Basic Accounting An Introductory Perspectives Objectives On completion of this unit, each student should be able to: Determine the

net worth of the business. Identify assets, liabilities and owners equity. To use the accounting equation To define accounting concepts and be able to do accounting exercises. Over the last four decades, outside India, accounting has continued to be the fastest growing profession and due to its increasing popularity the most popular field of study at colleges, business schools and universities the world over. Important in the successful operation of a firm is its ability to systematically record its business transactions. The business transactions are entered in the book-keeping records and processed to determine information such as : profit or loss, Total debtors, Total creditors, Cash at bank, Cost of goods sold and other details as required by the firm. Regardless of the type and size of business, it usually owns assets and owes liabilities. (1) Assets

These are things of value owned by a firm. Examples would be: Cash at bank, Ending Inventory, debtors, motor vehicles, Land and buildings, furniture and equipment, plant and machinery and loans given to other firms or persons. Assets can be further classified as: Current assets, Non Current assets, Investments and Intangibles. Current Assets These are assets which are in cash (Cash on hand, Cash at bank) or can be easily converted to cash within 12 months. Examples would be: Ending Inventory, Debtors, Income receivable, Loans given to other firms or persons. Non Current Assets These are assets which were bought by the firm to be used to earn revenues. They remain longer in business and a bit difficult to convert into cash. Examples would be: Motor Vehicles, Furniture and Equipment, Land and Buildings, Plant and Machinery 1

Investments These are assets which the firm buys or puts its own money in another business other then a bank. These may be converted to cash but it would take time. Examples would be: Shares in Hunts Travel Ltd. Intangible Assets These are assets which are owned by the firm but they have no physical existence. In certain cases there are certain expenses that need to be written off each year, such as: Preliminary Expenses, Sale of Shares Expenses. The assets do have some value which is used to earn revenue for the firm. Examples would be: Patents, Goodwill, Preliminary Expenses, Trademarks and Copyrights (2) Liabilities

These are things of value owed by a firm. Examples would be: Creditors, Bank Overdraft, Loans that were given by other firms or persons, Debentures, Mortgage. Liabilities can be further classified as: Current liabilities and Non Current Liabilities. Current Liabilities These are liabilities which have to be paid within 12 months. Examples would be: Creditors, Short-term Loans given by other persons or firms, Expenses Due. Income in Advance, Bills Payable, Provisions for Dividend, Provisions for Taxation, Provision for Leave. Non Current Liabilities These are liabilities which may be paid according to the arrangement made with the financiers and normally payment is made between (5 20) years. Examples would be: Mortgage, Debentures and Long-Term loans given by other persons of firms. (3) Owners Equities

This is also known as Proprietorship or Shareholders Equities. These are things of value provided by the owner(s) or benefits allocated for the owner(s) of the business. Here, in some cases, would include expenses made by the owner(s), which is called Drawings.

Accounting Equation The relation between Assets, Liabilities and Proprietorship can be expressed in an accounting equation: Assets (A) = Liabilities (L) + Proprietorship (P) Hence the equation can be written also as follows to find out Liabilities and Proprietorship. Liabilities (L) = Assets (A) Proprietorship (P) Proprietorship (P) = Assets (A) Liabilities (L) Why people do business? People do business for many reasons. Some of these reasons would be : (1) To be their own boss; (2) having a passion to take risks; (3) ability to manage others; (4) willingness to make profits every year; (5) a market exists to provide goods and service. All businesses need the services of an accountant who would perform the bookkeeping and accounting functions. What is Book-keeping? Its the traditional way of doing accounting or maintaining financial records. Involves keeping (7) specialized books. Largely manual work involved. Still in use by countless small businesses in India. Includes preparation of journals, postings to ledger and extraction of a trial balance. Book-keepers need to have basic knowledge of accounting and should be able to do everything till preparation of a trial balance.. What is Accounting? Accounting is often called the language of business. For example, Hindi is the official language in India and is used to facilitate communication among Hindustani people in India. Accounting is said to be a common medium of communicating business of financial information amongst interested parties in the big world of commerce Accounting is a business language used by accountants to communicate about the financial performance of the business particularly to the owners of the business. and

