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ACCOUNTING MATERIAL FINANCIAL ACCOUNTING GROWTH OF ACCOUNTING Accounting is as old as money itself. However, the act of accounting was not as developed as it as today because in the early stages of civilization, the numbers of transactions to be recorded were so small that each businessman was able to record and check for himself all his transactions. Accounting was practiced in India twenty-three centuries ago as is clear from the book named ‘ARTHASHASTRA’ written by Kautilya, King Chandragupta’s minister. This book not only relates to politics and economics, but also explains the art of proper keeping of accounts. The chapter ‘The Business of keeping up Accounts in the office of Accountants’ describes records of accounts to be maintained in accountant’s office and methods of checking accounts. However, the modern system of accounting is based on the principles of Double Entry System, which owes its origin to Fra Luca Pacioli who first published the principles of Double Entry System in 1494 at Venice in Italy. Thus, the art of accounting has been practiced for centuries but it is only in the late thirties that the study of the subject ‘Accounting’ has been taken up seriously. 1
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Hari Automobiles

FINANCIAL ACCOUNTING

GROWTH OF ACCOUNTING

Accounting is as old as money itself. However, the act of accounting was not as developed as it as today because in the early stages of civilization, the numbers of transactions to be recorded were so small that each businessman was able to record and check for himself all his transactions. Accounting was practiced in India twenty-three centuries ago as is clear from the book named ARTHASHASTRA written by Kautilya, King Chandraguptas minister. This book not only relates to politics and economics, but also explains the art of proper keeping of accounts. The chapter The Business of keeping up Accounts in the office of Accountants describes records of accounts to be maintained in accountants office and methods of checking accounts. However, the modern system of accounting is based on the principles of Double Entry System, which owes its origin to Fra Luca Pacioli who first published the principles of Double Entry System in 1494 at Venice in Italy. Thus, the art of accounting has been practiced for centuries but it is only in the late thirties that the study of the subject Accounting has been taken up seriously.

In the recent years large-scale production, cut - throat competition, widening of the market and changes in the technology have brought remarkable changes in the field of Accounting. In the words of Gordon and Shilinglaw: It has come to be recognized as a tool for mastering the various economic problems which a business organization may have to face. It provides information that can be drawn upon by those responsible for decisions affecting the organizations future. This history is written mostly in quantitative terms. It consists partly of files of data, partly of reports summarizing various portions of these data, and partly of the plan established by management, to guide its operations.

MEANING OF ACCOUNTING

The main purpose of accounting is to ascertain profit or loss during a specified period, to show financial conditions of the business on a particular date and to have control over the firms property. Such accounting records are required to be maintained to measure the income of the business and communicate the information so that managers, owners and other parties may use it. Accounting is a discipline which records, classifies, summarizing and interprets financial information about the activities of a concern so that intelligent decisions can be made about the concern. The American Institute of Certified Public Accountants has defined the Financial Accounting as The art of recording, classifying and summarizing in a significant manner in terms of money transactions and events which in part, at least of a financial character and interpreting the results thereof. American Accounting Association defines accounting as The process of identifying, measuring and communicating economic information to permit informed judgments and decisions by users of the information. Therefore Accounting is also known as The language of business as the success or failure of a business can be talked in terms of its profit or loss and such results can be ascertained only through Accounting.

ACCOUNTING RECORDS

The Traders are required to maintain at least two registers for recording Accounting transactions of their business they are Journal and Ledger. Every transaction that takes place in the business should be recorded in the journal in the order of its happening. Separate accounts should be opened in the ledger in the names of all these persons with whom the trader deals, in respect of all his assets and liabilities and also incomes and expenses. The transactions relating to each account should be posted to the respective accounts from the journal either daily or weekly, Ledger shows the clear picture of transactions relating to each account.

In big business units clear picture of transactions are more and work of book-keeping is required to be divided between two or three persons, the Journal is sub-divided into Purchases Journal, Sales Journal, Purchases Returns Journal, Sales Returns Journal, Cash Book and Journal Proper. However one ledger is maintained for all accounts. This system of bookkeeping is known as Practical System of Book-Keeping .

