SEMINAR ON ACCOUNTING

CYCLE

Presented By: Sahil Bhutani (BBA-I)

ACCOUNTING CYCLE

JOURNALIn accounting, a first recording of financial transactions as they occur in time, so that they can then be used for future reconciling and transfer to other official accounting records such as the general ledger.

LEDGERLEDGER is a book of accounts in which data from transactions recorded in journals are posted and thereby classified and summarized.

TRIAL BALANCE

A bookkeeping worksheet in which the balances of all ledgers are compiled into debit and credit columns.

TRADING ACCOUNT

It is the first part or stage in determination of the result of the business and is concerned with finding out the gross profit or gross loss by taking into account the various trading activities.

PROFIT AND LOSS ACCOUNT For earning net profit, a businessman has to incur many more expenses in addition to the direct expenses. These expenses are not taken to trading account.

For this purpose, a profit and loss account is prepared separately.

BALANCE SHEET

A financial statement that summarizes a company's assets, liabilities and shareholders' equity at a specific point of time.

During January 2010 Ram transacted the following business:

Commenced business with cash 20,000 Purchased goods on credit from Nadu 1,00,000 Purchased goods for cash 4,000 Paid Gopal an advance for goods ordered 10,000 Received cash from Maruti as advance for goods ordered

by him 6,000 Purchased furniture, office use for cash 2,000 Paid Rent 1,000

During January 2010 Ram transacted the following business:

Received commission (in cash) 1,600

Goods returned to Nadu 2,000

Goods sold to Kishore 10,000 Paid for postage and telegrams

200 Goods returned by Kishore 2,000 Paid for stationery

1,200 Paid into Bank 5,000

During January 2010 Ram transacted the following business: Goods sold for cash 27,750 Bought goods for cash 3,000 Paid salaries by cheque

3,200 Paid rent 1,000 Drew cash for personal use 4,000 Deposited cash into Bank

12,000

Journal Entries in the books of Ram

Date Particulars L.F.

Amount Dr.

Amount Cr.

Cash A/c Dr. To Ram’s Capital A/c (Being the cash brought into business as capital)

20,00020,000

Purchase A/c Dr. To Nandu’s A/c(Being the goods purchased on credit)

1,00,0001,00,000

Purchases A/c Dr. To Cash A/c(Being the goods purchased for cash)

4,0004,000

Gopal A/c Dr. To Cash A/c (Being the amount paid to Gopal)

10,00010,000

Journal Entries in the books of Ram

Date Particulars L.F.

Amount Dr.

Amount Cr.

Cash A/c Dr. To Maruti A/c(Being the cash received from Maruti)

6,0006,000

Furniture A/c Dr. To Cash A/c(Being the furniture purchased for office use for cash)

2,0002,000

Rent A/c Dr. To Cash A/c(Being the wages paid)

1,0001,000

Cash A/c Dr. To Commission Received A/c (Being the commission received)

1,6001,600

Journal Entries in the books of Ram

Date Particulars L.F.

Amount Dr.

Amount Cr.

Nandu A/c Dr. To Purchase return A/c (Being goods returned to Nandu)

2,0002,000

Kishore A/c Dr. To Sales A/c(Being goods sold to Kamal on credit)

10,00010,000

Postages & Telegrams A/c Dr. To Cash A/c(Being the amount paid for postages & Telegrams)

200200

Sales returns A/c Dr. To Kishore’s A/c(Being the goods returned by Kamal)

2,0002,000

Journal Entries in the books of Ram

Date Particulars L.F.

Amount Dr.

Amount Cr.

Stationery A/c Dr. To Cash A/c(Being the amount paid for stationery)

1,2001,200

Bank A/c Dr. To Cash A/c(Being the amount deposited into Bank)

5,0005,000

Cash A/c Dr. To Sales A/c(Being the goods sold for cash)

27,75027,750

Purchases A/c Dr. To Cash A/c(Being the goods purchased for cash)

3,0003,000

Journal Entries in the books of Ram

Date Particulars L.F.

