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FINANCIAL ACCOUNTING

Mr.Rupesh Dahake.
(M.B.A.,M.COM.,PGDCCA)
FINANCIAL ACCOUNTING
• FINANCIAL ACCOUNTING IS
CONCERNED WITH EXTERNAL
TRANSACTIONS IT RECORDS ALL
DEALINGS WITH OUTSIDE THE
CONCERN.
• Financial accounts are concerned with
classifying, measuring and recording
the transactions of a business.
BOOK-KEEPING

• BOOK-KEEPING MAY BE DEFINED AS THE ART AND SCIENCE


OF RECORDING ALL THE DEALINGS RELATED
MONEY,GOODS AND SERVICES.

SYSTEM OF BOOK-KEEPING

DOUBLE ENTRY
SYSTEM
• SINGLE ENTRY SYSTEM :-
SINGLE ENTRY SYSTEM RECORDS ONLY ONE
SIDE OF THE TRANSACTON AND HENCE IT
DOES NOT PROVIDE COMPLETE INFORMATON
ABOUT A TRANSACTION.

• DOUBLE ENTRY SYSTEM :-


DOUBLE ENTRYSYSTEM REOCORS BOTH THE
SIDES OF THE TRANSACTION AND THUS
PROVIDES COMPLETE INFORMATON OF THE
BUSINESS TRANSACTONS.
CREDIT CASH

TRANSACTION MEANS IT IS THE MONETORY


ACTIVITIES PERFORMED BY TWO OF MORE
PARTIES ONE IS GIVER AND SECOND IS TAKER.
ACCOUNTING EQUATIONS:-

TOTAL ASSETS =TOTAL LIABILITY

FOR EXAMPLE:-

CASH Rs.10000 +BUILDING Rs.25000


=CAPITAL Rs.25000+LIABILITY Rs.10000

35000=35000
TYPES OF ACCOUNTS:-
PERSONAL ACCOUNTS
Related with individual, private company and partnership
firm and representative accounts etc.
RULES OF
ACCOUNT
S

DEBIT THE CREDIT THE


RECEIVER GIVER
FOR EXAMPLE: - GOODS PURCHASE FROM X
COMPANY Rs.1000/-
PURCHASES ACCOUNT DR------------ 1000
TO X COMPANY ACCOUNT CR -----------
1000
REAL ACCOUNT
Related with assets like a Machinery,
Building, Land, Cash* and Bank, Stock, Goodwill.

RULES OF
ACCOUNT
S

DEBIT WHAT CREDIT


COMES IN WHAT GOES
OUT

FOR EXAMPLE: - BUILDING PURCHASE ON CASH Rs.10000/-


BUILDING ACCOUNT------------DR 10000/-
CASH ACCOUNT --------------------CR 10000/-
NOMINAL ACCOUNT
Related with income and expenditure of business.
For example: - Salary, Wages, Rent, Profit, Commissions received, loss
etc. this are example of nominal account.
RULES OF
ACCOUNT
S

DEBIT THE CREDIT THE


ALL INCOME
EXPENSES AND GAIN
AND LOSSES

FOR EXAMPLE:-Salary paid Rs.1000/-

Salary Account ---------------------DR 1000/-


To Cash ------------------------CR 1000/-
THE JOURNAL BOOK
Every Business Transactions Is Recorded On The Same Day In A Book
Called The Journal. Thus A Journal Is Simply A Chronological Listing Of
Transactions. The Journal Constitutes The Original Records Of
Transactions.

JOURNAL BOOK
(SPACIMAN FORMAT)

L.
DATE PARTICULAR F. DEBIT CREDIT
THE LEDGER
-From The Journal The Transactions Related To Each Person Or Firm Is
Sorted Out Classified And Entered In A Book Called Ledger.

LEDGER ACCOUNT

DEBIT SIDE(LEFT SIDE) CREDIT SIDE(RIGHT SIDE)


J. J.
DATE PARTICULAR F AMT DATE PARTICULAR F AMT
SOME RULES REGARDING LADGER ACCOUNT:-

• IN CASH ACCOUNT DEBIT THE RECEIVER AND


CREDIT THE GIVER.

• IN BANK ACCOUNT DEBIT THE RECEIVER AND


CREDIT THE GIVER.

• REMAIN ALL LEDGER ACCOUNTS DEBIT SIDE


THE EXPENSES OR GIVER SIDE AND CREDIT SIDE
RECEIVER OR INCOME SIDE.
TRIAL BALANCE
THE TOTAL OF DEBIT ACCOUNTS AND TOTAL OF CRDIT ACCOUNTS IS
CALLED TRAIL BALANCE.
FOR EXAMPLE
RECORD THE FOLLOWING TRANSACTION IN THE BOOK OF
ABHISHAK AND CO.

