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K.ESWAR. MBA( XLRI) CHIEF MANAGER & FACULTY SPBT COLLEGE. MUMBAI
ACCOUNTANCY
ACCOUNTANCY INVOLVES: SYSTAMATIC CLASSIFICATION OF BUSINESS TRANSACTIONS IN TERMS OF MONEY AND FINANCIAL CHARACTER. SUMMARIZING : TRAIAL BALANACE AND B/S INTERPRETING THE FINANCIAL TRANSACTIONS.
PURPOSE OF ACCOUNTANCY
TO KEEP A SYSTAMATIC RECORD TO ASCERTAIN THE RESULTS OF OPERATIONS TO ASCERTAIN FINANCIAL POSITION OF BUSINESS. TO FACILITATE RATIONAL DECISION MAKING TO SATISFY REQUIREMENT OF LAW AND USEFUL IN MANY RESPECTS.
CONCEPTS OF ACCOUNTANCY.
COST CONCEPT: BUSINESS TRANSACTIONS ARE RECORDED IN BOOKS AT COST PRICE. FIXED ASSETS ARE KEPT AT COST OF PURCHASE AND NOT AT THEIR MARKET PRICE. EVERY TRANSACTION IS RECORDED WITH PRESENT VALUE AND NOT ANY FUTURE VALUE. UNREALIZED GAINS ARE IGNORED. COST OF AN ASSET THAT HAS LONG BUT LIMITED LIFE IS SYSTAMATICALLY REDUCED BY A PROCESS CALLED DEPRECIATION. BUT SUCH DEPRECIATION HAS NO RELATION TO MARKET VALUE OF ASSET.
REALISATION CONCEPT.
THIS CONCEPT TELLS US WHEN REVENUE IS TREATED AS REALISED OR EARNED. IT IS TREATED AS REALIZED ON THE DATE WHEN PROPERTY IN GOODS PASSES TO BUYER AND HE BECOMES LEGALLY LIABLE TO PAY. NO FUTURE INCOME IS CONSIDERED. GOODS SOLD ON APPROVAL WILL BE INCLUDED IN SALES BUT ON COST ONLY.
JOURNAL
JOURNAL RECORDS EACH AND EVERY RECORD. BUT TO FIND OUT A TRANSACTION EFFECTING A PERSON, EXPENSES ACCOUNT OR ASSET ONE HAS TO TURNOVER ALL PAGES OF JOURNAL . HENCE TRANSACTIONS ARE POSTED FROM JOURNAL TO PARTICULAR PAGES OF LEDGER. HENCE JOURNAL CONTAINA COLUMN L.F
JOURNAL FORMAT
DATE PARTICULARS L.F DEBIT RS. CREDIT RS.
CASH BOOK
CASH BOOK KEEPS RECORDS OF ALL CASH TRANSACTIONS I.E CASH RECEIPTS AND CASH PAYMENTS. ALL RECEIPTS ARE RECORDED ON RIGHT SIDE AND ALL PAYMENTS ON LEFT SIDE. CASH BOOK IS BOOK OF ORIGINAL ENTRY.
CR
DISCO UNT
LEDGER
DR
CR
DATE
PARTICU LARS
J.F
AMOUN T(RS)
DATE
PARTICU LARS
J.F
AMOUN T RS.
Questions.
CREDIT BALANCE IN CAPITAL ACCOUNT IS LIABILITY OR AN ASSET: A. LIBILITY B. A REVENUE C. AN EXPENSE D. NONE OF THESE.
QUESTION
AMOUNT BROUGHT IN BY PROPRIETOR IN BUSINESS SHOULD BE CREDITED TO A. PROPRIETORS ACCOUNT B.DRAWINGS ACCOUNT C.CAPITAL ACCOUNT D.ASSET ACCOUNT
QUESTIONS
WAGES PAID TO RAJU TO BE DEIBED TO A. RAJU B WAGES C. CASH D. BANK
QUESTIONS.
