Class notes

Prepare a Bank Reconciliation Statement as on 31-12-2000:  1) Bank balance as per Pass Book Rs. 30,000 2) Bank has paid life insurance premium Rs. 500  3) Bank has collected interest on Bank Deposit Rs. 250 4) Bank has debited for Bank charges Rs. 150/ 5) Customer has directly deposited into own Bank A/c Rs. 1,000 6) Cheque deposited Rs. 2,000/-, cleared Rs. 1,500 7) Cheque issued worth Rs. 800, Preserved Rs. 300 8) Bank has paid water bill Rs. 150 9) There was excess debit in Pass Book Rs. 200 10) Bank has collected dividend on shares Rs. 1,000.

Ledger Introduction : The journal alone will not serve all the purposes of accounting. In the journal the entries of the transactions are spread over an different dates. Therefore the other book, namely, the ledger comes into play where all the entries pertaining to different accounts are summarised and classified under the respect accounts. This makes it possible to know the position of each and every account maintained in the ledger on any given date.  Meaning of Ledger : "Ledger is usually a bound book containing the various accounts concerned with the business. It contains all the personal accounts of debtors and creditors with whom the business deals, the accounts of all the assets of the business and also the accounts of various expenses incurred and the incomes earned by the business". Principal book or Chief book A ledger is the "Principal book" or "Chief book" of accounts for a trader's business. It contains all his transactions and accounts...

Meaning of Journal: The term 'journal' is derived from the French word 'jour', which means a day. Journal, therefore, means a daybook or a daily record. It is a book of original entries in which all transactions are first recorded chronologically (i.e., in the order of occurrence or order of dates) from the source documents.  In the journal, each transaction is analysed (i.e., classified) into debit (i.e., receiving or incoming) aspect and credit (i.e., giving or outgoing) aspect, and both the debit and credit aspects of each transaction are recorded together in one entry, with a brief explanation for the entry called narration. Features of Journal The following are some of the features of the journal:  (a) Journal is written every day (b) Transactions are recorded systematically in chronological order date wise (c) It is a book of prime or original entry (i.e. first entry)  (d) It analysis the transactions into the accounts to be debited and credited. (e) It contains t...

Meaning of accounting cycle The accounting cycle is the complete sequence of accounting processes or procedures which begin with the recording of business transactions in the book or books of original entry and end with the preparation of final accounts, and which are repeated in the same order in each accounting period. Diagram showing accounting process of an accounting cycle: The sequential steps involved in the accounting cycle are 1.Recording the business transactions in a journal or special journals Recording the business transactions date wise in the book or books of original entry called the journal or in a number of books of original entry called the special journals or subsidiary books, as and when they occur. 2. Classifying the transactions through posting to  ledger periodically Classifying the transactions (i.e., the entries found in the book or books of original entry) by posting or transferring those entries to the appropriate accounts in the Ledger perio...

Rules of accounts Rules of accounts under English system The procedure of debiting and crediting the different kinds of accounts under English system has been summarised as under 1.Personal accounts Debit the receiver Credit the giver 2. Real or property accounts Debit what comes in Credit what goes out 3. Nominal or fictitious accounts Debit expenses or losses Credit incomes or gains Applying the rules of debit and credit under English system 1.Understand clearly the meaning of a transaction given in the problem. For example:  commenced business with ₹10000 2.Find out which two accounts affected in the above transaction. Cash a/c Capital a/c 3.Find out to which class the above two accounts belong Cash a/c belongs to Real account Capital a/c belongs to representative personal account 4.Apply the respective rules to the two accounts Cash comes in to the business , so,as per real account rule - debit what comes in will apply here. Owner is the giver and he represents personal accou...

problem on natur of account 2 problems on nature ofaccount

Module 1: INTRODUCTION TO FINANCIAL ACCOUNTING INTRODUCTION Accountants can now engage in exciting new development areas such as forensic accounting, e-commerce, financial planning, environmental accounting, and others, in addition to their traditional role as financial record keepers. It collects data and distributes economic information about the company to a wide range of users as an information system. Definition of Accounting :  Definition by the American Institute of Certified Public Accountants (The year 1961):  “Accounting is the art of recording,  classifying and summarizing in a  significant manner and in terms of money, transactions and events which are, in part at least, of a financial character, and interpreting the result thereof”. Definition by the American Accounting Association (the Year 1966):  “The process of identifying,  measuring and communicating economic information to permit informed judgments and decisions by the users of accountin...