It involves identification of all financial activities relating to the firm and this has to be classified and recorded in seven different books. The information is processed, summarized , analysed and then interpreted to interested parties for decision making. Accounting is a very complex, comprehensive and highly important and responsible position. Some 30-40 years ago, either you became an accountant or an engineer. If you could not do accounting, engineering, medicine, teaching, then housework was just the work for you. Large businesses exist simply because there is a brainy person who manages their financial affairs. It has been said that accounting is an information system. Firstly, what is a system? A system has 3 elements: Input, Processing and Output. In accounting, the (Input) involves the business transactions and events recorded in the carious source documents issued by the firm or received from other businesses. The (Processing) involves classification into the 7 journals and postings to the ledger accounts as per the accounting principles and procedures and extraction of a trial balance, while the (Output) includes the preparation of the financial reports which may be analysed and then interpreted to make it more meaningful for users who would use it to make decisions Accountants to a certain extent are also known as financial engineers. Those who aspire to learn accounting (and become expert in this language) later become accountants. However, non accountants although they do not become experts but may have a fair bit of knowledge in accounting terms tend to become almost good investors and business men. Accounting function Involves identification, recording, classification, analysis and interpretation of financial information to interested parties to assist them in their decision-making. Management function Involves the decision-making, organizing, policy-making, defining workable strategies, setting of targets, monitoring of key performance indicators (KPI), providing and presenting various types of reports, assisting management in making decisions, controlling of financial and non-financial, and human resources, setting of standards and measures and at times decision-makers. Branches of accounting There are (3) main branches. Management accounting

Is the preparation and communication of financial and other information to management of the firm that helps them to carry out their responsibilities in planning and controlling their operations effectively and efficiently. The reports are more detailed and timely. Cost accounting Primarily deals with costing details, budgets, production level techniques, decisions on the level of production, profit planning and cost measurement techniques. Financial accounting Is the preparation and communication of financial information for use primarily by those outside the enterprise. The purpose of financial accounting is to provide information to owners and other interested users about the performance of the business. Accounting Cycle This shows the various stages of the accounting functions before the desired result is achieved. 1. 2. 3. 4. 5. 6. 7. 8. Recording of source documents Classification in the (7) journals. Postings to the Ledger accounts Extraction of the Trial balance Identification of the End-of-period-adjustments Extraction of Adjusted Trial balance Closing journal entries prepared Preparation of Profit and Loss Statement and Balance Sheet, and Cash Flow Statement 9. Analysis of various ratios 10. Interpretation of the ratios and the actual results obtained compared with the Management reports Accounting Assumptions and principles. There are two types of activities that take place in the business world: Business transactions and Non-business transactions. Business Transactions These are financial activities that take place between the business and other persons and or businesses. Examples would be: Purchase of goods for sale either for cash and or on account.; buying of fixed assets for cash or on account; payment or expenses, debt relating to the business.

Non Business transactions This could be any activity which does not include exchange of money for goods or services provided by the business to others or that provided by others to a business. Also, there may be certain activities which may include the exchange of money but these activities may be done by the owner(s) of the business which is treated as personal transactions of the owner and since the firms funds or assets would have been used, it would be shown as Drawings in the Balance Sheet. Some basic accounting principles Accounting Entity Concept This is also known as `Separate Entity Concept. The activities of the business and the owner are treated as separate. Assume Tanya owns a beauty parlor. Tanya also has a personal car, jewelry, cash at bank which would not be included as part of the parlor business. Tanya may also be a co-owner in another business but she has to keep the activities of both the businesses and her personal affairs separate from each other. Going Concern It suggests that the life of a business is continuous as long as its business dealings are all transparent, does not have any liquidity problems should continue to exist for quite some time. Period Concept The business activities of a firm have to be recorded at regular intervals and information provided to interested parties at regular intervals. So financial statements may be prepared monthly to reflect the performance of the business so that the performance may be tracked and if there are any problems they can be rectified or corrective actions taken on time. Monetary Concept All financial activities and contents of the financial statements are to be expressed in monetary terms. Example a farmer may have 200 cows, 4 tractors, 3 sons and 50 acre land. These are all stated in non monetary terms, however, a value has to be put for all (except on his 3 sons) and the details could be shown in his Balance Sheet.