Amount Dr.

Amount Cr.

Salaries A/c Dr. To Bank A/c(Being the amount paid as salaries)

3,2003,200

Rent A/c Dr. To Cash A/c(Being the rent paid)

1,0001,000

Ram Drawings A/c Dr. To Cash A/c(Being the cash drawn for personal use)

4,0004,000

Bank A/c Dr. To Cash A/c(Being cash deposited)

12,00012,000

Ledger Postings

Dr. Cr.Date ParticularsJF

NoAmountRs.

Date Particulars JFNo

AmountRs.

  To Balance c/d   20,000  By Cash A/c   20,000

               

               

  Total   20,000  Total   20,000

Ram’s Capital A/c

Ledger PostingsDr. Cr.Date ParticularsJF

NoAmountRs.

Date Particulars JFNo

AmountRs.

  To Capital A/c   20,000  By Purchases A/c   4,000  To Maruti's A/c   6,000  By Gopal A/c   10,000  To Commission A/c   1,600  By Furniture A/c   2,000  To Sales A/c   27,750  By Rent A/c   1,000          By Postage A/c   200          By Stationery A/c   1,200          By Bank A/c   5,000          By Purchases A/c   3,000          By Rent A/c   1,000          By Bank A/c   12,000          By Drawings A/c   4,000          By Balance c/d   11,950

Total 55,350 Total 55,350

Cash A/c

Ledger Postings

Dr. Cr.Date ParticularsJF

NoAmountRs.

Date Particulars JFNo

AmountRs.

  To Cash A/c   5,000  By Salaries A/c   3,200

  To Cash A/c   12,000  By Balance c/d   13,800                                    17,000      17,000

Bank A/c

Ledger Postings

Dr. Cr.Date ParticularsJF

NoAmountRs.

Date Particulars JFNo

AmountRs.

  To Nandu   1,00,000  By Balance c/d   1,07,000

   To Cash A/c     4,000       

   To Cash A/c     3,000       

  Total   1,07,000  Total   1,07,000

Purchases A/c

Ledger Postings

Dr. Cr.Date ParticularsJF

NoAmountRs.

Date Particulars JFNo

AmountRs.

 To Purchase Returns A/c    2,000 

By Purchases A/c    1,00,000

   To Balance c/d   98,000       

               

  Total   1,00,000  Total   1,00,000

Nandu A/c

Ledger Postings

Dr. Cr.Date ParticularsJF

NoAmountRs.

Date Particulars JFNo

AmountRs.

  To Balance c/d   37,750  By Kishore’s A/c   10,000

         By Cash A/c    27,750

               

  Total   37,750  Total   37,750

Sales A/c

Ledger Postings

Dr. Cr.Date ParticularsJF

NoAmountRs.

Date Particulars JFNo

AmountRs.

  To Balance c/d    2,000  By Nandu’s A/c    2,000

         

         

  Total   2,000  Total   2,000

Purchase Return A/c

Ledger Postings

Dr. Cr.Date ParticularsJF

NoAmountRs.

Date Particulars JFNo

AmountRs.

  To Kishore’s A/c   2,000  By Balance c/d   2,000

       

               

  Total   2,000  Total   2,000

Sales Return A/c

Ledger Postings

Dr. Cr.Date ParticularsJF

NoAmountRs.

Date Particulars JFNo

AmountRs.

  To Cash A/c   10,000  By Balance c/d   10,000

       

               

  Total   10,000  Total   10,000

Gopal’s A/c

Ledger Postings

Dr. Cr.Date ParticularsJF

NoAmountRs.

Date Particulars JFNo

AmountRs.

  To Cash A/c   1,000  By Balance c/d   2,000

  To Cash A/c   1,000 

               

  Total   2,000  Total   2,000

Rent A/c

Ledger Postings

Dr. Cr.Date ParticularsJF

NoAmountRs.

Date Particulars JFNo

AmountRs.

