journal entries
Journals are the first book where transactions are recorded on
daily basis .After identifying an events or a transactions whether
they fall in real , nominal or personal category of accounting ,
we record the transaction in the journal.
Format of journal entry
Date
Particulars
LF No. Amt. (Dr.) Amt. (Cr.)
Cash a/c
Dr.
To, Xs capital a/c
Problem
Bharat Gupta promotes Bharat Traders , his
proprietary firm , to start the business of trading
in product x on 1st April 2008. He hires an office
at A-12 Agrawal complex , Vikas Marg Delhi
@2500 per month . The following are the detail
of the transactions entered in to the firm during
the month of April . Pass necessary entries
April 1
received cash from Bharat Gupta toward

his capital
1, 50,000
opened a current a/c with SBI

1, 35000
Issued cheque for office rent for April
2500
Purchased one scooter from Ramjet automobiles
on credit .
31500
1
Paid cheque toward down payment for scooter , balance loan
against the security of scooter payable in 12 monthly EMIs starting from May
1st with interest @ 12 % p/.a
1
1
1
2
2
5
8
10
12
Purchased office furniture for cash

Purchased office equipment and paid cheque
Purchased 45 units of product x issued cheque
Sold 10 units of product x received cheque and
deposited in SBI
Cheque issue for advertisement in local daily
DAILY TIMES
Purchased 75 units of x from ABC & co. on 15
days credit
7500
8500
11,500
45000
12500
2200
75750
16
Sold 25 units of x to RIL & co. on
credit of one week 31875

19
Sold 5 units of x for cash
6425

23
Received cheque from RIL &co.
31875

27
issued cheque to ABC& co. 75750

28
Purchased 30 units of x from
ABC & co. of 15 days credit
30450

28
sold 20 units of x to RIL & co.
on credit of on week
25600

30
salary paid
3500

30
issued cheque to Bharat Gupta
for his personal use
4000

30
cash paid for telephone charges
650

30
cash paid towards petrol
consumed
by the scooter 550
Journal entries
Date
Particulars
April
1
Cash A/c
Dr.
To Bharat Guptas capital a/c
(Received cash from Bharat Gupta )
April
1
SBI current A/c ( or bank a/c)

To cash A/c
(open a current a/c with SBI )
Dr.
LF
No.
001
002
Amt (dr.)
002
003
1, 35,000
Amt( Cr.)
1,50,000
1,50,000
1,35,000
April 1 Office rent a/c

To SBI current a/c
Dr.
April 1 Scooter a/c

Dr.
To Ramjet Automobiles a/c
004 2,500
003
2,500
31,500
005
006
006 7,500
003
31500
Ramjet Automobiles
April 1
To SBI current A/c
Dr.
April 2 Furniture A/c

To Cash A/c
Dr.
April 2 Office equipment

To SBI current A/c
Dr.
008 11, 500

003
11500
April 5 Purchases A/c

To SBI Current A/c
Dr,
009 45000
003
007 8500
001
7500
8500
45000
April
8
SBI current a/c

To Sales A/C
Dr,
April
10
Advertisement and publicity a/c

To SBI Current a/c
Dr,
April
12
April
16
April
19
April
23
Purchases Ac/
To ABC & Co. A/c
Dr.
RIL & Co. A/c

To sales A/c
Dr.
Cash a/c
To sales A/c
Dr.
SBI current a/c

To RIL & co. A/c
Dr.
003
010
12500
011
003
2200
009
012
75750
013
010
31875
001
010
6425
003
013
31875
12500
2200
75750
31875
6425
31875
April ABC & Co. a/c

27
To SBI Current A/c
Dr.
April Purchase A/c

28
To ABC & Co. a/c
Dr.
April RIL & Co. a/c

28
To Sales
Dr.
April Salaries a/c

30
To cash
Dr.
April
30
Bharat Guptas Drawings a/c
To SBI Current a/c
Dr.
012
003
75750
009
012
30450
013
010
25600
014
001
3500
015
003
4000
75750
30450
25600
3500
4000
April 30
April 30
Telephone Expense a/c

To cash
Dr.
Vehicle Expenses a/c

To cash
Dr,
016 650
00
650
017 550
001
550
Ledger
The process is known as posting the accounts
from journal to ledger. It consist of 8 columns
namely date, particulars ,J.F. No. , Amount Dr,
then again date , particulars , J.F.No. amount
Cr.
Format of ledger
Dr.
Date Particulars J.F.