An account is nothing but a summarized record of business transactions relating to a person, assets, liability, income or expenditure. Each account is opened on a separate page. Left hand side of the account is called Debit side and Right hand side is called Credit side. Some transactions are to be recorded on the Debit side and some on the Credit side of an account to ascertain the final result of each account. It is known as Debiting an account and Crediting an account respectively.

Single and Double Entry System of Accounting: - In business accounting, both single and Double entry system of accounting is in use. But among them the double accounting form of accounting are being used widely because of its advantages, like accuracy, completeness and durability Etc.

Single Entry System: - This system is based on cash accounting i.e. transactions are recorded only when cash is received or paid. This system ignores credit transactions and accruals. It is used only in Government accounting.

Double Entry System: - This system is widely used by non-government organizations. Under this System transactions are recorded on accrual basis. i.e. irrespective of whether cash is paid or not. For example where salary is due at the end of a month, it is recorded as an expense of that particular month, though cash is paid in the subsequent month. Further all transactions have two aspects namely debit and credit. This is the reason why the system is called Double Entry System. This system is been developed by Luca Picalio, an French statistician and he is known as Father of Modern Accounting System.

(* Accrual = The amount which is due or yet to be receivable from others)

CLASSIFICATION OF ACCOUNTS

1. Personal Account: The accounts, which are related to persons, companies, organizations and institutions that should be called as Personal Account.

Example: Person Names, Company Names, Organization Names and Institution Names etc.

Debit Rule: The Receiver

Credit Rule: The Giver

Ex: 1) Raju gives a gift to Rajesh & Co Rs.10,000

Rajesh & Co A/c Dr. 10,000

To Raju A/c 10,000

2. Real Account: The Accounts, which are related to companys property that accounts should be called as Real Account. Companys property divided in to two types

A) Fixed Assets: Fixed Assets are those, which provide long-term benefits for running the business. Change in the value of these assets is minimum. For example, Land and Buildings; Plant and Machinery.,Furniture for office use.B) Current Assets: Current Assets are those which dedicate their benefits for running the business and which change in value within a short span of time. For example, Goods, Debtors, Cash and Investments etc., Values of these assets always change.Debit Rule: What comes in

Credit Rule: What goes out

Ex: 1) Purchase Furniture Rs.10,000 for Cash

Furniture A/c Dr. 10,000

To Cash A/c 10,000

2) Purchase Machinery Rs.20,000 from Xyz Ltd.

Machinery A/c Dr. 20,000

To Xyz Ltd A/c 20,000

3. Nominal Account: The accounts, which are related to company expenses, losses, incomes and gains that accounts should be called as Nominal Account. All Non-Visible items like Goodwill, expenses and profits will be covered under this principle. This is also called as Dependent Principle. Because it will not satisfy fully (i.e. Both debit and credit) with out sharing one of the side with real or personal principle.

Expenses: Amount spent for acquiring goods or services for running business is known as Expenses.

Income: The amount earned by a firm out of its business transaction during a period is called Income.

Debit Rule : All Expenses, Losses

Credit Rule: All Incomes, Gains

Ex: 1) Paid Salaries Rs.500

Salaries A/c Dr.500

To Cash A/c 500

2) Received Rent Rs.1,000

Cash A/c Dr. 1,000

To Received Rent A/c 1,000

BASIC TERMS USED IN ACCOUNTING

1) Assets: The properties possessions and other articles belonging to a businessman, which are purchased by him for use in his business but not for re-sale, are called Assets. They may be tangible as well as intangible. Buildings, Machinery, Furniture etc. are the examples of Tangible assets, where as Goodwill, Patents rights etc. are examples of Intangible asset. Moreover, the balance of Cash in hand, Unsold stock of goods, amount receivable from debtors (customers) can also be known as Assets.

