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Journal:

Book of original entry

Records all daily transactions in chronological order
Date 1 Particulars 2 L.F Number 3 Debit 4 Credit 5

1. 2. 3. 4.

Identify business transaction Identify at least two important accounts Identify the nature of accounts Apply the rule of Debit and Credit

Transaction Rent paid Salaries paid Interest paid Dividend received

Accounts involved Rent A/c Cash A/c Salaries A/c Cash A/c Interest A/c Cash A/c Cash A/c Dividend A/c

Nature of Accounts Debit/Credit Nominal Real Nominal Real Nominal Real Real Nominal Debit Credit Debit Credit Debit Credit Debit Credit

Machinery purchased
Paid to Suresh Received from Mohan

Machinery A/c Cash A/c

Suresh A/c Cash A/c Cash A/c Mohan A/c

Real Real
Personal Real Real Personal

Debit Credit
Debit Credit Debit Credit

How to write Journal entry

Date 2011 July1 2011 July 2 Particulars Rent A/c To Cash A/c (Being rent paid) Machinery A/c To Cash A/c (Being machinery purchased for cash) Dr L.F.No 2 1 3 1 Debit Amount 1000 1000 20000 20000 Credit Amount

Dr

2011 July 6 2011 July 7

Cash A/c Dr To Dividends A/c (Being dividends received) Cash A/c Dr To Mohan A/c (Being cash received from Mohan

1 4 1 5

500 500 950

950

 Many transactions on the same date relating to one particular account or nature may be recorded by means of a single journal entry
Date Particulars Cash A/c Dr Land A/c Dr Furniture A/c Dr Stock A/C Dr To Creditors A/c To Bank O.D A/c To Capital A/c (Being commencement of business by taking over a running business) L.F.No Debit Amount 2000 4000 1000 2000 1000 2000 6000 Credit Amount

Date

Particulars Cash A/c Dr Land A/c Dr Furniture A/c Dr Stock A/C Dr Sundry Debtors Dr To Creditors A/c To Bank O.D A/c To Capital A/c (Being balances brought forward from the last year)

L.F.No

Debit Amount Credit Amount 2000 4000 1000 2000 5000

1000 2000 11000

 Ledger is a book which contains various account (Real, Personal, Nominal) Posting: Transferring the debits and credits items from journal to respective accounts in the ledger

Dr Date Particular Amount Date Particulars

Cr Amount

 Separate accounts should be opened for posting transactions relating to different accounts in journal The A/c which has debited in journal should also be debited in the ledger by giving reference of other A/c which has credited in the journal The A/c which has been credited in journal should also be credited in the ledger by giving reference of other A/c which has credited in the journal.
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Dr Date
1-7-10 4-7-10 7-7-10

Cr Particulars To Capital To Suresh To Raju Amount Date 10,000 3,000 1,000 Particulars Amount 1,000 1,000 12000

2-7-10 By Mohan 5-7-10 By Ramesh 31-7-10 By Balance C/d

14000
1-8-10

14000

To Balance B/d

12000

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 Trial Balance is a statement containing the various ledger balances on a particular date.
Trial Balance as on 31st January 2011 Particular Cash Account Capital Account Purchases Account Mohan Account 4,000 2,000 Debit Amount 12,000 10,000 Credit Amount

Sales Account 16,000

4,000 16,000
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 Objectives of preparing a Trial Balance

1. check the arithmetical accuracy. 2. Basis for financial statement. 3. Summarized ledger.

Methods of preparing Trial Balance

Total Method Balance Method Total and Balance Method

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