No.
Cr.
Amount Date Particulars J.F.

(Dr.)
No.
Amount
(Cr)
Cash a/c (for the month of

April )
Dr.
Date Particulars
April To Bharat
1
Guptas
capital
April To Sales
13
J.F. Amoun Date Particulars J.F.

No. t (Dr.)
No.
April By SBI
001 150000
003 6425
current a/c
By furniture
1
2 By salaries
30 Telephone
By vehicle
30
expenses
30
156425
May
1st
To balance
b/d
Cr.
8225
bal c/d
001
002
004
004
005
Amount
(Cr)
135000
8500
3500
650
550
8225
156425
SBI bank current a/c
Dr.
Date Particulars
To cash
To Sales
To RIL and
co.
J.
F.
Amount Dat Particulars

(Dr.)
e
135000
12500
31875
By Office rent
By Ramjeet
auto mobile
By office
equipment
By Purchases
By
Advertising
By ABC and
co.
By Bharat
Guptas
drawings
bal c/d
179375
Cr.
J.
F.
Amount
(Cr)
2500
7500
11500
45000
2200
75750
4000
30925
179375
Office rent A/c

for April
Dr.
Dat
e
Particulars J.F Amou Dat

.
nt
e
(Dr.)
To By SBI
current a/c
2500
2500
Cr.
Particular J.F. Amount

s
No.
(Cr)
By
Balance
c/d
2500
2500
Subsidiary books
Subsidiary books are those books of original entries
where all transactions of similar nature are recorded .In a
big organization recording all transactions in the journal
on daily basis will be difficult, therefore it is avoided by
subdividing the journal into various subsidiary books .
Following are different subsidiary books
Purchase day book

Sales day book
Purchase return day book
Sales return day book
Bills receivable book
bills payable book
Cash book
Trial balance
It is made at the end of the period . It is three
column statement
Format of trial balance

Accounts Head
L.F.
Total
Amounts
(Dr.)
Amounts
(Cr.)
Rectification of errors
The accuracy of the trial balance determines the
accuracy of final accounts .but sometimes there
is possibility of committing error. Accounting
errors are the errors committed by persons
responsible for recording and maintaining
accounts of a business firm in the course of
accounting process.
CLASSIFICATION OF ACCOUNTING
ERRORS
Various accounting errors can be classified as
follows :
(a) Errors of omission
(b) Errors of commission
(c) Errors of principle
(d) Compensating errors
(a) Errors of omission

As a rule, a transaction is first recorded in books of
accounts. However, accountant may not record it at all
or record it partially. It is called an error of omission.
For example, goods purchased on credit are not
recorded in Purchases Book. In this case it is a
complete omission. Therefore, both debit and credit
are affected by the same amount. Therefore, it does
not affect the Trial Balance.
Errors of commission
When the transaction has been recorded but an error is
committed in the process of recording, it is called an error of
commission. Error of commission can be of the following types:
(i) Errors committed while recording a transaction in the Special
Purpose books. It may be :
Recording in the wrong book for example purchase of goods
from Rakesh on credit is recorded in the Sales Book and not in
the Purchases Book.
Recording in the book correctly but wrong amount is written.
For example, goods sold to Shalini of Rs.4200 was recorded in
the Sales Book as Rs.2400
Error of Principle
Items of income and expenditure are divided into capital
and revenue categories. This is the basic principle of
accounting that the capital income and capital expenditure
should be recorded as capital item and revenue income
and revenue expenditure should be recorded as revenue
item. For example, Rs. 5000 spent on the repairs of
building is debited to Building A/c while it should have
been debited to Repair to Building A/c. It is a case of error
of principle because expenditure on repairs of building is a
revenue expenditure, while it has been debited to Building
A/c taking it as an item of capital expenditure.
Error of compensation
As the name indicates , compensating errors
are those which compensates each other e.g. a
sale of rs. 500 to ram is debited by rs. 50 while
sale of rs 50 is debited by rs. 500 .
There may be two types of accounting errors