2) Liabilities: The debts, borrowings and Owings of a businessman, which were contracted for the business, are called Liabilities. The loan from banks, amount payable to creditors (suppliers) etc. come under liabilities. The capital invested by the proprietor in this business is also treated as a liability for the business.3) Purchase: The tern Purchase refers to the total amount of goods acquired/bought by an enterprise for resale or for use in the production of goods or rendering of services in the normal course of business.4) Sales: The term Sales refers to the amount for which the goods are sold or services are rendered. In other words, the revenue of a business unit can be referred as Sales.5) Creditors: Creditors are those persons who have advanced money or supplied goods on credit to the business. However the suppliers of goods on credit can be referred as Trader Creditors.6) Debtors: The term Debtor refers to the person from whom the amounts are due for goods sold or services rendered or in respect of contractual obligations. The debtors for purchases of goods on credit can be referred as Trade Debtors.7) Capital: The money or moneys worth invested by a businessman in his business is called Capital. It is the lifeblood of every business. In accountancy capital is treated as an amount borrowed by the business from its proprietor.8) Drawings: The money or goods taken by the proprietor from his business for his private expenses or domestic use is known as Drawings.9) Stock: The term Stock refers to tangible property held for sale in the ordinary course of business or for consumption the production of goods or services for sale.10) Business: Business is a generic term including any activity undertaken for the purpose of making profits. It refers to any establishment or organization set up for the conduct of trade, commerce or industry.11) Profession: Profession is a practice of intellectual skill by a person in a definite field, requiring specialized training on the part of the person engaged in that field, e.g. a doctor, a lawyer, an accountant, an architect etc.12) Voucher: A Voucher is a written document originating and supporting a business transaction. It is the basis of recording a transaction in the books of account. For example: Cash memos, Pay-in-slips, invoices, etc.13) Goods: The articles, commodities and merchandise in which a businessman deals in his business are called Goods. In other words, goods mean those commodities which are purchased by a businessman for the purpose of reselling them for the profit in his business. Ex: Purchase A/c EXPENSES: - Expenses are divided into two types

1. Direct Expenses

2. Indirect Expenses

Direct Expenses: Expenses are incurred for manufacturing of stock item or these expenses are incurred for purchasing of stock item (or) simply the expenses, which will be shown in trading account Debit side.

Those are: Wages

Carriage on purchase or Carriage Inwards

Fuel Expenses

Gas, Coal and Power expenses

Factory LightingIndirect Expenses: Expenses are incurred for selling of stock item and expenses relating to office administration (or) the expenses, which comes of profit and loss account debit side.

INCOMES: Incomes are divided into two types

1. Direct Income

2. Indirect Income

Direct Income: The income, which we received from the sale of stock item or the closing stock, related expressions will be created under direct incomes (closing stock will be considered as the direct income only in computer accounting packages not in general sense).

Indirect Income: The income which we received other than selling of stock items only the income received from operation of business (or) simply the incomes showed on the credit side of the profit & loss account.

Trial Balance: After posting the accounts in the ledger statement is prepared to show separately the debit and credit balances such a statement is known as Trail Balance. Listing the each and every account and entering in separate columns the total of the debit and credit sides may also prepare it. Whichever it is prepared the totals of two columns should agree. An agreement indicates reasonable accuracy of the accounting work. If the two sides dont agree then it is simply an arithmetical error.

Dr.

Trading, Profit & Loss A/C Format

Cr.

Particular

AmountParticular

Amount

To Opening stock

By Sales

To Purchase

By Closing Stock

To Wages

By Handling charges received

To Gas, coal and Power

By Gross Loss C/d (if any)

Expenses

To Factory Lighting

To Factory Rent

To Handling Charges

To Carriage on Purchase

Or Carriage Inwards

To Fuel Expenses

To Gross Profit C/d

To Gross Loss B/d (if any)

By Gross profit B/d

To Salaries

By Received Rent

To Rent

By Received Interest

To Advertisement

By Received Commission

To Packing Expenses By Received Discount

To Bad debts

By Profit on Sales of Assets

To Carriage Outwards

By Interest on Drawings

To Insurance Premium

By Interest on Fixed Deposits

To Printing & stationery

By Net Loss ( if any )

To Electricity Charges

To Telephone Charges

To Discount Allowed

To Audit Fees

To Depreciation

To Interest on Capital

To Loss on sale of Asset

To Interest on Loans

To Provision for Bad debts

To Net Profit (Transferred

,to Balance sheet)

