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Management Accounting - 3

Here are the necessary ledger accounts with balances for the given transactions: Cash A/c Dr Cr To Stationery 25 To Machinery 750 To Bank 500 By Balance c/d 17225 By Bank 6000 18500 18500 Bank of Baroda A/c Dr Cr To Balance b/d 6000 By Cash 500 By Commission 100 By M 1000 By Balance c/d 5500 6000 6000 M's A/c Dr Cr To Goods 1500 By Cash 1000 By Balance c/d 500 1500 1500 Stationery A/c

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Aditya Kulkarni
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115 views12 pages

Management Accounting - 3

Here are the necessary ledger accounts with balances for the given transactions: Cash A/c Dr Cr To Stationery 25 To Machinery 750 To Bank 500 By Balance c/d 17225 By Bank 6000 18500 18500 Bank of Baroda A/c Dr Cr To Balance b/d 6000 By Cash 500 By Commission 100 By M 1000 By Balance c/d 5500 6000 6000 M's A/c Dr Cr To Goods 1500 By Cash 1000 By Balance c/d 500 1500 1500 Stationery A/c

Uploaded by

Aditya Kulkarni
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Basic Accounting Elements

1. Assets
2. Liabilities
3. Income
4. Expense
5. Capital ( equity )
Accounting Equation

RESOURCES SOURCES OF FINANCE

Assets
Equities/Sources

Tangible Intangible Internal i.e.Owner’s Capital Outside Liabilities

TOTAL ASSETS = TOTAL EQUITIES

Assets = Internal Equity + External Equity

Assets = Capital + Liabilities


R started business by investing Rs.500000

Effects Cash A/c R’s Capital

Dual effect of Receipt of Creation of a


transaction cash liability as
Rs.500000 business is
i.e.creation of different from
an asset owner
To be written Debit what Credit the
as- comes in or giver or
Cash A/C Dr increase in the increase in the
R’s Capital A/c value of an value of
asset liability
Cr
K Ltd purchases a machine by investing cash Rs.200000.

Effects Machine A/c Cash A/c

Dual effect of Machine received Purchases a


transaction Rs.200000 machine by
i.e.creation of an paying cash
asset i.e.cash reduces
by Rs.200000

To be written as Debit what comes Credit what goes


Machine A/c Dr in or increase in out or Decrease
Cash A/c Cr the value of an in the value of
asset asset
Steps to be followed
1. Analyse the transaction and identify which of
the five elements is involved
2. Analyse the change coming in i.e. increase or
decrease in the assets or liabilities
3. Enter the name of the account getting
activated
4. Write the debit above and Credit on the next
line
Draw up a table showing necessary columns for serial number of
business transaction,two accounts affected,type of account,account
debited or credited,reason and amount

a) P started business with Rs.25000


b) Deposited Rs.5000 into Canara Bank
c) Bought goods from S for cash Rs.2000
d) Purchased goods from D Rs.1000 on credit
e) Salary paid to R Rs.7500
f) Sold goods to N Rs.8000
g) Purchased 10 revenue stamps from G.P.O,
h) Invoiced goods to V for Rs.10000 for cash
i) Received Rs.500 as commission.
j) Returned damaged goods to D Rs.70
k) Bought furniture from K Rs.3500
l) Paid Rent Rs.1200
m) Withdrew cash from Bank for office use Rs.1000
n) Bank interest received Rs.430 from Canara Bank
o) Withdrew Rs.400 for personal use
Fill in the blanks

1) P’s Capital A/c is a ---------------A/c.


2) Wages paid to workers for errection of Machinery shall be debited to ----.
3) Salary represents an ------ for employee and -------- for employer.
4) -----A/c includes the accounts of assets and properties.
5) Rent receivable A/c is an -------- A/c.
6) Live stock A/c is neither a ---------A/c nor --------- A/c.
7) Under double entry book-keeping system every debit has a
corresponding ---------- of equal amount.
8) Copy Right A/c is an --------- asset.
9) Cash or goods withdrawn by the Proprietor for his personal use is debited
to -------- A/c.
10) ----------- is the amount contributed by the Proprietor for starting the
business.
State whether following statements are True or False

1. Debit means an increase in liability and decrease in an asset.


2. Credit means an increase in asset and decrease in liability.
3. A sale of old furniture to R for cash should be debited to R’s A/c.
4. Salary payable is a nominal a/c.
5. Goodwill is an intangible asset.
6. Discount allowed to customer is an income for business.
7. P’s drawings is an Impersonal A/c.
8. Bank overdraft is an asset of the business.
9. Debit the giver and credit the receiver is the rule of Personal A/c.
10. Some of the transactions may have only one account.
11. For every debit there is corresponding credit of equal amount.
12. Commision receivable is a nominal account.
13. Excess of income over expenditure is called Profit.
14. Bank of Maharashtra is a real A/c.
Journal

• Meaning : It is called book of original entry wherein the


business transactions are recorded first chronologically.
• The recording of the transactions into the journal is
called the process of journalising.
• An entry made in the journal is called “ Journal Entry”.
• Contents of Journal :
• Date,Serial number,Particulars,Voucher number,Ledger
Folio,Debit amount and credit amount.
Specimen of Journal

Rajesh Traders
Address :

Date Sr. Particulars Vou. Debit Credit


L.F.
Year No. No.
Month Rs. Rs.
Journalise the following transactions and post
them into ledger and balance the account

Jan 1 M started business with Rs.15000.


Jan 8 Bought goods Rs.2100 from Atul on credit.
Jan 12 Withdrew cash Rs.200 for personal use.
Jan 15 Paid Rs.1500 to Atul on his account.
Jan 24 Bought goods Rs.800 for cash.
Jan 28 Brought additional capital Rs.1200.
Jan 30 Bought goods Rs.1000 from Atul on credit.
Prepare necessary ledger accounts from the following transactions in the books
of R.

Jan 1 Started business with cash Rs.18500.


Jan 2 Opened an account with Bank of Baroda depositing Rs.6000.
Jan 4 Purchased stationery Rs.25.
Jan 8 Purchased goods on credit from M Rs.1500.
Jan 12 Purchased Machinery from V for cash Rs.750.
Jan 15 Sold goods for cash Rs.550.
Jan 20 Paid salary to Menon Rs.250.
Jan 22 Deposited into Bank of Baroda Rs.500.
Jan 26 Received commission from T Rs.100.
Jan 28 Withdrew cash Rs.100 for personal use.
Jan 29 Paid to M Rs.1000 by cheque.

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