(i) That do not affect the agreement of Trial-The errors of omission
and errors of compensating nature does not affect the trial
balance .
(ii) That cause the disagreement of trial balance,-such errors are
easy to be located , they are caught at early stage.
Suspense account
The accountant should take corrective steps to
locate the differences in the total of trial balance
,if he is not in the position to locate the
difference then in such case a suspense
account is opened .
Bank Reconciliation Statement

The bank reconciliation statement is a statement
Prepared to reconcile and explain the cause of
disagreement between the balance as per cash
book and as the same as per pass book or bank
statement as on particular date.
This statement is no part of book keeping system
of the firm.it is a memorandum reconciling the
two balances, drawn up by way of check to
establish the accuracy of the two balance.
Objectives of Reconciliation
To ascertain that all amounts deposited are properly

credited by the bank.
To make certain that opening and closing balances
carried by the bank are correctly computed.
To verify periodically the accuracy of the firms own
computation of bank balance.
Reasons for differences between the cash

book balance and the bank statement
balance
1. Uncredited items
They are deposits paid into the bank. These items
occurred too close to the cut-off date of the bank
statement and so do not appear on the statement.
They will appear on the next statement.
2. Unpresented cheques
They are cheques issued by the firm that have not
yet been presented to its bank for payment.
3. They are payments made directly to the bank.

4. Errors-Errors in debit or credit in the books
5. Bank charges
They are charges made by the bank to the
company for banking services used.
6. Interest allowed by the bank

They are interest received for deposits or fixed
deposits.
Methods For Preparing B.R.S
Addition And Subtraction Method

Debit And Credit Method
Format Of The Addition &Subtraction Method
Explanations:
A credit entry in the cash book decreases the cash
book balance .If there is no corresponding debit entry
in the pass book balance. This will make the pass
book balance more than the cash book balance.
Hence the amount credited in the cash book should be
added to the Cash.B.B.
A credit entry in the pass book increases the pass if
there is no corresponding debit entry. Hence the
amount credit in the pass book should be added to
equalize the balance.
Explanations:
A debit entry in the cash book increases the cash book
balance. If there is no corresponding credit entry.
Hence the amount debited in the pass book should be
subtracted from the cash book balance .
A debit entry in the pass book decreases the pass
book balance. If there is no corresponding credit entry
in the pass book. Hence, the amount debited in the
pass book should be subtracted from the ash book
balance.
Debit And Credit Method

Rules for entering Dr & Cr method are:
1. Write the balance as per the cash book/pass book in
the appropriate column i.e., debit the balance in the
debit column and credit the balance in the credit
column.
2. Write in the debit column:
Items not debited or debited short either in cash
book or in pass book
Wrong or excess credit either in cash book or in
pass book.
Continued..
3. Write in the credit column:
Items not credited or short credited in cash book or

in pass book
Wrong or excess debits either in cash book or in
pass book.
(Add both the column and put the difference
between the two columns in the column with the
lesser amount, so as to make the columns agree.
The difference represents the bank balance
Format Of The Debit & Credit Method
Problem -BRS
On 31st Aug Mr. Rams cash book balance shows bank
balance Rs.1490 where as bank passbook shows Rs.
1255, on scrutiny he finds the following
He had deposited a cheque of Rs. 850 but not had yet
been cleared
He had issued a cheque for Rs. 640 but
presented on15th in bank
Rs. 25 was credited by bank on account of interest .
Bank had charged Rs. 50 for providing fund transfer
facility
Prepare BRS
Capital and revenue item

Capital expenditure vs. revenue
expenditure
Capital income vs. revenue income
Final accounts of sole trader

There is no given format for final accounts
for the sole trader , but broadly the
statements to be prepared are as follows
Manufacturing
Trading
Profit and loss a/c
Balance sheet
Manufacturing Account
It shows the production cost of goods

completed during the accounting period.
1.
2.
3.
4.
5.
6.
Direct materials
Direct labour
Direct expenses
Factory overhead expenses
Work in progress
Manufacturing cost (COSG)
Format of manufacturing account