Historical (Cost) Concept States that all non current assets and Non Current Liabilities have to be shown in the Balance Sheet at their purchase price and Total value respectively. Example. A firm had bought 3 Trucks at Rs5,00,000 each on 2/1/2005. In the Balance Sheet, the Trucks would be recorded at their cost price of Rs15,00,000. Accumulated depreciation would also be shown and the net result would be the Book Value of the assets. Matching Concept All revenues (those received in cash plus amount receivable) should be subtracted (matched) with all expenses (Those paid in cash plus amount payable) which should give an end result of either Net Profit or Net Loss. Timeliness Concept Time plays a very important role in all businesses. Everybody has to work according to time else the results would be affected. Firms have to prepare financial statements on time so that the users (those who are interested in the performance of the business) can study it and make relevant decisions on time. Consistency Concept Accountants when preparing financial statements should adopt a similar format in their presentation and not make too many changes every time. Example; if the final reports are prepared in T- form then they should continue to be prepared in this format unless a decision was taken to present it in statement format, but once this is done it should not go back and forth with the old format. Similarly the methods of accounting for depreciation and inventory valuation should also be uniform and not keep changing every often. Generally Accepted Accounting Principles (GAAP) To ensure that the information contained in the financial statements can be relied upon by various users, these reports need to be prepared based on GAAP which is a set of rules, conventions and procedures necessary to define accepted accounting practice. GAAP represents policies that have been agreed by a body of experts in the field of accounting and many of whom are in public practice or in academia or both.

Accounting Standards Firms generally follow diverse accounting policies which are regarded as necessary for the preparation of financial statements. These standards are formulated by the Accounting Standards Board of the ICAI. Formats of the Financial Statements Trading Account This report shows how well the firm had traded. If the firm made a Gross Profit it meant that the firm had higher sales then the cost of the goods it had purchased. The format of preparing a Trading account is shown below:

Opening stock Purchases Duty Wages of storemen Freight Inwards Returns Inwards Cartage Inwards Sales Returns Buying expenses = Cost of Sales Gross Profit

Trading Account of XYZ Stores For the year ended 31st December 201X Ending stock Sales Returns Outwards Purchase Returns Gross Loss

Note: You can only have a Gross Profit or a Gross Loss but not both. Gross profit would result if the right-hand side Total figure is greater then the Cost of sales and Gross Loss would occur if the Cost of Sales is greater then the Total figure on the right hand side.

Profit and Los Account This report considers all the Revenues and Expenses of the firm. The objective is to find out if there is a Net Profit or Net loss. Net Profit = Total Revenues Total Expenses. The format of the Profit and Loss account is given below.

Expenses Gross Loss Advertising Bad debts Insurance Cartage outwards Salaries Rent paid Interest paid Electricity Telephone
Repairs & maintenance

Profit and Loss Account of XYZ Stores For the year ended 31st December 201X Revenues Gross profit Rent received Interest received Discount Received Commission Received Net Loss

Stationery Loss on sale Discount allowed Depreciation Net Profit

Net Profit (Loss) = Total Revenues Total Expenses. If Total Revenues are greater then Total Expenses then there would be a Net Profit and a Net Loss if vice-versa.

