Professional Documents
Culture Documents
Vidya.k.nair
ACCOUNTING
• Language of business…
• E.g., a housewife
It helps to know………
sources from which cash was
received and the purposes for which
it was utilized
• Journal
• Orderly manner
Classifying
• Systematic analysis of the recorded data,
with a view to group transactions or
entries of one nature at one place.
• ledger
• Separate- account heads or each items
• Eg;- advertising, stationery, tavelling
expenses etc…
• Total expenditure incurred under each
head
summarising
• Presenting the classified data in a
manner which is understandable and
useful to interested parties…
• Trial balance
• Profit and loss account
• Balance sheet
Deals with financial transactions
• Eg;-dedicated employees
Analyses and interprets
• Analyzed and interpreted in a manner
that the end users can make a
meaningful judgement about the
financial condition and profitability
of the business operations..
• Analysis - methodical classification
of data
• Interpretation-explaining the
meaning and significance of data.
communicates
• In a proper from and manner to the proper
person
Accounting Accounting
Concepts conventions
Accounting concepts
• Business is considered to be a
separate entity from the proprietor..
Assets are always shown at their cost and not at their current
market value
Dual aspect concept
Convention of conservatism
Convention o consistency
Convention of materiality
Convention of conservatism
Expenses Incomes
natural artificial representative and and
losses gains
tangible intangible
Personal accounts
• Pre-paid
Rule…………
• Bound ledger
• However it should be
completed before the financial
statements are prepared.
Distinction between journal
and ledger
Basis of journal ledger
distinction
Nature of Book of original Book of final
book or prime entry or secondary
entry
Basis for Prepared on the Prepared on
preparation basis of source the basis of
documents of journal
transactions
Stage of Recording in the Recording in the
recording journal in the ledger is the
first stage. second stage
It is prepared to It is prepared
object record all to know the net
transactions in effect of
chronological various
order.. transactions
affecting the
particular
account
In journal there are 5 In ledger there
column- are identical four
format Date, particulars, L/F, column on debit
debit amount, credit and credit column.
amount. Date, particulars,
J/F, amount
all ledger
Journal is not accounts
Balancing balanced ( except nominal
accounts) are
balanced in
ledger
Narration is No narration
narration written for each is given.
entry.
Name of
the process journalizing posting
of recoding
If the debit side total exceeds credit side total, put such
difference on the credit side in ‘credit amount column,
write the date on which balancing is being done in the
‘date column’ and the words ‘By Balance c/d’ in
particulars column.
Procedure for balancing
If the credit side total exceeds debit side total, put such
difference on the debit side in ‘debit amount column, write
the date on which balancing is being done in the ‘date
column’ and the words ‘To Balance c/d’ in particulars
column.
• Summarized ledger
Error of omission
Error of commission
Error of principle
Compensating errors
Error of Omission
• This error arises when a transaction is
completely or partially omitted to be
recorded in the books of accounts--two
types
•
Error of complete omission
CASH JOURNALS
• Simple cash book Cash transactions
• Cash book with bank column Cash & bank transactions
• Cash book with bank and discount Cash, bank & discount
column Transactions
Petty cash book Petty cash transactions
Specific transactions to be recorded in special
journals
2. GOODS JOURNAL
BILLS JOURNALS
Cash transactions
• Bills receivable book
Types of cash
book
• Date of purchase
• Purchase invoice number
• Name of the supplier
• Page number of the ledger on which
supplier’s account appears and
• Amount of purchase
Sales journal
• This journal is used for the purpose
of recording the sale of goods on
credit..
• Date of sales
• Sales invoice number
• Name of the customer
• Page number of the ledger on which
the customer’s account appears and
• Amount of sales
Purchase returns book
• Date of return
• Debit note number
• Name of the supplier
• Page number of the ledger on which
supplier’s account appears and
• Amount of goods returned to the
supplier
Sales returns book