Particulars
To opening stock
Raw material
WIP
To purchases
To wages
To all factory exp.
To repair to plant and
factory building
To Deprecation of Plant
and building
Total
Amount
(Dr.)
---------------------------------------
Particulars
By closing stock
Raw material
WIP
By COGS to be
transferred to P/L a/c
(Balancing figure)
Amount
(Cr.)
-------------------
Format of
Trading account for the year ended 31st Dec 2009
Particulars
To opening stock
Finished goods
To purchases xxxxx
Less Returns xxxx
To Direct Expenses
To Gross profit
transferred to P/L
account ( Balancing
figure )
Total
Amount
(Dr.)
Xxxxxx
Xxxxxx
Xxxxxx
Xxxxxx
xxxxxx
Particulars
Amount
( Cr.)
By sales
xxxxx
Less sales return xxxx Xxxxxxx
By closing stock
xxxxxxx
By Goss loss
Format of profit and loss account

Profit and loss account for the year ended 31st Dec 2009
Particulars
Amount
(Dr.)
To Gross loss ( transferred from

trading account )
To rent
To salary
;Commission
;Deprecation
;Dividend
;Bad debts
To Interest
To Insurance
To Printing
To Stationary
;Postage
;Discount allowed
;Advertising esp.
To Net profit
Total
Particulars
By Gross profit (transferred from
trading account )
By Dividend recd.
BY Interest recd.
By Discount recd.
By Commission earned
By Net loss
Amount
( Cr.)
Format of balance sheet
EXERCISE
1. The following figures relating to the year 2008
have been taken from the books of Chibwe
Jackson, a manufacturer of mealie meal.
Stocks at 1/01/08
Raw materials
285 000
Work-in-progress
243 100
Purchases of R Materials
467 000
EXERCISE
Carriage on Raw Materials
6 400
Direct factory wages
396 000
Factory power, light & heating
163 000
Depreciation of plant & machine 38 000
Warehouse charges & expenses 45 000
Royalties
150 000
General Factory expenses
38 000
EXERCISE
Stocks at 31/12/08
Raw Materials
268 000
Work-in-progress
274 000
REQUIRED
Prepare the manufacturing account as at
31/12/08
Assignments for journal, ledger, trial

balance
Journalize the following transactions , prepare ledger and trial

balance too.
Jan 1st Vicky stared business with a
Amount
cash of Rs
100000
3
Purchased goods from Ajit for cash
30000
6
Cash sales
2000
8
Good sold to Ram on credit
6000
10
Purchased goods on credit from Anil
10000
15
Received from Shankar in full settlement
5900
20
Paid to Anil
5000
24
Purchased furniture for office use
4000
31
Paid shop rant
2000
31
Paid salary
3000
Assignments on BRS
Prepare BRS Item 1.The bank statement for August 2009 shows an ending
balance of 3,490.
Item 2.On August 31 the bank statement shows charges of
35 for the service charge for maintaining the checking
account.
Item 3.On August 28 the bank statement shows a return item
of 100 plus a related bank fee of 10. The return item is a
customer's check that was returned because of insufficient
funds. The check was also marked "do not redeposit.
Item 4.The bank statement shows a charge of 80 for check
printing on August 20.
Item 5.The bank statement shows that 8 was added to the
checking account on August 31 for interest earned by the
company during the month of August.
BRS
Item 6. The bank statement shows that a note receivable of 1,000

was collected by the bank on August 29 and was deposited into
the company's account. On the same day, the bank withdrew 40
from the company's account as a fee for collecting the note
receivable.
Item 7. The company's Cash account at the end of August shows a
balance of 967.
Item 8. During the month of August the company wrote checks
totaling more than 50,000. As of August 31st, 3,021 of the
checks written in August had not yet cleared the bank and 200 of
checks written in June had not yet cleared the bank
.Item 9. The 1,450 of cash received by the company on August 31
was recorded on the company's books as of August 31.
However, the 1,450 of cash receipts was deposited at the bank
on the morning of September 1
.Item 10. On August 29 the company's Cash account shows cash
sales of 145. The bank statement shows the amount deposited
was actually 154. The company reviewed the transactions and
found
that 154 was the correct amount.
Assignments for final accounts