Balance Sheet Format

Liabilities

Amount Assets Amount

Capital

Fixed Assets

Add: Additional Capital

Tangable Assets

Interest on capital

Land & Buildings

Net Profit

Furniture

Less: Drawings

Machinery

Interest on Drawings

Motor Vehicles

Net Loss

Computer

Printer

Current Liabilities

In-tangable Assets

Sundry Creditors Goodwill

Bills Payable

Current AssetsOutstanding Expenses

Deposits Given Received income in Advance

Sundry Debtors

Bank Overdraft

Bills Receivable

Loans taken from Parties

Cash-in- Hand

Security deposits received

Bank Account

Duties & Taxes

Closing Stock

Sales Tax

Loan given

Excise Duty

Prepaid Expenses

Luxury Tax

Incomes Accrued

Value Added Tax (VAT)

Investments

Long-term Investment

Short-term Investment

Miscellaneous Expenses

Preliminary Expenses

Increase in Asset Debit

Decrease in Asset

Credit

Increase in Expenses Debit

Decrease in ExpensesCredit

Decrease in Liabilities Debit

Increase in LiabilitiesCredit

Decrease in Income Debit

Increase in Income

Credit

MANUAL ACCOUNTING PROCEDURE

1. Journal Entries (Cash Book / Day Book)

2. Ledger Posting (Ledger Book)

3. Trial Balance

4. Trading, Profit & Loss A/C

5. Balance Sheet

COMPUTER ACCOUNTING PROCEDURE

1. Company Creation

2. Ledger Creation

3. Stock Items Creation

a) Stock Groups

b) Units of Measures

c) Stock Items

d) F11 Features

4. Journal Entries / Voucher Entry

5. Reports Checking

a) Trading, Profit & Loss A/C

b) Balance Sheet

c) Trail Balance

d) Day Book

e) Various Ledger Books

f) Stock Status

g) Cash Flow / Funds Flow

h) Ratio Analysis

Grouping

Profit & LossA/C

Expenses

Incomes

Direct

Indirect

Direct Indirect

Expenses

Expenses

Income Income

Balance Sheet

Liabilities

Assets

Share

Current

Fixed Current

Capital

Liabilities

Assets Assets

Sundry Bills

Loans

Creditors Payable & Advances taken

Sundry

Bills

Cash Cash

Closing

Debtors Receivable in

at

Stock

Hand bank

Voucher Types

1. Receipt (F6) : If cash comes in to business. Cash / Cheque (Bank)

2. Payment (F5) : If cash goes from business. Cash / Cheque (Bank)

3.Purchase (F9) : Only Stock Items are purchase for cash or credit.

4.Sales (F8) : Only Stock Items are sold for cash or credit.

5. Journal (F7) : No Cash /No Bank Entries

(Or)

Adjustment Entries

6. Contra (F4) :

1. Cash deposited into bank

Bank A/c Dr.

To Cash A/c

2. Cash withdrawn from bank

Cash A/c Dr.

To Bank A/c

1. Ravi Electricals

1 April,20091. Ravi started business with cash Rs.3,00,000

2. Purchased LG Washing Machine Rs.10,000 for cash

3. Purchased Samsung Washing Machine Rs.12,000 each from Samsung Ltd.

4. Paid Carriage on Purchase Rs.1,200

5. Sold LG Washing Machine Rs.12,000 for cash

6. Sold Samsung Washing Machine Rs.15,000 each to M.K.Enterprises

7. Paid Salaries Rs.1,200 and Rent Rs.1,000 by cashGross Profit: Rs.3,800

Net Profit

: Rs.1,600

Balance Sheet : Rs.3,13,600

2. Ravi Electricals

1 April,20091. Ravi started business with cash Rs.3,00,000

2. Purchase 10 LG Washing Machines @ Rs.10,000 each for cash

3. Purchase 10 Samsung Washing Machines @ Rs.12,000 each from Samsung Ltd

4. Paid Carriage on Purchase Rs.1,200

5. Sold 10 LG Washing Machines @ Rs.12,000 each for cash6. Sold 10 Samsung Washing Machines @ Rs.12,000 each to M.k.Enterprises