Balance Sheet This report considers all the Assets, Liabilities and the Owners Share in the firm. The format of a Balance Sheet is given below: Balance Sheet of XYZ Stores As at 31st December 201X Current Assets Cash on hand Cash at bank Ending stock Debtors Prepayments Loan to XYZ Income due Non Current Assets Buildings
Less Accumulated Depn

Current Liabilities Creditors Expenses due Income in advance Short Term Loans Bank overdraft Non Current Liabilities Long Term Loans Debentures Mortgage Owners Equities Capital + Net Profit - Net Loss - Drawings + Additional Capital

Vehicles
Less Accumulated Depn

Equipment
Less Accumulated Depn

Land Furniture
Less Accumulated Depn

Recording of Business Transactions Before the financial statements (Trading account, Profit & Loss account, Balance Sheet and the Cash Flow Statement) is prepared, the various transactions (Financial activities) have to be classified in to various categories and accounts would have to be created. Accounts These are individual records of opening and closing balances together with increases and decreases of relative importance. The number of accounts varies according to the size and nature of the business.

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There are 5 classification of accounts (1) Assets; (2) Liabilities; (3) Owners Equities; (4) Revenues; (5) Expenses Under each type of account we have several accounts that are used in business. Example : Classification of Account: Asset Names of accounts used: Cash at Bank, Debtors, Buildings, Motor Vehicles, Land, Equipment, Inventory. Ledgers The file or binder which contains details of all the accounts that exist for a given business. Double Entry System(DES) In the (DES) every transaction is recorded with a debit(s) and credit(s) and both the debits and credits should each give the same total amount at the end. Construction of a Ledger Account Date Particulars
Left side (DEBIT)

Name of Account Amount Date Particulars

Right side (CREDIT)

Amount

Debit and Credit Rules Under this rule, (Assets) are entered on the debit side of the account for increases and on the credit side for any decreases. Similarly, (Liabilities) and (Owners Equity) accounts are entered on the debit side for decreases and on the credit side for any increases. Illustrative transactions Jan 1 Raju the owner of Kwik Fashions invested Rs2,00,000 cash in the business as capital. Accounts affected: Cash at Bank (Asset) and Capital (Owners equities) Analysis: Assets (cash at bank) increased by Rs2,00,000 and Owners equities (capital) also increased by Rs2,00,000.

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Rules of Debit and credit: Assets increased so we record on the debit side of Cash at Bank account. Increase in Owners Equity means we record on the credit side of the Capital account Procedure: On the debit side of the Cash at bank account we record the reason for the increase and that occurred due to capital invested so we write Capital (the name of the account affected) Balancing Ledger Accounts Every ledger account has to be balanced to indicate what would be the closing or (ending) balance. Ledger accounts can be in `T format or in `Columnar format Example of `T format Ledger accounts Jan3 Opening balance in Cash at Bank account Rs80,000 DR Jan 7 Cash Sales Rs10,000 Jan7 Received from Peter a debtor Rs70,000. Jan 15 Cash purchases Rs70,000 Jan 20 Cash Sales Rs50,000 Jan 22 Paid wages Rs15,000 Cash at Bank
Date 3./1 7/1 20/1 Particulars Opening balance Sales Peter Sales Amount 80,000 10,000 70,000 50,000 Date 15/1 22/1 Particulars Purchases Wages Amount 70,000 15,000

Notes 1) This is an Asset account. Note there are (Assets, Liabilities, Owners Equities, Revenues and Expense) related accounts. Under Assets, we have Cash at Bank so this becomes the `name of the account 2) The opening balance is written first. It could have either a Debit balance (as in this example) or a Credit balance. 3) On the Debit side as per the date in which they occurred, the name of the account is written which is responsible for the increase in Cash at Bank and on the credit side are those accounts responsible for the decrease in Cash at bank.