Q. CREDIT SALES MADE TO ROHIT TO BE DEIBTED TO A. SALES B. PURCHASE C. CASH D. ROHIT
QUESTIONS
FURNITURE PURCHASED BY ISSUING CHEQUE WHAT ENTRIES TO BE PASSED A. DEBIT FURNITURE AND CREDIT BANK ACCOUNT DEBIT BANK ACCOUNT AND CREDIT FURNITURE DEBIT FURNITURE AND CREDIT CASH. DEBIT BANK AND CREDIT FUNITURE SHOP ACCOUNT
QUESTIONS
RETURN OF GOODS SHOULD BE CREDITED TO A. SALES RETURN B PURCHASE RETURN C.CUSTOMER ACCOUNT D. GOODS ACCOUNT
MATCH FOLLOWING
A B
A
B C
RAMESH
DENA BANK RENT
1
2 3
REAL
PERSONAL NOMINAL
D
E F
COMPUTER
LAND DISCOUNT
4
5 6
REAL
NOMINAL PERSONAL
QUESTION
WHAT IS JOURNAL ENTRY A. ORIGINAL ENTRY B. DOUBLE ENTRY C DUPLICATE ENTRY NONE
QUESTION
TRANSACTION IN BANK COLUMN ON CREDIT SIDE OF THREE COLUMNAR CASH BOOK INDICATE A. AMOUNT WITHDRAWN FROM BANK B.AMOUNT DEPOSITED IN BANK C.BOTH A AND B D. NONE
QUESTION
PASS JOURNAL ENTRY: RENT PAID FOR OFFICE PREMISES RS.30000 OUT OF WHICH PART AMOUNT OF RS.10000 PAID BY CHEQUE AND REST BY CASH.
QUESTION
PASS JOURNAL ENTRY: PURCHASED 100 SHARES OF CENTRAL BANK OF INDIA FOR RS.100 PER SHARE.
QUESTIONS
PASS JOURNAL ENTRY: SOLD GOODS TO TENDULKAR RS.15000
QUESTIONS
PASS JOURNAL ENTRY: DRAVID INVOICED GOODS FOR RS.12000 TO US.
QUESTIONS
PASS JOURNAL ENTRY: RECEIVED DUE AMOUNT FROM TENDULAKAR AND ALLOWED HIM DISCOUNT OF 10%
QUESTIONS
PASS JOURNAL ENTRY: PAID SALARY AND RENT RS.1200 AND 1500 RESPECTIVELY.
QUESTIONS
PASS JOURNAL ENTRY: KIRAN BECAME INSOLVENT. HE HAD TO PAY 10000 TO US. BUT WE RECEIVED ONLY 25 PAISE A RUPEE.
QUESTION
PASS JOURNAL ENTRY: PAID MONTHLY CAR INSTALMENT OF PROPRIETORS PERSONAL CAR RS.12000
QUESTION
PASS JOURNAL ENTRY: BOUGHT FURNITURE FROM GODREJ AND PAID BY CHEQUE RS.50000
QUESTION
PASS JOURNAL ENTRY: DEPOSITED CASH IN BANK RS.1000
QUESTION
JOURNALIZE FOLLOWING: COMMENCED BUSINESS WITH Rs.15000 OF WHICH RS.5000 WAS BORROWED FROM HIS WIFE AT 12% INTEREST P.A.
QUESTIONS
PASS JOURNAL ENTRY: PURCHASED GENERATOR FROM RAMA & CO. RS.50000
QUESTIONS
PASS JOURNAL ENTRY: PAID CARRIAGE AND CARTERAGE ON GOODS SOLD TO NAYAN ON HIS BEHALF.
QUESTION
PASS JOURNAL ENTRY: BOUGHT GOODS FROM SATISH AT ONE MONTHS CREDIT RS.6000 OUT OF WHICH HALF WAS INVOICED TO MR. RAM AT 30% ABOVE COST.
ACCOUNTING STANDARDS.
INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA RECOGNISING THE NEED TO HARMONISE THE DIVERSE ACCOUNTING POLICIES AND PRACTICES CONSTITUTED AN ACCOUNTING STANDARDS BOARD IN THE YEAR 1977. ASB FORMULATE ACCOUNTING STANDRDS SO THAT COUNCIL OF ICAI MAY MANDATE SUCH STANDARDS.
QUESTIONS
SEBI AND COMPANYS ACT REQUIRE AUDITORS TO QUALIFY AUDIT REPORTS THAT A. THAT DO NOT CONFORM TO MANDATORY ACCOUNTING STANDARDS. B. CONFORM TO MANDATORY ACCOUNTING STANDARDS. C. DO NOT CONFORM TO ACCOUNTING STANDARDS. D . NO RESPOSIBILITY ON AUDITORS.
QUESTIONS.
Q WHICH SECTION OF COMPANIES ACT CAST RESPONSIBILITY ON BOARD OF DIRECTORS TO COMPLAY WITH MANDATORY ACCOUNTING STANDARDS: A. SECTION 217(2AA) B. SECTION 215 C. SECTION 125 D. SECTION 44.
