Financial Accounting

Module 1
An Overview

Financial Accounting

An overview, Accounting
concepts,
principles,
accounting
standards.
Ledger
posting,
Trial
Balance.
2

Definition And Meaning Of Accounting

The American Institute of Certified Public

Accountants (1941) defines Accounting is the art of
recording, classifying and summarising in significant
manner and in terms of money, transactions and events
which are in part, at least of a financial character and
interpreting the results thereof.
Accounting As An Information Cycle
Input

Process

Output

Accountancy, Accounting And Book-keeping

IMPORTANCE OF ACCOUNTING
1. Facilitates to replace memory and comply with
legal requirements
2. Facilitates to ascertain net result of operations
and also to know the financial position
3. Facilitates the users to take effective decisions
4. It is helpful in a comparative study
5. It assists the management
6. It facilitates to have control over assets
7. It facilitates the settlement of tax liability
8. It facilitates raising of loans
9. It acts as a legal evidence
10. It facilitates ascertainment of value of business.
5

SCOPE OF ACCOUNTING

Identifying
Measuring
Recording
Classifying
Summarising
Analysing
Interpreting

Communication
6

Accounting Principles

Accounting principles are a body of doctrines

commonly associated with the theory and
procedures and as a guide for selection of
conventions or procedures where alternatives exist.
These principles are classified into two categories:
1. Accounting Concepts
2. Accounting Conventions

TYPES OF ACCOUNTING
Accounting

Financial
Accounting

Cost
Accounting

Management
Accounting

Social
Responsibility
Accounting

ACCOUNTING CONCEPTS
Concept means a general notion, a theory or belief
held by person or group of persons. The term
concepts includes those basic assumptions or
conditions upon which the science of accounting is
based.
1.
2.
3.
4.
5.
6.
7.

Business entity concept

Money measurement concept
Cost concept
Going concern concept
Dual aspect concept
Realisation concept
Accrual concept
9

ACCOUNTING CONVENTIONS

A convention means a custom or an established usage

formed or adopted by an agreement. The term conventions
includes those customs or traditions which guide the
accountant while preparing the accounting statements.
1.
2.
3.
4.

Convention of consistency
Convention of full disclosure
Convention of conservatism
Convention of materiality

10

Accounting Standards
The Accounting standards bring uniformity in the preparation
and presentation of financial statements and aids in
comparison of different financial statements of companies in
the same or different industries.
Procedure for framing Accounting Standards
The International Accounting Standards are issued by the
IASC
These Standards are received by ICAI assigned to ASB
The Accounting standards are issued under the authority of
the council of ICAI.
So far the ASB of ICAI has issued 28 Accounting standards
as shown below:
11

Accounting
Standard
AS-1

Title

Mandatory for
Accounting period
beginning on or after

Disclosure of Accounting Policies

1.4.1991

AS2(Revised)

Valuation of inventories

1.4.1999

AS3(Revised)

Cash Flow Statements

1.4.2001

AS4(Revised)

Contingencies and Events occurring

after Balance Sheet Date

1.4.1995

AS5(Revised)

Net Profit or Loss, prior period items

and changes in Accounting policies

1.4.1996

AS6(Revised)

Depreciation Accounting

1.4.1995

AS7(Revised)

Accounting for construction contracts

1.4.2003

12

AS-8

Accounting for Research and

Development

1.4.1991

AS-9

Revenue Recognition

1.4.1991

AS-10

Accounting of Fixed Assets

1.4.1991

Accounting for the effect of changes in

foreign exchange rates

1.4.1995

AS-12

Accounting for Government Grants

1.4.1994

AS-13

Accounting for Investments

1.4.1995

AS-14

Accounting for Amalgamations

1.4.1994

AS-15

Accounting for retirement benefits in

the financial statements of employers

1.4.1995

AS-16

Borrowing costs

1.4.2000

AS-17

Segment reporting

1.4.2001

AS-11(Revised)

13

AS-18

Related Party Disclosures

1.4.2001

AS-19

Leases

1.4.2001

AS-20

Consolidated Financial Statements

1.4.2001

AS-21

Earnings per share

1.4.2001

AS-22

Accounting for taxes on income

1.4.2001

AS-23

Accounting for investments in consolidated finance

statements

1.4.2002

AS-24

Discounting operations

1.4.2004

AS-25

Interim financial reporting

1.4.2002

AS-26

Intangible assets

1.4.2003

14

AS-27

Financial reporting of interest in joint ventures

1.4.2002

AS-28

Impairment of Assets

1.4.2004

AS-29

Provisions, Contingent Liabilities and

Contingent Assets

1-4-2004

15

USERS OF FINANCIAL STATEMENTS

1.
2.
3.
4.
5.
6.
7.
8.