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4) Once all the transactions affecting (increase or decrease) the Cash at Bank are entered, the next task would be to balance the ledger account. 5) To balance the ledger accounts, perform the following steps: STEP 1: Add both sides of the total and see which side has the HIGHEST TOTAL. STEP 2: The side which has the highest total would be the main total for both sides. STEP 3: the side which has the lowest total should be subtracted with the (highest) or the MAIN TOTAL. STEP 4: This difference would be called the Ending balance. STEP 5: The final step would be write the ending balance just below the Main Total on the opposite side of where the Ending balance was written. Example, if the main total is Rs20,000 and the credit side is less by Rs16,000, then Rs16,000 becomes the Ending balance. The final step would be to write Ending balance just below the Main Total on the Debit side by an amount of Rs16,000. (Note that the date would be the 1st of the new month) Cash at Bank
Date 3./1 7/1 20/1 1 /2 Particulars Opening balance Sales Peter Sales Ending balance Amount 80,000 10,000 70,000 50,000 Rs2,10,000 Rs1,25,000 Date 15/1 22/1 31/1 Particulars Purchases Wages Ending balance Amount 70,000 15,000 1,25,000 Rs2,10,000

STEP 1: Add both sides: Debit side is Rs2,10,000 and the Credit side is Rs85,000. The debit side has a larger total so this would be the main total. STEP 2: Rs2,10,000 Rs85,000 gives Rs1,25,000 which becomes the Ending balance on the credit side. STEP 3: The ending balance on the Credit side is now written just below the main total on the DEBIT side. This amount indicates that there is still Rs1,25,000 in the business bank account and on 1st Feb the Opening balance was Rs1,25,000. Example of `Columnar format Ledger accounts. (We would use the same example) Jan3 Opening balance in Cash at Bank account Rs80,000 DR Jan 7 Cash Sales Rs10,000 Jan7 Received from Peter a debtor Rs70,000. Jan 15 Cash purchases Rs70,000 Jan 20 Cash Sales Rs50,000 Jan 22 Paid wages Rs15,000

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Cash at Bank Account

Date 3/1 7/1 15/1 20/1 22/1 Particulars Opening balance Sales Peter Purchases Sales Wages Debit 10,000 70,000 70,000 50,000 15,000 Credit Balance Rs80,000DR Rs90,000DR Rs1,60,000DR Rs90,000 Rs1,40,000 Rs1,25,000DR

The advantage of this format is that after each transaction, a new balance is determined. This is the format used by businesses who have a computerized Ledger system. Analysis Chart This chart is useful for anyone who is learning accounting or has difficulties in knowing the relevance of Debits and Credits. It allows users to prepare ledger accounts accurately as possible and also keep track of what is happening. Illustrative Example a) Cash sales Rs20,000 b) Bought goods from MH Ltd Rs1,20,000 c) Paid rent Rs5,000 d) Sold goods to Rameshwar Rs40,000 e) Received from Rameshwar Rs30,000 f) Owner provided additional cash as capital Rs2,50,000 g) Bought a vehicle from Max Motors for Rs1,50,000 and paid deposit of Rs35,000 h) Owner took cash Rs15,000 for personal use. Show the effect of these transactions on the analysis chart.
Transactions Cash sales Rs20,000 Bought goods from MH Ltd Rs1,20,000 Paid rent Rs5,000 Sold goods to Rameshwar Rs40,000 Owner provided additional cash capital Rs2,50,000 Bought a vehicle from Max Motors for Rs1,50,000 and paid a deposit of Rs35,000 Owner took cash Rs15,000 for own use Accounts affected Cash at Bank Sales Purchases MH Ltd Rent Cash at Bank Rameshwar Sales Cash at Bank Capital Vehicles Max Motors Ltd Cash at Bank Drawings Cash at Bank Account Classification Asset Revenue Expenses Liabilities Expenses Assets Assets Revenue Assets Owners Equities Asset Liabilities Assets Owners Equities Assets Effect (Increase) or (Decrease) Increase Increase Increase Increase Increase Decrease Increase Increase Increase Increase Increase Increase Decrease Decrease Decrease Ledger Entry (Debit) or (Credit) Debit Credit Debit Credit Debit Credit Debit Credit Debit Credit Debit Credit Credit Debit Credit

