SEMINAR ON ACCOUNTING CYCLE
Presented By: Sahil Bhutani (BBA-I)
ACCOUNTING CYCLE
BALANCE SHEET JOURNAL
PROFIT AND LOSS ACCOUNT
LEDGER
TRADING ACCOUNT
TRIAL BALANCE
JOURNAL
In accounting, a first recording of financial transactions as they occur in time, so that they can then be used for future reconciling and transfer to other official accounting records such as the general ledger.
LEDGER
LEDGER is a book of accounts in which data from transactions recorded in journals are posted and thereby classified and summarized.
TRIAL BALANCE
A bookkeeping worksheet in which the balances of all ledgers are compiled into debit and credit columns.
TRADING ACCOUNT
It is the first part or stage in determination of the result of the business and is concerned with finding out the gross profit or gross loss by taking into account the various trading activities.
PROFIT AND LOSS ACCOUNT
For earning net profit, a businessman has to incur many more expenses in addition to the direct expenses. These expenses are not taken to trading account.
BALANCE SHEET
A financial statement that summarizes a company's assets, liabilities and shareholders' equity at a specific point of time.
During January 2010 Ram transacted the following business:
Commenced business with cash 20,000 Purchased goods on credit from Nadu 1,00,000 Purchased goods for cash 4,000 Paid Gopal an advance for goods ordered 10,000 Received cash from Maruti as advance for goods ordered by him 6,000 Purchased furniture, office use for cash 2,000 Paid Rent 1,000
During January 2010 Ram transacted the following business:
Received commission (in cash) 1,600 Goods returned to Nadu 2,000 Goods sold to Kishore Paid for postage and telegrams 200 Goods returned by Kishore Paid for stationery 1,200 Paid into Bank
10,000
2,000
5,000
During January 2010 Ram transacted the following business:
Goods sold for cash Bought goods for cash Paid salaries by cheque 3,200 Paid rent Drew cash for personal use Deposited cash into Bank 12,000
27,750 3,000
1,000 4,000
Journal Entries in the books of Ram
Date Particulars Cash A/c Dr. To Rams Capital A/c (Being the cash brought into business as capital) Purchase A/c Dr. To Nandus A/c (Being the goods purchased on credit) Purchases A/c Dr. To Cash A/c (Being the goods purchased for cash) Gopal A/c Dr. To Cash A/c (Being the amount paid to Gopal) L. F. Amount Dr. 20,000 20,000 Amount Cr.
1,00,000 1,00,000
4,000 4,000
10,000 10,000
Journal Entries in the books of Ram
Date Particulars
Cash A/c Dr. To Maruti A/c (Being the cash received from Maruti) Furniture A/c Dr. To Cash A/c (Being the furniture purchased for office use for cash) Rent A/c To Cash A/c (Being the wages paid) Dr.
L. F.
Amount Dr.
6,000
Amount Cr.
6,000
2,000
2,000
1,000 1,000
Cash A/c Dr. To Commission Received A/c (Being the commission received)
1,600 1,600
Journal Entries in the books of Ram
Date Particulars Nandu A/c To Purchase return A/c (Being goods returned to Nandu) Dr. L. F. Amount Dr. 2,000 2,000 Amount Cr.
Kishore A/c Dr. To Sales A/c (Being goods sold to Kamal on credit) Postages & Telegrams A/c Dr. To Cash A/c (Being the amount paid for postages & Telegrams) Sales returns A/c Dr. To Kishores A/c (Being the goods returned by Kamal)
10,000 10,000
200 200
2,000 2,000
Journal Entries in the books of Ram
Date Particulars Stationery A/c Dr. To Cash A/c (Being the amount paid for stationery) Bank A/c Dr. To Cash A/c (Being the amount deposited into Bank) Cash A/c To Sales A/c (Being the goods sold for cash) Dr. L. F. Amount Dr. Amount Cr. 1,200 1,200
5,000 5,000
27,750 27,750
Purchases A/c Dr. To Cash A/c (Being the goods purchased for cash)
3,000 3,000
Journal Entries in the books of Ram
Date Particulars Salaries A/c Dr. To Bank A/c (Being the amount paid as salaries) Rent A/c To Cash A/c (Being the rent paid) Dr. L. F. Amount Dr. 3,200 3,200 Amount Cr.
1,000 1,000
Ram Drawings A/c Dr. To Cash A/c (Being the cash drawn for personal use) Bank A/c To Cash A/c (Being cash deposited) Dr.
4,000 4,000
12,000
12,000
Ledger Postings
Rams Capital A/c
Dr. Date Cr.
Particulars JF Amount No Rs.
Date Particulars
JF Amount No Rs.
To Balance c/d
20,000
By Cash A/c
20,000
Total
20,000
Total
20,000
Ledger Postings
Cash A/c
Dr.
Date Particulars JF Amount No Rs. Date Particulars
Cr.
JF Amount No Rs.
To Capital A/c To Maruti's A/c To Commission A/c To Sales A/c
20,000 6,000 1,600 27,750
By Purchases A/c By Gopal A/c By Furniture A/c By Rent A/c By Postage A/c By Stationery A/c By Bank A/c By Purchases A/c By Rent A/c By Bank A/c By Drawings A/c By Balance c/d
4,000 10,000 2,000 1,000 200 1,200 5,000 3,000 1,000 12,000 4,000 11,950
Total
55,350
Total
55,350
Ledger Postings
Bank A/c
Dr. Date Particulars JF Amount No Rs. Date Particulars Cr. JF Amount No Rs.
To Cash A/c
5,000
By Salaries A/c
3,200
To Cash A/c
12,000
By Balance c/d
13,800
17,000
17,000
Ledger Postings
Purchases A/c
Dr. Date Cr.