Creditors (short term & long term)

Investors (present & potential)
Management
Employees
Tax Authorities
Customers
Government and their agencies
Public

16

Double Entry System Of Book-keeping

The main principle involved in Double Entry system is the duality transactions
i.e., for every debit, there is an equal and opposite credit.
Total Debits = Total Credits

Principles Of Double Entry System

Classifications of accounts under double entry system

Traditional classification of Accounts

Personal Accounts
Names of individuals,
firms, companies and
other entities

Real Accounts
Assets And Liabilities

Nominal Accounts
Expenses, losses and
incomes and gains

17

Assets: Resources, things or rights or value owned by a business

Liability: Claims of others against a business / Assets owned by the business to
the
outsiders
Expenses:An expenditure in return for which a benefit is received.
Loss:
An expenditure in return for which no benefit is received.
Income: Refers to the earnings of a business for the expenses incurred
Profit:
Refers to the earnings of a business for no expenses incurred or
proportionally meagre expenses incurred

Rules for debit and credit under traditional classification

Type of Account

Debit

Credit

Personal Account

The receiver

The giver

Real Account

What comes in

What goes out

All expenses and losses

All incomes and gains

Nominal Account

18

ACCOUNTING CYCLE

Final
Accounts

19

Records Maintained By An Organisation

The books of accounts maintained by an organisation may be

classified into two as
a.

Books of Prime / Original Entry

b.

Books of Second entry / Final entry

Books of Prime / Original Entry

1. Journal
2. Cash Book
3. Subsidiary Books

20

JOURNAL / DAY BOOK

Journal is a daily record of each business transaction. It is also called

a day book and it is used for recording all day to day transactions in
the order in which they occur.
Format of a Journal

Dat
e

Particulars

Ledge Debit Credit

Rs.
r Folio Rs.

.
Dr
To.
(Being)

21

CASH

BOOK

Debit: All Cash receipts and Bank receipts and Discount

Allowed
Credit: All Cash payments and Bank payments and Discount
Received.

The cashbook is classified into 4 types viz.,

Single column cash book
Two columnar cash book
Three columnar cash book
Petty cash book
22

Tips to decide
whether a cash
transaction or not

23

In a purchase or a sale:
If there is no mention about the payment
made, No name of the party given, but the
amount is given, then It is a cash transaction
Ex:
If there is the name of the party and no
mention about the payment, then it is a credit
transaction
If name of the party given and payment in
cash or credit then it is a cash transaction.
24

LEDGER
Also called as General Ledger, this is a principal book that
contains all the accounts i.e., accounts of Assets liabilities, capital,
revenue and expenses. The entries from the books of original entry
are transferred to this book. Hence it is also called as a book of final
entry. There are a number of accounts in a general ledger. All
similar
transactions are grouped under one account.
Dr
Cr
Date

Particulars

ToBalanceb/d
(Openingbalance)

Folio

Amount
Rs.

Date

Particulars

Folio

Amount
Rs.

--------

ByBalancec/d
(Closingbalance)

--------

The opening and closing balances will appear only in case of assets,
liabilities and capital accounts but not in case of incomes and
expenditures.
25

Format of a single column cash book

Dr
Date

Cr
Particulars
ToBalanceb/d
(Opening
balance)

L.F.

Amount
Rs.

-------

Date

Particulars

L.F.

Amount
Rs.

ByBalancec/d
(Closing
balance)

-------

26

Illustration:
I.Singlecolumncashbook

2007June
1.Balanceason31/542,000
2.Purchasesmade12,000
3.CashdrawnfromBank5,000
4.Cashpaidtowardssalary8,000
5.PurchasedgoodsfromKishan&co.oncredit8,000
6.Rentpayable5,000
7.CashdepositedintoBank20,000

27

Soln:

Date

Single Column Cash Book

Particulars

1/6/07 To balance b/d

3/6/07 To Bank

LF Amount Date
42,000
5,000

47,000

Particulars

2/6/07 By Purchases
4/6/07 By Salary
7/6/07 By Bank
By balance c/d

LF Amoun
t
12,000
8,000
20,000
7,000

47,000

28

JAN 1 : Opening cash balance Rs 5,000

JAN 4 : Rent paid Rs 2,000
JAN 6 : Interest received Rs 3,000
JAN 15 : Cash purchases Rs 4,000
JAN 25 : Cash sales Rs 8,000
JAN 31 : Salaries paid Rs 2,000
29