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Now we prepare the ledger accounts. From the second column we prepare these ledger accounts: (Note an account should appear once only although it may be used several times. 1) Cash at Bank 2) Sales 3) Purchases 4) MH Ltd 5) Rent 6) Rameshwar 7) Capital 8) Vehicles 9) Mac Motors Ltd 10) Drawings

a) Sales e) Rameshwar f) Capital Ending balance Ending balance

(1) Cash at Bank Account 20,000 c) Rent 30,000 g) Max Motors Ltd 2,50,000 h) Drawings Ending balance Rs3,00,000 Rs2,45,000 (2) Sales Account 60,000 a) Cash d) Rameshwar Rs60,000 Ending balance (3) Rent Account 5,000 Ending balance Rs5,000

5,000 35,000 15,000 2,45,000 Rs3,00,000

20,000 40,000 Rs60,000 Rs60,000 5,000

c) Cash at Bank Ending balance

d) Sales Ending balance

(4) Rameshwar Account 40,000 e) Cash at Bank Ending balance Rs40,000 Rs10,000

30,000 10,000 Rs40,000

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b) MH Ltd Ending balance Ending balance

(5) Purchases Account 1,20,000 Ending balance Rs1,20,000 (6) MH Ltd Account Rs1,20,000 b) Purchases Ending balance (7) Capital Account Rs2,50,000 f) Cash at Bank Ending balance (8) Vehicles Account 1,50,000 Ending balance Rs1,50,000 (9) Max Motors Account 35,000 g) Vehicles Rs1,15,000 Rs1,50,000 Ending balance (10) Drawings Account 15,000 Ending balance Rs15,000

1,20,000

1,20,000 Rs1,20,000 2,50,000 Rs2,50,000

Ending balance

g) Max Motors Ltd Ending balance

1,50,000

Cash at Bank Ending balance

1,50,000 Rs1,50,000 Rs1,15,000

h) Cash at bank Ending balance

15,000

Notice that all (10) ledger accounts have been prepared. Next thing accountants do is prepare a Trial balance. Trial Balance It contains a list of all those accounts that have an ending balance. Whichever side the new Opening balance (for the new month) appears, it would be entered accordingly in the Trial balance. For instance, The Cash at Bank in the illustration given above has a ending balance on the debit side of Rs2,45,000 so it would be entered on the debit side of the trail balance. So the ending balances would be entered in the Trial balance as follows:

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Cash at bank Rent Rameshwar Purchases Vehicles Drawings

Trial Balance 2,45,000 Sales 5,000 MH Ltd 10,000 Capital 1,20,000 Max Motors 1,50,000 15,000 Rs5,45,000

60,000 1,20,000 2,50,000 1,15,000

Rs5,45,000

The Trial balance has balanced and both sides have the same amount of Rs5,45,000. This means that the ledger accounts have been correctly posted to either the debit or credit side. The final ending balance has been computed correctly and appears on the correct side. If the trial balance does Not balance, the whole exercise of ledger account postings, accounts and totals would have to be srutunised. Students have a choice of preparing ledger accounts in (T form) or in the modern(easier) Columnar format. Many prefer columnar method.

Exercise 1 1) In each of the following list of business items, identify the assets, liabilities and proprietorship (Owners Equities) a) Cash at bank b) Land and Buildings c) Creditors d) Debtors e) Motor vehicles f) Drawings

2) Classify the following under Current Assets, Non Current Assets, Investments, Current Liabilities, Non Current liabilities a) b) c) d) e) f) g) h) Cash in hand Loan to G. Green Loan from Axis Bank Accounts receivable Fixtures and Fittings Shares in B. Company Mortgage on Buildings Plant and Machinery j) Stock on hand k) Sundry debtors l) Prepayments m) Buildings n) Bank overdraft o) Equipment