Particulars JF Amount No Rs. Date Particulars JF Amount No Rs.
To Nandu
To Cash A/c
1,00,000
4,000
By Balance c/d
1,07,000
To Cash A/c
Total
3,000
1,07,000 Total 1,07,000
Ledger Postings
Nandu A/c
Dr. Date Cr.
Particulars JF Amount No Rs. Date Particulars JF Amount No Rs.
To Purchase Returns A/c To Balance c/d Total
2,000
98,000 1,00,000
By Purchases A/c
1,00,000
Total
1,00,000
Ledger Postings
Sales A/c
Dr. Date Cr. Particulars JF Amount No Rs. Date Particulars JF Amount No Rs.
To Balance c/d
37,750
By Kishores A/c
By Cash A/c
10,000
27,750 37,750
Total
37,750
Total
Ledger Postings
Purchase Return A/c
Dr. Date Cr. Particulars JF Amount No Rs. Date Particulars JF Amount No Rs.
To Balance c/d
2,000
By Nandus A/c
2,000
Total
2,000
Total
2,000
Ledger Postings
Sales Return A/c
Dr. Date Cr.
Particulars JF Amount No Rs. Date Particulars JF Amount No Rs.
To Kishores A/c
2,000
By Balance c/d
2,000
Total
2,000
Total
2,000
Ledger Postings
Gopals A/c
Dr. Date Cr. Particulars JF Amount No Rs. Date Particulars JF Amount No Rs.
To Cash A/c
10,000
By Balance c/d
10,000
Total
10,000
Total
10,000
Ledger Postings
Rent A/c
Dr. Date Cr. Particulars JF Amount No Rs. Date Particulars JF Amount No Rs.
To Cash A/c
To Cash A/c Total
1,000
1,000 2,000
By Balance c/d
2,000
Total
2,000
Ledger Postings
Commission Received A/c
Dr. Date Cr. Particulars JF Amount No Rs. Date Particulars JF Amount No Rs.
To Balance c/d
1,600
By Cash A/c
1,600
Total
1,600
Total
1,600
Ledger Postings
Kishores A/c
Dr. Date Cr. Particulars JF Amount No Rs. Date Particulars JF Amount No Rs.
To Sales A/c
10,000
By Sales Return A/c By Balance c/d
2,000
8,000
10,000
Total
10,000
Total
Ledger Postings
Postage & Telegram A/c
Dr. Date Cr. Particulars JF Amount No Rs. Date Particulars JF Amount No Rs.
To Cash A/c
200
By Balance c/d
200
Total
200
Total
200
Ledger Postings
Stationery A/c
Dr. Date Cr. Particulars JF Amount No Rs. Date Particulars JF Amount No Rs.
To Cash A/c
1,200
By Balance c/d
1,200
Total
1,200
Total
1,200
Ledger Postings
Salaries A/c
Dr. Date Cr. Particulars JF Amount No Rs. Date Particulars JF Amount No Rs.
To Cash A/c
3,200
By Balance c/d
3,200
Total
3,200
Total
3,200
Ledger Postings
Drawings A/c
Dr. Date Cr. Particulars JF Amount No Rs. Date Particulars JF Amount No Rs.
To Cash A/c
4,000
By Balance c/d
4,000
Total
4,000
Total
4,000
Ledger Postings
Marutis A/c
Dr. Date Cr. Particulars JF Amount No Rs. Date Particulars JF Amount No Rs.
To Balance c/d
6,000
By Cash A/c
6,000
Total
6,000
Total
6,000
Ledger Postings
Furniture A/c
Dr. Date Cr. Particulars JF Amount No Rs. Date Particulars JF Amount No Rs.
To Cash A/c
2,000
By Balance c/d
2,000
Total
2,000
Total
2,000
Trail Balance
Particulars
Ram's Capital A/c Cash A/c Bank A/c Purchases A/c Nandu Sales A/c Purchase Return A/c Sales Return A/c Gopal Rent A/c Commission Received A/c Kishore Postage & Telegram A/c Stationey A/c Salaries A/c Drawings A/c Maruti Furniture A/c Total
Amount Dr.
11,950 13,800 107,000
Amount Cr.
20,000
98,000 37,750 2,000 2,000 10,000 2,000 1,600 8,000 200 1,200 3,200 4,000 6,000 2,000 165,350 165,350
Trading Account
Particulars Amount(Dr.) Particulars Amount(Cr.)
To opening stock
To Purchases Less :Purchase Returns To Carriage To Power To Freight To manufacturing Exp. To factory Exp. To Import Duty
By Sales Less: Sales Returns
By Closing Stock
To Royalty
To Gross profit Transferred to P&L A/C TOTAL TOTAL
Profit And Loss Account
Particulars To Salaries To Rent Rates & Taxes To Printing & Stationary To Lighting To Audit Fees To Trade Exp. Amount(Dr.) Particulars By Profit b/d By Rent By Bad Debts Recovered By Profit on Sale of Assets By Miscellaneous Receipts Amount(Cr.)
To General Exp.
To Advertisement To Bad Debts To Bank Charges To Donation & Charity
To Net Profit Transferred to capital A/C
TOTAL TOTAL
Balance Sheet
LIABILITES Sundry Creditors Outstanding Exp. AMOUNT ASSETS Cash In Hand Cash At Bank AMOUNT
Unearned Income Long Term Loans
Capital Add: Net Profit Add: Drawings
Sundry Debtors Closing Assets
Accrued Income
Furniture Loose Tools Motor Vehicle Plant Machinery Land & Buildings Goodwill
TOTAL
TOTAL