7. Paid Salaries Rs.12,000 and Rent Rs.1,000 by cashGross Profit: Rs.18,800

Net Profit

: Rs.5,800

Balance Sheet: Rs.4,25,800

3. Friend Computers

1 April,2009

1. Rajesh started business with cash Rs.3,20,000

2. Shiva started business with cash Rs.2,40,000

3. Srinu started business with cash Rs.1,60,000

4. Cash deposited into ICICI Bank Rs.50,000

5. Purchase Furniture for cash Rs.2,500 for office use

6. Personal Drawings Rajesh Rs.2,000 ; Shiva Rs.1,000 ; Srinu Rs.500 by cash

7. Bought 10 Computers @ Rs.22,500 from Hcl Computers

8. Sold 5 Computers @ Rs.28,500 each to Kumar & Co.

9. Sold 1 Computer @ Rs.22,500 for cash 10% Discount

10. Salaries paid for Rs.23,000 ; Rent Rs.2,800 by cash

11. Carriage Rs.2,500 ; Legal Expenses Rs.2,750 by cash

12. Commission paid to Naresh Rs.1,800 by cash13. Interest on Capital of Rajesh Rs.6,000 ; Shiva Rs.4,000 and Srinu Rs.2,000

14. Interest on Drawings of Rajesh Rs.200 ; Shiva Rs.100 and Srinu Rs.50

15. Depreciation on Furniture @ 10%

Closing Stock: Rs. 90,000

Gross Profit

: Rs.25,250

Net Loss

: Rs.17,000

Balance Sheet: Rs.9,53,150

4. Radhakrishna & Company

1 April,2009

1. Radhakrishna started business with cash Rs.8,00,000

2. Cash deposited into ICICI Bank Rs.2,00,000

3. Amount deposited into PNB (Punjab National Bank) Rs.2,00,000

4. Purchase Order 15 Stereo Systems @ Rs.18,000 each from Surya Electronics5. Purchase 10 Stereo Systems @ Rs.18,000 each from Surya Electronics