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i) Accounts Payable 3) For the following ledger account names identify which of these are Asset/Liabilities/Owners Equities/Revenues/Expenses account? a) b) c) d) e) f) g) h) i) j) k) Cash at bank Rent paid Office Expenses Debtors Creditors Loan to Bandook Lal Wages Sales Creditors Purchases Bad debts l) Capital m) Interest paid n) Bank overdraft o) Salaries p) Stationery q) Loan from Mithai lal r) Petty Cash expenses s) Sales returns t) Purchase returns u) Motor vehicles v) Motor vehicles expenses

4) Prepare an analysis chart and determine which accounts from the following transactions of Brahma Nand are debited and which are credited. a) b) c) d) e) f) g) h) i) j) k) Sold goods for cash Rs2,000 Paid rent Rs1,500 Bought goods from Bandura Ltd Rs3,700 Bought goods for cash Rs5,000 Sold goods on credit to Chamatkaar Traders Rs25,000 Paid office expenses Rs2,000 Returned goods to Bandura Ltd Rs700 Received interest from Murray Rs200 Credit sales to Dharam Raj Rs11,000 Paid Bandura Rs2,000 Received from Dharam Raj Rs9,500

5) Prepare an analysis chart and ledger accounts in columnar form and a trial balance. a) b) c) d) e) f) g) h) i) Suman contributed cash Rs50,000 as capital Cash purchases Rs20,000 Sold goods to Rashi Rs50,000 Bought goods from Supa Mart Rs1,25,000 Paid rent Rs2,000 Cash sales Rs85,000 Owner took cash Rs20,000 for personal use. Paid Supa Mart Rs40,000 Received from Rashi RS45,000

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6) Prepare an Analysis Chart, ledger accounts and then extract a trial balance of Bindula from the following details. October 4 Bindula started business with Cash Rs1,50,000 as capital 5 Bought goods from Murari Lal for Rs80,000 6 Sold goods to Arvind Khajurewala for Rs1,20,000 7 Paid wages RS10,000 8 Bought furniture from Courts Ltd Rs50,000 and made a deposit Rs10,000 9 Received from Arvind Khajurewala Rs1,00,000 10 Cash sales Rs25,000 11 Owner took goods Rs10,000 and cash Rs20,000 for personal use 7) The book-keeper of Fast Foods and Books Store left in hurry to complete his BCom in which he was debarred for 2 years for very low attendance and not maintaining a satisfactory CGPA. Copy the following ledger accounts, balance the accounts and then prepare a trial balance. Sales Chautala Account Rs1,000 Sales returns Cash at bank Discount allowed Gautam Account Rs10,000 Sales returns Cash at bank Bad Debts Motor Vehicles Account Rs12,500 Cash at Bank Account 400 Motor Vehicles 5,400 13,000 Sales Returns Account 150 2,150 Bad Debts Account Rs2,450 Rs150 400 20 Rs2,150 5,400 2,450

Sales

Cash at bank

Chautala Gautam Sales Chautala Gautam Gautam

12,500

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Chautala

Discount Allowed Account 20 Sales Account Chautala Gautam Cash at bank 1,000 10,000 13,000

8) Natwarlal Nautankiwala operates a milk bar. Recently, he has begun learning accounting, but he needs your assistance to complete the ledger accounts and extract a trial balance. Prasad Mandira Cash at Bank Account 236 Office expenses 380 Stationery Salaries Kanti Mandira Account 380 Sales return Cash at Bank Discount allowed Gopal Account 20 Purchases Prasad Account 400 Discount allowed Cash at Bank Kanti Account 25 Purchases 114 20 Discount Allowed Account 10 14 Discount Received Account Kanti 20 120 60 250 114 20 380 10 170 14 236 1,500

Sales

Returns Sales

Purchase returns Cash at bank Discount received Mandira Prasad

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Sales Account Mandira Prasad Sales Returns Account 20 Purchases Account 170 1,500 Purchases Returns Account Gopal Kanti Office Expenses Account 120 Salaries Expenses Account 250 Stationery Expenses Account 60

380 400

Mandira

Gopal Kanti

20 25

Cash at bank Cash at bank Cash at bank

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