Format of a single column cash book

Dr

Cr

Date

Particulars

JAN 1
JAN 2
JAN
25

To
Balance
b/d
To Interest
To Sales

L.F Amoun
.
t
Rs.
5,000
3,000
8,000

----------16,000
-----------

To Balance
b/d

Date

Particulars

JAN 4
JAN
15
JAN
31
JAN
31

By Rent
By Purchase
a/c
By
Salaries
a/c
By
Balance
c/d

L. Amoun
F.
t
Rs.
2,000
4,000
2,000
8,000
----------16,000
-----------

8,000
30

Dr
Date

Format of a double column cash

book
Particulars

To Balance b/d
(Opening
balance)

L.
F

Discoun
t
Rs.

Cash Date
Rs.

------

Particulars

L.
F

Discount
Rs.

Cr
Cash
Rs.

By
Balance
c/d
(Closing
balance)

------

OR
31

Dr
Date

Format of a double column cash

book
Particulars

To
Balance
b/d
(Opening
balance)

L.
F

Discount

Rs.

Bank
Rs.

Date

------

Particulars

L.
F

Discount
Rs.

Cr
Bank
Rs.

By Balance
c/d
(Closing
balance)

------

OR
32

Format of a double column cash

book
Dr
Date

Cr
Particulars

To Balance
b/d
(Opening
balance)

L.
F

Cash
Rs.

Bank
Rs.
------

Date

Particulars

L.
F

Cash
Rs.

Bank
Rs.

By
Balance
c/d
(Closing
balance)

------

33

PROBLEM
Two Columnar Cash Book with discount and cash columns:
2006 October
Opening balance
Paid salary
Purchased goods
Purchases made from Shreya & co.
Cash sales
Sales made to Rajinikanth & co.
To Shreya returned 20% of goods due to damage, paid to 18,000/- in
full Settlement of the account.
Received from Rajinikanth 48,000/- in full settlement after he made
returns 10,000/Deposited into Bank

80,000
10,000
12,000
25,000
1,15,000
60,000

3,000

34

Solution:
Date Particulars
Tobalanceb/d
Tosales
ToRajinikanth
&co.

L Discount
F allowed

Cash

2,000

80,000
1,15,000
48,000

2,000

2,43,000

Date Particulars
BySalary
ByPurchases
ByShreya&
co.
ByBank
Bybalancec/d

L
F

Discount Cash
received

2,000

2,000

10,000
12,000

18,000
3,000
2,00,000
2,43,000

WorkingNote:
Shreya&co.Rajinikanth&co.
Puchases25,000Sales60,000
(-)Returns20%5,000(-)Returns10,000
Payable20,000Receivable50,000
(-)Paid18,000(-)Received48,000
Discountreceived2,000Discountallowed2,000
35

JAN 1 : Cash Balance Rs 5,000

JAN 6 : Sold Goods to Mahesh Rs 4,000
JAN 8 : Purchased Goods from Mukesh Rs 3,000
JAN 15 : Cash Received from Mahesh Rs 3,900 in full
settlement
JAN 20 : Paid to Mukesh Rs 2,850 in full settlement
JAN 25 : Sold Goods to Suresh Rs 3,000
JAN 31 : Received Cash from Suresh Rs 2,900

36

double column cash book

Dr
Dat
e

Cr
Particulars

To
Balance
b/d
To Mahesh
To Suresh

L
.
F

Disco
unt
Rs.

Cash
Rs.

100
100

5,000
3,900
2,900

------200
-------

--------11,800
---------

Dat
e

Particulars

By Mukesh
By Balance
c/d

L.
F

Disco
unt
Rs.

150

Cash
Rs.
2,850
8,950

--------11,800
---------

37

Dr
Date

Format of a three columnar cash

book
Particulars

To
Balance
b/d
(Opening
balance)

L.
F

Disc
ount
Rs.

Cash

Bank
Rs.

------

Date

Particulars

Disc
o-unt
Rs.

Cash
Rs.

Bank
Rs.