  To Balance c/d   1,600  By Cash A/c   1,600

       

               

  Total   1,600  Total   1,600

Commission Received A/c

Ledger Postings

Dr. Cr.Date ParticularsJF

NoAmountRs.

Date Particulars JFNo

AmountRs.

  To Sales A/c   10,000 By Sales Return A/c   2,000

        By Balance c/d 8,000

               

  Total   10,000  Total   10,000

Kishore’s A/c

Ledger Postings

Dr. Cr.Date ParticularsJF

NoAmountRs.

Date Particulars JFNo

AmountRs.

  To Cash A/c   200  By Balance c/d   200

       

               

  Total   200  Total   200

Postage & Telegram A/c

Ledger Postings

Dr. Cr.Date ParticularsJF

NoAmountRs.

Date Particulars JFNo

AmountRs.

  To Cash A/c   1,200  By Balance c/d   1,200

       

               

  Total   1,200  Total   1,200

Stationery A/c

Ledger Postings

Dr. Cr.Date ParticularsJF

NoAmountRs.

Date Particulars JFNo

AmountRs.

  To Cash A/c   3,200  By Balance c/d   3,200

     

               

  Total   3,200  Total   3,200

Salaries A/c

Ledger Postings

Dr. Cr.Date ParticularsJF

NoAmountRs.

Date Particulars JFNo

AmountRs.

  To Cash A/c   4,000  By Balance c/d   4,000

     

               

  Total   4,000  Total   4,000

Drawings A/c

Ledger Postings

Dr. Cr.Date ParticularsJF

NoAmountRs.

Date Particulars JFNo

AmountRs.

  To Balance c/d   6,000  By Cash A/c   6,000

       

               

  Total   6,000  Total   6,000

Maruti’s A/c

Ledger Postings

Dr. Cr.Date ParticularsJF

NoAmountRs.

Date Particulars JFNo

AmountRs.

  To Cash A/c   2,000  By Balance c/d   2,000

     

               

  Total   2,000  Total   2,000

Furniture A/c

Trail BalanceParticulars Amount Dr. Amount Cr.Ram's Capital A/c   20,000Cash A/c 11,950 Bank A/c 13,800 Purchases A/c 107,000 Nandu   98,000Sales A/c   37,750Purchase Return A/c   2,000Sales Return A/c 2,000 Gopal 10,000 Rent A/c 2,000 Commission Received A/c   1,600Kishore 8,000 Postage & Telegram A/c 200 Stationey A/c 1,200 Salaries A/c 3,200 Drawings A/c 4,000 Maruti   6,000Furniture A/c 2,000 Total 165,350 165,350

Trading Account

Particulars Amount(Dr.)

Particulars Amount(Cr.)

To opening stock By Sales Less: Sales Returns

To Purchases Less :Purchase Returns

By Closing Stock

To Carriage

To Power

To Freight

To manufacturing Exp.

To factory Exp.

To Import Duty

To Royalty

To Gross profitTransferred to P&L A/C

TOTAL TOTAL

Profit And Loss AccountParticulars Amount(Dr

.)Particulars Amount(Cr.

)

To Salaries By Profit b/d

To Rent Rates & Taxes By Rent

To Printing & Stationary By Bad Debts Recovered

To Lighting By Profit on Sale of Assets

To Audit Fees By Miscellaneous Receipts

To Trade Exp.

To General Exp.

To Advertisement

To Bad Debts

To Bank Charges

To Donation & Charity

To Net ProfitTransferred to capital A/C

TOTAL TOTAL

Balance SheetLIABILITES AMOUN

TASSETS AMOUNT

Sundry Creditors Cash In Hand

Outstanding Exp. Cash At Bank

Unearned Income Sundry Debtors

Long Term Loans Closing Assets

Capital Add: Net Profit Add: Drawings

Accrued Income

Furniture

Loose Tools

Motor Vehicle

Plant Machinery

Land & Buildings

Goodwill

TOTAL TOTAL