ACCOUNTING STANDARDS
AS -1 ALL SIGNIFICANT POLICIES ADOPTED IN PREPARATION OF FINANCIAL STATEMENTS SHOULD BE DISCLOSED. ANY CHANGE IN ACCOUNTING POLICIES WHICH HAS MATERIAL EFFECT IN CURRENT PERIOD OR IN LATER PERIOD SHOULD BE DISCLOSED.
AS 2
DEALS WITH DETERMINATION OF VALUE AT WHICH INVENTORIES ARE CARRIED/VALUED INVENTORIES TO BE VALUED AT LOWER OF COST OR NET REALISABLE VALUE. AVERAGE COST OR FIFO METHODS ARE PERMITTED IN CASE WHERE GOODS ARE INTERCHANGEABLE.
AS-3
PREPARATION OF CASH FLOW STATEMENT AND ITS PRESENTATION ALONGWITH FINANCIAL STATEMENTS CASH FLOW TO BE CLASSIFIED BY OPERATING/INVESTING/FINANCING ACTIVITIES.
AS 4
TREATMENT OF CONTINGENCIES AND EVENTS IN FINANCIAL STATEMENTS. EG. CASES IN HIGH COURT OR PENALTY PROCEEDINGS UNDER LAW. CONTINGENCIES MUST BE PROVIDED IF LOSSES CAN BE ESTIMATED. EVENTS AFTER BALANCESHEET DATE AND BEFORE APPROVAL OF BOARD OF DIRECTORS SHOULD BE APPROPRIATELY ADJUSTED IN VALUE OF ASSETS AND LIABILITIES. IF INSUFFECIENT EVIDENCE, DISCLOSURE TO BE MADE CONTINGENT GAINS ARE NOT RECOGNIZED.
AS-5
DEALS WITH TREATEMENT OF PRIOR PERIOD AND EXTRAORDINARY EVENTS. DEBITS OR CREDITS WHICH ARISE IN CURRENT YEAR OR AS A RESULT OF OMMISSION/MISTAKES IN PRIOR YEAR. ALSO EXTRAORDINARY ITEMS LIKE WRITING OFF IVENTORIES. DISPOSAL OF FIXED ASSETS.
AS -6
DEPRECIATION IS MEASURE OF WEARING OUT ASSETS. DEPRECIATION METHOD SHOULD CAREFULLY BE SELECTED AND CONSISTENCY APPLIED FOR YEAR TO YEAR. TREATMENT FOR REVALUATION OF ASSETS DEPRECIATION METHOD TO BE DISCLOSED.
ACCOUNTING OF CONSTRUCTION CONTRACTS .CONTRACT FOR CONSTRUCTION EXCEED ONE YEAR OR SO. ACCOUNTING ISSUES OF REVENUE, TREATMENT OF ADVANCE RECEIVED, WORK IN PROGRESS, IN FINANCIAL STATEMENTS. TYPES OF CONTRACTS: FIXED PRICE CONTRACT + ESCALATION COST OR COST PLUS A FIXED FEE. AMOUNT AND METHOD USED TO DETERMINE REVENUE RECOGNIZED.
AS-7
AS-8
STAND DELETED FROM 1.4.03 R&D EXPENSES ARE NOW COVERED ON AS-10
AS-9
BASIS FOR RECOGNITION OF REVENUE I.E INCOME AND TIME WHEN INCOME IS SAID TO HAVE ARISEN WHEN REVENUE RECOGNITION POSTPONED , DISCLOSURE OF CIRCUMASTANCES TO BE MADE.
AS-10
ACOUNTING OF FIXED ASSETS AND DISCLOSURE THERE OF. COMPONENTS OF COST. PURCHASE PRICE: + IMPORT DUTY+TAXES+DIRECT COST TO BRING ASSET TO ITS WORKING CONDITIONTRADE DISCOUNTS. FINANCING COST TO THE EXTENT SUCH COST RELATE TO PERIOD AFTER SUCH ASSETS ARE READY TO USENOT TO BE CAPITALIZED. TEST RUN EXPENSES CAPITALIZED.
AS-11
TRANSLATION OF ACOUNTING TRANSACTION IN FOREIGN CURRENCIES IN REPORTING CURRENCY. FINANCIAL STATEMENT OF FOREIGN OPERATIONS FORWARD EXCHANGE CONTRACTS. EXCHANGE DIFFERENCE INCLUDED I.E PROFIT OR LOSS TO BE DISCLOSED.
AS-12
GOVERNMENT GRANTS RECEIVED BY AN ENTITY. SUBSIDIES/CASH INCENTIVE/DUTY DRAWBACK DOES NOT INCLUDE ANY TAX EXEMPTION OR TAX HOLIDAY.
AS-13
ACCOUNTING FOR INVESEMENTS MADE BY AN ENTITY. CURRENT AND LONG TERM.