By Balance
c/d
(Closing
balance)

O
R

L.
F

Cr

------

38

It is an accounting transaction that involves

both CASH account and BANK account

No posting will be done from the CASH BOOK

to the LEDGER in case of a contra entry

A contra entry is indicated by the letter C

which gives a hint to the ledger keeper that
no posting is required

39

Ex : Cash deposited to bank

Credit side of cash book : Amount will be

entered in cash column against the words By
Bank

Debit side of cash book: Amount will be entered

in bank column against the words To Cash

Ledger folio column : C which represents a

contra entry is entered
40

Ex : Cash withdrawn from bank

Credit side of cash book : Amount will be

entered in bank column against the words By
Cash

Debit side of cash book: Amount will be entered

in cash column against the words To Bank

Ledger folio column : C which represents a

contra entry is entered
41

JAN 1 : Paid into Bank Rs 6,000

JAN 2 : Withdrew for private expenses Rs 1,000
JAN 3 : Withdrew from bank Rs 3,000
JAN 4 : Withdrew from bank for private use Rs 1,500

42

Format of a three columnar cash book

Dr

Cr

D
a
t
e

Particulars

1
3

To Cash a/c
To Bank a/c

L.
F

C
C

Disc
ount
Rs.

Cash

300
0

Bank
Rs.

Dat
e

Particulars

L.
F

600
0

1
2
3
4

By
Bank C
a/c
By
C
Drawings
By Cash a/c
By
Drawings

Disc
ount
Rs.

Cash
Rs.

600
0
100
0

Bank
Rs.

300
0
150
0

43

III. Three Columnar Cash Book

On 1st Jan 2001 Raj Opened a Bank account by depositing 6,000/- in cash.
All remittances are to be paid to the Bank
Date
Jan 2
Jan 5
Jan 7
Jan 10
Jan 12
Jan 15
Jan 20
Jan 27

Particulars
Goods sold to Mohan for cash 9,250/Settled Harishs account of 200/- at a discount of 5%
Received from Shyam a cheque of 725/- discount allowed 25/Purchased Typewriter for 200/- and spent 50/- on its repairs
Shyams cheque was returned as dishonoured
Received a money order for 25/- from Harish
Shyam settled his accounts by means of a cheque for 755/-, 5/for being Interest charge.
Purchased Machinery from Rajeev for 5,000/- and paid him by
means of a Bank draft purchased from a Bank for 5,005/-

44

Solution:
Date Particular
s
1/1
2/1
7/1
15/1
20/1
20/1

L
F

ToCash
c
ToSales
ToShyam
ToHarish
ToShyam
ToIntt
charge

Dis
allowed

25

Cash

9,250

25

Bank Date Particulars

6,000 1/1
5/1
725 10/1
750 10/1
12/1
5 27/1
31/1

25

9,275

7,480

L Dis
F received

ByBank
c
ByHarish
By
Typewriter
ByRepairs
ByShyam
By
Machinery
Bybalance
c/d

10

Cash Bank
6,000
190

200
50
725
5,005
2,835 1,750

10

9,275 7,480

45

It is a cash book in which all the petty cash

expenses incurred daily by an organisation is
recorded. Such as postage, cartage,
stationery, cleaning charges, etc.

46

47

Petty Cash Book

It is a cash book in which all the petty cash expenses

incurred daily by an organisation is recorded.
Dr
Dt

Cr
Particulars

CBF

Total
Rs.

Dt

Particulars

Vr.
No

Postage

Conveyance

Wages

Business
Promotion

Total
Rs.

48

PETTY CASH BOOK

Record the following petty cash book maintained on the

imprest system
1-10-2007
Rs 10000
2-10-2007
Rs 125
3-10-2007
Rs 1200
4-10-2007
Rs 100
5-10-2007
Rs 250
6-10-2007
Rs 4200

cash received from cashier

paid for coffee and tea for staff
travelling expense by the sales manager
subscription for the newspaper
purchase of paper and other stationery
expenses for taking employees for an outing

49

PETTY CASH BOOK

D
t
1
0/
0
7

Partic
ulars

To
cash
from
head
cashier

C
B
F

Total
Rs.

D
t
1
0/
0
7

Particula
rs

Vr
.
N
o

Emplo
yees
welfar
e exp

1000
0

By coffee
& tea

125

By
travelling
exp of
manager

Travel
ling
exp

Newspap
ers &
stationer
y

posta
ge

125

1200

120
0

100

100

By
newspape
r
5

Tota
l
Rs.