6. Paid Carriage Inwards Rs.500 by cash

7. Sales Order 10 Stereo Systems @ Rs.20,000 each to Shahs Electronics

8. Sold 10 Stereo Systems @ Rs.20,000 each to Shahs Electronics

9. Paid Salary Rs.4,000 and Rent Rs.2,500 by cash

10. Paid Telephone Charges Rs.2,000 by cheque (ICICI Bank)

11. Paid Staff Welfare Expenses Rs.1,500 by cheque (PNB)

12. Cheque issued to Surya Electronics Rs.50,000 (ICICI Bank)

13. Cheque received from Shahs Electronics Rs.80,000 (PNB)

Gross Profit

: Rs. 19,500

Net Profit

: Rs.9,500

Balance Sheet: Rs.9,39,500

5. Hema & Company

1 April,2009

1. Hema started business with cash Rs.15,00,000

2. Purchase Furniture worth Rs.20,000 for office use

3. Amount deposited into Andhra Bank Rs.10,00,000

4. Purchase 15 CD Players @ Rs.14,000 each from Sai Electronics

5. Purchase 20 Audio Systems @ Rs.8,000 each from Bpl India

6. Purchase Computer worth Rs.25,000 and payment made by cheque for office use

7. Purchase Woolen Carpet worth Rs.14,000 and payment made by cheque for office use

8. Sold 4 Audio Systems @ Rs.9,100 each for cash

9. Sold 2 Audio Systems @ Rs.9,300 each to Sudha Electronics

10. Sold 4 CD Players @ Rs.15,200 each for cash11. Sold 6 CD Players @ Rs.15,500 each to Sandhya Electronics

12. Cheque given to Sai Electronics Rs.1,10,000

13. Cash paid to Bpl India Rs.80,000

14. Sold 6 Audio Systems @ Rs.9,300 each to Sandhya Electronics

15. Received cheque from Sandhya Electronics Rs.50,400

16. Sold 4 Audio Systems @ Rs.9,100 each for cash

17. Amount deposited into Andhra Bank Rs.1,10,000

18. Cash withdrawn for personal use Rs.75,000

19. Purchase 5 CD Players @ Rs.14,000 each from Sai Electronics

20. Cheque given to Sai Electronics Rs.1,00,000

21. Purchase 7 Audio Systems from Bpl India @ Rs.8,000 each

22. Cheque given to Bpl India Rs.75,000

23. Purchase Furniture from Modern Furniture House Rs.25,000 for office use

24. Paid Rent Rs.6,000 by cash

25. Paid Electrical Charges Rs.2,000 by cash

26. Paid Salaries Rs.12,000 by cash

27. Cash paid to Modern Furniture House Rs.25,000

Closing Stock: Rs. 2,28,000

Gross Profit

: Rs. 33,000

Net Profit

: Rs. 13,000

Balance Sheet: Rs.15,69,000

6. Bhaskar Furnitures

1 April,2009

1. Bhaskar started business with cash Rs.5,00,000

2. Purchases from A - Z Furnitures50 Tables @ Rs.200 each 200 Chairs @ Rs.150 each 3. Cash Purchases

20 Boards @ Rs.250 each 4. Sales to Princess School

5 Boards @ Rs.400 each

50 Chairs @ Rs.200 each

20 Tables @ Rs.250 each

5. Cash Sales

10 Boards @ Rs.400 each

100 Chairs @ Rs.200 each

20 Tables @ Rs.250 each

6. Returned to A Z Furnitures

5 Tables ; 10 Chairs

7. Paid to A Z Furniture Rs.15,000

8. Received cash from Princess School in full settlement of his account

9. Paid Salaries Rs.5,000 and Rent Rs.2,000

Closing Stock: Rs. 8,250

Gross Profit

: Rs.11,750

Net Profit

: Rs. 4,750

Balance Sheet: Rs.5,27,2507. Ramesh & Company1 April,2009

1. Ramesh started business with cash Rs.9,00,000

2. Purchase 25 Colour TVs @ Rs.18,000 each for cash ; VAT 4%

3. Paid Wages Rs.600

4. Purchase Furniture by cash Rs.50,000 for office use

5. Purchase Printer by cash Rs.30,000 for office use

6. Sold 15 Colour TVs @ Rs.21,000 each for cash, Excise Duty on Sales 8% and VAT 4%

7. Amount deposited into SBI Bank Rs.2,00,000

8. Paid Salary Rs.3,500 and Rent Rs.2,000

9. Amount withdrawn for Personal use Rs.1,00,000 from S B I Bank10. Depreciation on Furniture @10%

11. Depreciation on Printer @60%

Closing Stock: Rs.1,80,000

Gross Profit

: Rs.44,400

Net Profit

: Rs.15,900

Balance Sheet: Rs.8,41,100

8. Radhika & Company1April,20091. Radhika started business with cash Rs.10,00,000

2. Purchase Furniture worth Rs.40,000 by cash for office use

3. Purchase Computer worth Rs.45,000 by cash for office use

4. Purchase 20 Printers @ Rs.10,000 each from Samsung Ltd ; VAT 4%5. Purchase 20 Computers @ Rs.40,000 each for cash ; VAT 4%

6. Sold 10 Printers @ Rs.12,000 each for cash ; VAT 4%

7. Sold 10 Computers @ Rs.50,000 each to Krishna ; VAT 4%

8. Paid cash to Samsung Ltd Rs.1,00,000

9. Received cash from Krishna Rs.5,00,000

10. Paid Salaries Rs.2,000 and Rent Rs.3,000 by cash

Closing Stock: Rs.5,00,000

Gross Profit

: Rs.1,20,000

Net Profit

: Rs.1,15,000

Balance Sheet: Rs.12,07,800

9. Raj & CompanyBalance Sheet as on 31-03-2009

Liabilities

Amount Rs. Assets

Amount Rs.

