Financial Accounting

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					FINANCIAL ACCOUNTING
   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.

               FINANCIAL ACCOUNTING RECORD




                PURCHASES,SALE,SERVICES ,
                     AND EXPENSES
         BOOK-KEEPING
• BOOK-KEEPING MAY BE DEFINED AS THE ART
  AND SCIENCE OF RECORDING ALL THE DEALINGS
 RALTED TO MONEY.

              SYSTEM OF BOOK-KEEPING




           SINGLE ENTRY      DOUBLE ENTRY
              SYSTEM            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
               TRANSACTION




             CREDIT            CASH




TRANSACTION MEANS IT IS THE MONETORY ACTIVITIES
PERFORMED BY TWO OF MORE PARTIES ONE IS GIVER
AND SECOND IS TAKER.
           ACCOUNTING EQUIATIONS:-


         TOTAL ASSETS =TOTAL LIABILITY


                          FOR EXAMPLE:-
CASH Rs.10000 +BUILDING Rs.25000=CAPITAL Rs.25000+LIABILITY Rs.10000

                            35000=35000
              TYPES OF ACCOUNTS:-

1.PERSONAL ACCOUNTS: - relate with individual, private
company and partnership firm etc.


                           RULES OF
                          ACCOUNTS




           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
1.REAL ACCOUNT: - Relate with assets like a Machinery,
  Building, Land, Cash and Bank*, Stock.

                               RULES OF
                               ACCOUNTS




       DEBIT WHAT                            CREDIT WHAT
       COMES IN                              GOES OUT


FOR EXAMPLE: - BUILDING PURCHASE Rs.10000/-
           BUILDING ACCOUNT------------DR            10000/-
               CASH ACCOUNT --------------------CR             10000/-
1.NOMINAL ACCOUNT: - Relate with income and expenditure of business.
 For example: - Salary, Wages, Rent, Profit, Commissions received, etc
 this are example of nominal account.



                                   RULE OF
                                   ACCOUNT




                DEBIT THE                            CREDIT THE
                EXPENSES OR                          RECEIVER OR
                GIVER SIDE                           INCOME SIDE

                   FOR EXAMPLE:-Salary paid Rs.1000/-

                 Salary Account ---------------------DR    1000/-
                      To Cash ------------------------CR       1000/-
THE JOURNAL AND

-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)


       DATE       PARTICULAR       L.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                          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
DA                               /             DA                              /
TE         PARTICULAR            F     AMT     TE         PARTICULAR           F      AMT

                                                    BY CASH ACCOUNT                   50000
     TO CAPITAL ACCOUNT                10000        BY PURCHASES ACCOUNT              25000
     TO SALES                          80000        BY BANK ACCOUNT                    1000
                                                    BY BALANCE C/D                    14000


                                       90000                                          90000
                                         CAPITAL ACCOUNT

       DEBIT SIDE(LEFT SIDE)(GIVER/EXPENSES)      CREDIT SIDE(RIGHT SIDE)(RECEIVER/INCOME)
                                    J/                                          J/
  DATE           PARTICULAR         F     AMT     DATE        PARTICULAR        F          AMT
   1ST                                             1ST
  JUNE2    TO BAL C/D                    10000   JUNE200    BY CASH ACCOUNT                10000
   008                                              8

                                         10000                                             10000



                                         BUILDING ACCOUNT

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

DATE           PARTICULAR          J/F    AMT      DATE         PARTICULAR           J/F       AMT

         TO CASH ACCOUNT                 50000              BY BAL ACCOUNT C/D                50000

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


       TO CASH ACCOUNT                 25000              BY BAL ACCOUNTC/D          25000


                                       25000                                         25000




                                        SALES ACCOUNT

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

DATE        PARTICULAR          J/F     AMT     DATE          PARTICULAR       J/F    AMT

       TO BAL ACCOUNTC/D               80000              BY CASH ACCOUNT            80000

                                       80000                                         80000
                                 BANK ACCOUNT
            DEBIT SIDE(LEFT                          CREDIT SIDE(RIGHT
        SIDE)(RECEIVER/INCOME)                     SIDE)(GIVER/PAYMENT)
                           J/                                        J/
DATE       PARTICULAR      F     AMT      DATE        PARTICULAR     F      AMT
2ST                                        2ST
                                                        BY BAL
JUNE2   TO CASH ACCOUNT          1000    JUNE200                            1000
                                                      ACCOUNTC/D
008                                         8
                                 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
2ST                                        2ST
                                                       BY BAL
JUNE2   TO CASH ACCOUNT          10000   JUNE20                            10000
                                                     ACCOUNTC/D
008                                         08
                                 10000                                     10000
                         TRIAL BALANCE
                     AS ON 31 ST MARCH 2008

SR NO         ACCOUNT NAME             L/F    DEBIT   CREDIT

  1     CASH ACCOUNT                          14000

  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