250

250
6

By
stationery

By staff

4200
420
0

75

50

Jan 1, cash received from the chief cashier Rs.200

Jan 3, typing papers Rs. 8
Jan 6, office cleaning Rs.4
Jan 8, postage Rs. 2
Jan 10, cartage Rs. 2
Jan 15, postage Rs. 6
Jan 18, ink Rs 3, typing paper Rs. 10
Jan 20, type writer ribbon Rs. 10
Jan 22, telephone charges Rs. 7
Jan 24, office cleaning Rs. 2
Jan 25, nail polish Rs. 27
Jan 27, telegrams Rs. 25
Jan 29, typing paper Rs. 30

51

Dr
Dt

Cr
Parti
cular
s

Jan to
1
cash
From
chief
cashie
r

CB To D
F
tal t
Rs
.

Partic
ulars

Vr.
No

Stat
ione
ry

Posta
ge
char
ges

20
0

Typing
Clean
Post n
off
clean
Cartag
e
Postag
e
Ink,
typing
paper

1,2
3
4,5

3
6
8

1
0
1
5
1
8

2
0

Car
tag
e

4
2

6
7

2
6

Cleanin misc
g
ellan
eous

total

12
4
4

2
6

8,9

13

13

10

10

10

Typ
ribbon

52

Dt

Parti
cular
s

C
B
F

Tot
al
Rs.

D
t

Partic
ulars

2
2

Teleph 11
one
charge
s
12
Cleanin
13
g
Nail
polish
14

2
4
2
5
2
7

Fe
1
Fe
1

To bal
b/d
Cash
from
chief
cashie
r

200
58

142

2
9

Telegra
ms
Typing
paper

Lf bal
c/d

Vr.
No

15

Stat
ione
ry

Posta
ge
char
ges

Car
tag
e

Cleanin misc
g
ellan
eous

2
27

25

27
25

30
61
2

total

30
44
3

2
4

8
5

27
6

142
58
200

53

PURCHASES BOOK
This is a subsidiary book in which all the credit purchases made
by the organisation is recorded. The monthly total from the
purchase book is transferred to the General Ledger to the
Purchases Account.
Date

Purchase
invoice
no.

Name of the supplier

L
F

Details
Rs.

Ps.

Total Amount
Rs.

Ps.

54

PURCHASE RETURNS BOOK

Abookinwhichallthepurchasereturns(returnsoutwards)
arerecorded.
Date

Debit
Note
No.

Name of the supplier

L
F

Details
Rs.

Ps.

Total Amount
Rs.

Ps.

55

SALES BOOK

The credit sales are recorded in this book. The

monthly totals are transferred to the sales account in the General
Ledger.
Date

Sales
invoice
no.

Name of the purchaser

L
F

Details
Rs.

Ps.

Total Amount
Rs.

Ps.

56

SALES RETURNS BOOK

A book of account in which all the sales returns

(returnsinwards)madebytheorganisationarerecorded.
Date

Credit
Note
No.

Name of the Purchaser

L
F

Details
Rs.

Ps.

Total Amount
Rs.

Ps.

57

Enter the following in subsidiary books.

Jan 1: Purchased goods from Sudarshan paid by cheque
Rs.15000
3: Sold goods to Bimal Rs.11000.
6: Purchased goods from Satish & co Rs. 12000.
Returned goods to him Rs. 700 .
8: Purchased stock worth Rs.42000 from Reliance
industries of which only 40% is on cash basis.
10: Sold goods worth Rs.38000 to Karimlal & co allows
him a trade discount of 1% .
11: Murugeshan & co supplies stock worth Rs. 64000
and allowed us a trade discount of 1.5% .
12: Returns out of the previous 2 transactions amount
to 5% each.

58

Date

Purchas
e Invoice
No.

Name of the supplier

LF

Amount
(Rs)

Total (Rs)
Amount

Jan6

Satish&Co

21 12000

12000

Jan8

Reliance&Co.

23 25200

25200

Jan11

Murugesh&Co.

25 63040

63040

100240 100240

59

Date

Debit
Note No.

Name of the Party

LF

Amount
(Rs)

Total (Rs)
Amount

Jan6

Satish&Co

21 700

700

Jan
12

Murugesh&Co.

25 3152

3152

3852

3852

60

Date

Invoice
No.

Name of the Party

LF

Amount
(Rs)

Total (Rs)
Amount

Jan3

Bimal&Co.