Raj Capital

3,10,000Furniture

54,000

LG Electronics 24,000Electrical Equipment

20,000

S B H

40,000

Sam Sum Bros

20,000

Closing Stock

50,000

(5 Refrigerators

@ Rs.10,000 each)

Cash

1,50,000

3,34.000

3,34,000

1 April,2009

1. Purchase 40 Refrigerators @ Rs.10,000 each from LG Electronics ; VAT 4%2. Paid Carriage on Purchase Rs.1,000

3. Sold 20 Refrigerators @ Rs.12,000 for cash ; VAT 4%

4. Sold 20 Refrigerators @ Rs.12,000 to Sam Sum Bros ; VAT 4%

5. Paid cash to LG Electronics Rs.3,50,000

6. Paid Salaries Rs.5,000 and Rent Rs.3,000

7. One Refrigerator returned to LG Electronics

8. One Refrigerator returned by Sam sum Bros

9. Received cash from Sam sum Bros in full settlement of his account

Closing Stock: Rs. 50,000

Gross Profit

: Rs.77,000

Net Profit

: Rs.69,000

Balance Sheet: Rs.4,58,60010. Suresh Electricals1 April,2009

1. Suresh commenced business with cash Rs.5,00,000

2. Purchase Furniture worth Rs.80,000 for business use

3. Deposited in IDBI Bank Rs.1,00,000

4. Purchase Office Desk paid by cheque Rs.2,000

5. Purchase 10 DVD Players from Aiwa & Co. @ Rs.7,000 each

6. Paid Carriage Rs.250

7. Sold 5 DVD Players for cash @ Rs.9,000 each

8. Sold 5 DVD Players to X & Co. @ Rs.9,000 each

9. Paid Salaries Rs.3,000 and Rent Rs.2,500

Gross Profit

: Rs.19,750

Net Profit

: Rs.14,250

Balance Sheet: Rs.5,84,250

11. Srinivas Automobiles1 April,2009

1. Srinivas started business with cash Rs.5,00,000

2. Purchase Computer Rs.30,000 for office use

3. Purchase Furniture Rs.20,000 for office use

4. Purchase 10 Scooters@ Rs.10,000 each for cash

5. Purchase 10 Scootys @ Rs.5,000 each from Sony & Co.

6. Sold 10 Scooters @ Rs.12,000 each to Sanjay for cash

7. Sold 10 Scootys @ Rs.6,000 each to Sagar

8. Sold Computer for Rs.28,000, which was in office use

9. Paid Electricity Charges Rs.800

10. Paid medical expenses for Srinivas son Rs.500

11. Deposited cash in S B I for Rs.20,000

12. Withdraw cash from S B I for office use Rs.5,00013. Withdraw cash from S B I for private use Rs.2,000

14. Charge Interest on Capital Rs.4,000

15. Charge Interest on Drawings Rs.250

16. Depreciation on Furniture @ 10%

Closing Stock: Nil

Gross Profit

: Rs.30,000

Net Profit

: Rs.23,450

Balance Sheet: Rs.5,74,700

12. Vinay & CompanyBalance sheet as on 31-03-2009Liabilities Amount Rs. Assets

Amount Rs.

Vinay Capital 25,800

Cash

11,000

Usha & Co. 28,800

Ramesh

14,100

Closing Stock

21,700

Equipment

2,400

Furniture

5,400

54,600 54,600

1 April,20091. Purchased Goods from Usha & Co. Rs.13,500

2. Purchased a Machine from Tisco Ltd. Rs.800

3. Sold Ramesh on account Goods worth Rs.18,200

4. Received from Ramesh Rs.15,000

5. Paid Rs.18,200 to Usha & Co.

6. Paid Insurance Premium Rs.120

7. Made Cash Payment :Wages Rs.1,500 (Vinay)& rajesh1000Other Expenses Rs.1,140

8. Paid Rent of Rs.660

9. Proprietor withdraw Rs.200 for his personal use

10. Depreciation on Equipment Rs.35 & Furniture Rs.55

11. Closing Stock Rs.24,700

Gross Profit : Rs.7,700

Net Profit : Rs.3,190

Balance Sheet : Rs.53,690

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