1ST JUN 2008 CAPITAL INTRODUCED INTO BUSINESS Rs.10000/-

2ND JUN 2008 BUILDING PURCHASES ON CASH Rs.50000/-

3RD JUN 2008 GOODS PURCHASES ON CASH Rs.25000/-

4TH JUN 2008 GOODS SOLD Rs.80000/-

5TH JUN 2008 CASH DEPOSITED INTO BANK Rs.1000/-

6TH JUN 2008 SALARY PAID Rs.10000/-


CASH ACCOUNT

DEBIT SIDE(LEFT SIDE)(RECEIVER) CREDIT SIDE(RIGHT SIDE)(GIVER)

J J
D
. .
F 50000
D
ATE PARTICULAR F AMT ATE PARTICULAR AMT
BY BUILDING ACCOUNT
BY PURCHASES
1000
TO CAPITAL ACCOUNT ACCOUNT 25000
0
TO SALES   BY SALARY ACCOUNT  
8000
A/C BY BANK 10000
0
ACCOUNT BY 1000
BALANCE. C/D
      90000       90000
4000
CAPITAL ACCOUNT

DEBIT SIDE(LEFT CREDIT SIDE(RIGHT


SIDE)(GIVER/EXPENSES) SIDE)(RECEIVER/INCOME)
J. J.
DATE PARTICULAR F AMT DATE PARTICULAR F AMT
BY CASH
TO BAL C/D   10000   10000
ACCOUNT

      10000       10000

BUILDING ACCOUNT

CREDIT SIDE(RIGHT
DEBIT SIDE(LEFT SIDE)(GIVER/EXPENSES) SIDE)(RECEIVER/INCOME)

DATE PARTICULAR J.F AMT DATE PARTICULAR J.F AMT


BY BAL. ACCOUNT
TO CASH ACCOUNT   50000   50000
C/D

      50000       50000
PURCHASES ACCOUNT
CREDIT SIDE(RIGHT
DEBIT SIDE(LEFT SIDE)(GIVER/EXPENSES) SIDE)(RECEIVER/INCOME)
DATE PARTICULAR J.F AMT DATE PARTICULAR J.F AMT

BY BAL. ACCOUNT
TO CASH ACCOUNT   25000   25000
C/D

      25000       25000

SALES ACCOUNT

CREDIT SIDE(RIGHT
DEBIT SIDE(LEFT SIDE)(GIVER/EXPENSES) SIDE)(RECEIVER/INCOME)

DATE PARTICULAR J.F AMT DATE PARTICULAR J.F AMT


TO BAL. ACCOUNT
  80000 BY CASH ACCOUNT   80000
C/D

      80000       80000
BANK ACCOUNT

DEBIT SIDE(LEFT
SIDE)(RECEIVER/INCOME) CREDIT SIDE(RIGHT SIDE)(GIVER/PAYMENT)
J. J.
DATE PARTICULAR F AMT DATE PARTICULAR F AMT
BY BAL .ACCOUNT
TO CASH ACCOUNT   1000   1000
C/D
    1000       1000

SALARY ACCOUNT

DEBIT SIDE(LEFT CREDIT SIDE(RIGHT


SIDE)(GIVER/EXPENSES) SIDE)(RECEIVER/INCOME)
J. J.
DATE PARTICULAR F AMT DATE PARTICULAR F AMT
BY BAL .ACCOUNT
TO CASH ACCOUNT   10000   10000
C/D
    10000     10000
TRIAL BALANCE
AS ON 31 ST MARCH 2008

SR NO ACCOUNT NAME DEBIT CREDIT

1 CASH ACCOUNT 4000

2 CAPITAL ACCOUNT 10000

3 BUILDING ACCOUNT 50000

4 BANK ACCOUNT 1000

5 SALARY ACCOUNT 10000

6 PURCHASE ACCOUNT 25000

7 SALES ACCOUNT 80000

90000 90000
TOTAL
TRADING ACCOUNT
FOR THE YEAR ENDING ----------
DEBIT SIDE(LEFT CREDIT SIDE(RIGHT
SIDE)(GIVER/EXPENSES) SIDE)(RECEIVER/INCOME)
D
ATE PARTICULAR AMT DATE PARTICULAR AMT
TO OPENING STOCK
25000
TO PURCHASE ACCOUNT BY SALES ACCOUNT 80000
TO GROSS PROFIT C/D
55000
    80000     80000

PROFIT AND LOSS ACCOUNT


FOR THE YEAR ENDING ----------
DEBIT SIDE(LEFT CREDIT SIDE(RIGHT
SIDE)(GIVER/EXPENSES) SIDE)(RECEIVER/INCOME)
D
ATE PARTICULAR AMT DATE PARTICULAR AMT

TO SALARY ACCOUNT
BY GROSS PROFIT
TO NET PROFIT 10000 55000
B/D
(TRANS. TO BALANCE 45000
SHEET)
    55000     55000
BALANCE SHEET
AS ON ----------

LIABILITES AMT ASSETS AMT

CAPITAL
10000 BUILDING A/C 50000
NET PROFIT (TRANS. FROM
45000 CASH A/C 4000
P/L A/C)
BANK A/C 1000

  55000   55000