32 11000

11000

Jan10

Karimlal&Co.(-1%)

35 37620

37620

48620

48620

61

Date

Jan
12

Credit
Note No.

Name of the Party

Karimlal&Co.(-1%)

LF

Amount
(Rs)

Total (Rs)
Amount

35 1881

1881

1881

1881

62

JOURNAL PROPER

Those journal entries that cannot be recorded in any

of the subsidiary books are recorded in the journal proper.
Thefollowingarerecordedinthejournalproper:

a.

OpeningEntries

b.

ClosingEntries

c.

TransferEntries

d.

AdjustmentEntries

e.

RectificationEntries
63

A trail balance may be simply

defined as a statement prepared by
putting all debits on one side and all
credits on the other side to check the
arithmetical accuracy of the ledger
balances.
In otherwords,the trail balance is a
connecting link between the ledger
accounts and final accounts.

64

TRIAL BALANCE
It is a statement that shows the balance in all the accounts in a
ledger.Itcontainsallthedebitandcreditbalances.Atrialbalanceisalist
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
arithmeticallycorrectornot.
Sl.
No.

Head of Account

LF

Debit Balance
Rs.

Ps.

Credit Balance
Rs.

Ps.

65

basically trial balance is a statement or

list.
It contains all the debit and credit
balances.
The trail balance is the only base for the
preparation of final accounts.
Trail balance can be prepared at any time
and not necessarily at the end of a
calendar or accounting year.

66

Before preparing the final accounts, the

accountant should prove/satisfy the
arithmetical accuracy and correctness on
which the entire final accounts were
prepared. The net profit/balance sheet
does not resemble true and fair picture
which which was prepared from a trail
balance which lacks the quality of
arithmetical accuracy.

67

To examine the implementation of a

double entry book keeping and its
principles.
To know the arithmetical accuracy.
To find the profit of the firm.
To find out the errors and mistakes in
passing journal entries and their posting.
To facilitate the process of the
preparation of final accounts.
68

Debit side
Assets accounts: land, building,
machinery, furniture, debtors, stock, bills
receivables etc.
Accounts relating to expenses and losses:
salaries, wages, rent, carriage, discount,
bad debts, depreciation, purchases,
return inward.

69

Credit side
Liabilities accounts: creditors, loan,
mortgage, bills payable, bank overdraft,
reserves and funds.
Incomes and gain account: interest
realised, rent collected, discount
received, sales account, returns outward.
Capital Account

70

Trail balance can be prepared in two

methods. They are total balances method
and net balances method.
Total balances method: in this method,
debit as well as credit sides of all
accounts will be summed up and with this
totals the trail balance will be prepared.
This method is called gross trail balance
method. This method is now out of use.

71

Net balances method: this is the most

commonly used trail balance. In this
method the net balance of the accounts
were ascertained on a particular date and
arranged in the proforma of trail balance.
If these totals of debit and credit agree,
we can say the trail balance has
arithmetical accuracy.

72

Example:
Prepare a trial balance from the following balances of the year
2002. (Dec 05/ Jan 06- 10M)

Capital
28,000
Stock of goods
4000
Motor car
8000
Discount received
400
Bad-debts
400
Sales
40,000
Cash-at-bank
4000
Return inwards
2000
Cash in hand
600
Rent
3500
Discount allowed
300
Carriage
1500

Purchases 15,000
plant
15,000
furniture 5000
wages
8200
creditors 6500
salaries
2800
commission (cr) 600
return outwards 1000
debtors
5600
general expenses
300
interest received 200
advertisement 500

73

SOLUTION: DEBIT(ASSETS & EXPENSES) CREDIT

(LIABILITIES & REVENUES)

dt

Nameoftheaccount

LF

Debit

Capital

Stockofgoods

4000

Motorcar

8000

Discountreceived

Bad-debts

Sales

Cash-at-bank

4000

Returninwards

2000

Cashinhand

600

10

Rent

3500

11

Discountallowed

300

credit
28,000

400
400
40,000

74

dt

Nameoftheaccount

LF

Debit

credit

12

Carriage

1500

13

Purchases

15,000

14

plant

15,000

15

furniture

5000

16

wages

8200

17

creditors

18

salaries

19

commission(cr)

600

20

returnoutwards

1000

21

debtors

5600

22

generalexpenses

300

6500
2800

75

dt

Nameoftheaccount

LF Debit

23

Interestreceived

24

Advertisement

500

TOTAL

76,700

credit
200

76,700

76

77