No.1
State how the following must be dealt with the final accounts of a
firm for the year ended on 31 Dec. 1999, by giving reasons in
brief Advertising expenses of Rs. 10000 paid on 31/12/1998 , the
advertisement in respect of which has appeared in the
magazines only in January , 1999
Cost of temporary pandal erected for an exhibition on 1/7/1998 ,
the exhibition being expected to be over by June 1999 Rs.
17000
Cost of a second hand scooter purchased on 1.10.88 for Rs.
2500 which was totally destroyed in an accident on 31 /11/ 1998
, the insurance company is paying Rs. 1000 in full settlement in
Jan 1999
Petrol expenses of Rs. 420 paid for the car of one of the
partners for an official visit , the car not being an asset of the
firm
Hire charges of Rs. 1000 for a compressor , when the firms
compressor was under break down
Assignments for final accounts

No. 2A firm had the following balances on1st Jan 1998
Provision for bad and doubtful debts
2,500
Provision for discount on debtors 1,200
Provision for discount on creditors
1,000
During the year bad debts amounted to Rs. 2,000, discounts allowed were
Rs 100 and Discount received were Rs, 200. During 1999 bad debts
amounting to Rs. 1000 were written off, while discount allowed and
received were Rs. 2000 and 500 respectively.
Total debtors on Dec 31st 1998 were Rs. 48, 000 before writing off bad
debts, but after allowing discounts. On Dec 31st 1999 the amount was
Rs. 19000 after writing off the bad debts but before allowing for
discount. Total creditors on these two dates were Rs. 20,000 and 25,000
respectively
It is the firms policy to maintain a provision for 5% against bad debts and
2% for discount on debtors and a provision for 3% for discount on
creditors
Show account for provision for debtors and provision for creditors for the
year 1998 and 1999
Thank You
Please forward your query
To:asrivastava5@amity.edu.
CC:
manoj.amity@panafnet.com
75

FA Session 1

Hochgeladen von

Dokumentinformationen

Copyright

Verfügbare Formate

Dieses Dokument teilen

Dokument teilen oder einbetten

Freigabeoptionen

Stufen Sie dieses Dokument als nützlich ein?

Sind diese Inhalte unangemessen?

Copyright:

Verfügbare Formate

FA Session 1

Hochgeladen von

Copyright:

Verfügbare Formate

PAN African eNetwork Project

Points to discuss Accounting concepts and conventions ,

Copyright Amity University

Convention of Disclosure:-The disclosure of all significant information

Convention of Materiality:-It refers to the relative importance of an item

Convention of Consistency: This convention means that accounting

Convention of Conservatism:-This convention means a caution

Copyright Amity University

Going Concern-Accountants assume, unless there

Copyright Amity University

Copyright Amity University

Requirements of companies act

AS 16: Borrowing Cost.

AS 25: Interim Financial Reporting.

Directives of regulatory bodies like

A copy of full accounts to each shareholder

Copyright Amity University

Copyright Amity University

Copyright Amity University

Double entry system

The double-entry accounting system records financial transactions in

Copyright Amity University

Golden rules of accounting

Personal Accounts : All Accounts which can be attached to an individual or

Nominal Accounts: All Income, Expense, Profit, Losses accounts are

Copyright Amity University

Copyright Amity University

received cash from Bharat Gupta toward

opened a current a/c with SBI

Purchased office furniture for cash

Copyright Amity University

SBI current A/c ( or bank a/c)

Copyright Amity University

April 1 Office rent a/c

April 1 Scooter a/c

April 2 Furniture A/c

April 2 Office equipment

008 11, 500

April 5 Purchases A/c

Copyright Amity University

SBI current a/c

Advertisement and publicity a/c

RIL & Co. A/c

SBI current a/c

Copyright Amity University

April ABC & Co. a/c

April Purchase A/c

April RIL & Co. a/c

April Salaries a/c

Telephone Expense a/c

Vehicle Expenses a/c

Copyright Amity University

Copyright Amity University

Date Particulars J.F.

Copyright Amity University

Amount Date Particulars J.F.

Cash a/c (for the month of

J.F. Amoun Date Particulars J.F.

Copyright Amity University

SBI bank current a/c

Amount Dat Particulars

Office rent A/c

Particulars J.F Amou Dat

Copyright Amity University