AS-14
AMALGAMATION OF TREATMENT OF RESULTANT GOODWILL OR RESERVES TAKE OVER OF EXISTING BUSINESS AND FORMATION OF NEW BUSINESS.
AS-15
ACCOUNTING OF RETIREMENT BENEFIT TO EMPLOYEES IN FINANCIAL STATEMENTS PF/PENSION/GRATUIITY LEAVE ENCASHMENT POST RETIREMENT WELFARE SCHEME METHOD BY WHICH RETIREMENT BENEFITS VALUED.
AS-16
CAPITALIZATION OF BORROWING COST ATTTRIBUTABLE TO ACQUISITION/CONSTRUCTION OR PRODUCTION WHERE QUALIFYING ASSET TAKES SUBSTANTIAL PERIOD TO GET IT READY FOR INTENDED USE OR SALE.
AS-17
SEGMENT REPORTING REPORTING OF INFORMATION ABOUT DIFFERENT TYPES OF PRODUCT AND SERVICES OF AN ENTERPRISE AND ITS OPERATIONS IN DIFFERENT GEOGRAPHICAL AREAS. FOR ASSESSING RISK AND RETURN OF DIVERSIFIED OR MULTILOCATIONAL ENTERPRISE.
AS-18
REPORTING OF RELATED PARTY RELATIONSHIP AND TRANSACTIONS BETWEEN A REPORTING ENTERPRISE AND RELATED PARTY. NAME OF RELATED PARTY AND RELATIONSHIP WHERE CONTROL EXIST TO BE DISCLOSED.
AS-19
LEASE: A LEASE AN AGREEMENT WHEREBY THE LESSOR CONVEYS TO THE LESEE IN RETURN FOR A PAYMENT OR SERIES OF PAYMENTS THE RIGHT TO USE AN ASSET FOR A AGREED PERIOD. ACCOUNTING POLICIES FOR LESSOR AND LESSEE AND DISCLOSURE IN RELATION TO FINANCIAL LEASE AND OPERATING LEASE.
AS-20
PRINCIPLES & DETERMINATION OF EARNING PER SHARE COMPARISON BETWEEN ENTERPRISES. NET PROFI(LOSS)/ WEIGHTED AVERAGE NUMBER OF SHARES.
AS 21
CONSOLIDATED FINANCIAL STATEMENT OF PARENT AND SUBSIDARIES.
AS-22
METHOD OF DETERMINATION OF AMOUNT OF EXPENSES OR SAVING RELATING TO TAXES ON INCOME IN RESPECT OF AN ACCOUNTING PERIOD. DEFERRED TAX ASSETS AND LIABILITIES SHOULD BE DISTINGUISHED FROM CURRENT TAX ASSETS AND LIABILITIES
AS-23
ACCOUNTING FOR INVESTMENT IN ASSOCIATES.
AS-24
DISCONTINUATION OF OPERATION OF PARTICULAR SEGMENT. DISCLOSURE OF PRE TAX PROFIT OR LOSS FROM ACTIVITIES ATTRIBUTABLE TO DISCONTINUING OPERATIONS.
AS-25
INTERIM REPORTING WHICH IS NOT FOR COMPLETE REPORTING PERIOD. CONDENSED B/S CONDENSED P&L CONDENSED CASH FLOW STATEMENT EXPLANATORY NOTES.
AS-26
OTHER THAN INTANGIBLE ASSETS COVERED IN AS22( DEFERRED TAX ASSETS) RELATE TO START UP COST ( EG ADVT ETC) R&D PATENTS AND COPY RIGHT GOODWILL DISCLOSURE: USEFUL LIFE OR AMORATIZATION RATE AMORATIZATION METHOD.
AS-27
TWO OR MORE PARTIES UNDER TAKE ECONOMIC ACTIVITY WITH JOINT CONTROL ACCOUNTING FOR JOINT VENTURE IN A CONSOLIDATED FINANCIAL STATEMENT. DISCLOSURE: ANY CONTINGENT LIABILITY INCURRED BY VENTURER AND ITS SHARE. ANY CAPITAL COMMITMENT AND ITS SHARE.
AS-28
EQUITY OR DEBT LISTED TURNOVER EXCEED RS.50 CRORES PRINCIPAL OF THIS A.S IS TO ENSURE CARRYING COST OF ASSET IS NOT MORE THAN RECOVERABLE VALUE OF ASSET. NOT APPLIED TO INVENTORIES AS 2 CONSTRUCTION CONTRACT AS 7 FINANCIAL ASSETS AS 13 & DEF TAX AS 22