Table of Contents
30 transactions For accounts Project
Pass The Journal Entries (Which Should Have At Least 30 Transactions (Without Gst), Post Them Into The Ledger, Closing The Books Of Accounts Prepare A Trial Balance And Final Accounts( Trading And Profit&Loss Account , Balance Sheet) –
On 1st March, 2020 Mr. Mohit started a Furniture business in GANDHI NAGAR Mr. Mohit invested Rs 50,00,000.
March 2 Cash deposited into the bank Rs. 30,00,000.
March 3 Goods purchased (3,000 Chairs) for cash Rs 8,00,000 at 25% trade discount .
March 4 Machinery Purchased for cash Rs.5,50,000 and installation expenses paid Rs. 50,000.
March 5 Computer Purchased paid by cheque Rs. 50,000.
March 6 Goods sold (2,000 Chairs) for Cash Rs. 7,00,000.
March 7 Carriage paid Rs. 18,000.
March 10 Goods purchased (1,000 Tables) from Dinesh & company Rs. 12,50,000 at 20% trade discount .
March 12 Goods Sold( 500 Tables to Mohit & Brother Rs.20,00,000 at 40% trade discount .
March 13 Investment purchased by cheque Rs. 2,00,000.
March 15 amount paid to Dinesh & company by cheques Rs. 4,00,000.
March 16 Furniture Purchased for office use paid by cheque Rs. 1,50,000.
March 17 Cash withdrawn for personal use Rs. 40,000.
March 18 Cheques received from Mohit and brother Rs 8,00,000 and deposited into Bank same day.
March 19 Goods purchased ( 1000 Tables) from Dinesh & company Rs. 10,00,000 at 20% trade discount .
March 20 Goods sold for Cash Rs. 5,00,000.
March 21 Goods Sold ( 500 Chairs and 500 tables) to Mohit & Brother Rs.10,00,000 at 20% trade discount .
March 22 Cash withdrawn from bank for office use Rs. 1,00,000.
March 23 Advertisement Expenses paid by cheque Rs. 1,20,000.
March 24 Insurance premium paid Rs. 20,000 by cheque.
March 25 Cash received from Mohit & brother Rs 2,00,000.
March 26 Cash paid to Dinesh & company Rs. 1,50,000.
March 27 Commission Received Rs. 20,000.
March 28 wages paid Rs.15,000.
March 29 Cash withdrawn for personal use Rs. 40,000.
March 30 Salary Rs 25,000, Rent Rs. 16,000 paid by cheque.
March 31 Depreciation charge on machinery Rs. 5,000.
March 31 Depreciation charge on Computer Rs. 2,500.
March 31 Bank charges charged by bank Rs. 5,000.
March 31. Interest received on investment Rs. 4,000.
Balancing of different accounts
Balancing is done periodically, i.e., weekly, monthly, quarterly, halfyearly or yearly, depending on the requirements of the business.
- Personal Accounts : These accounts are generally balanced regularly to know the amounts due to the persons (creditors) or due from the persons (debtors).
- Real Accounts : These accounts are generally balanced at the end of the financial year, when final accounts are being prepared. However, cash account is frequently balanced to know the cash on hand. A debit balance in an asset account indicated the value of the asset owned by the business. Assets accounts always show debit balances.
- Nominal Accounts : These accounts are in fact, not to be balanced as they are to be closed by transfer to final accounts. A debit balance in a nominal account indicates that it is an expense or loss. A credit balance in a nominal account indicates that it is an income or gain.
All such balances in personal and real accounts are shown in the Balance Sheet and the balances in nominal accounts are taken to the Trading and Profit and Loss Account.
- Balance of Direct expenses Accounts are transfer to Debit side of Trading Account.
- Balance of Purchase Account transfer to Debit side of Trading Account.
- Balance of Direct Incomes(Sales) Accounts are transfer to Credit side of Trading Account.
- Balance of Indirect expenses Accounts are transfer to Debit side of Profit and Loss Account.
- Balance of Indirect Incomes Accounts are transfer to Credit side of Profit and Loss Account.
Financial statements/Final Accounts
The statements that are prepared at the end of a particular accounting period to measure the overall result (Net Profit/Net Loss) of business activities and show the financial position of a business concern are generally called financial statements.
The accounts which are prepared at the final stage (at the end of the financial year) of the accounting cycle to know the profit or loss and financial position of a business concern are called Final Accounts.
Final accounts give an idea about the Profitability and Financial position of a business to its management, owners, and other interested parties.
Financial statements/Final Accounts include these statements :
(i) Income statement (a. TradingAccount, b. Profit and Loss Account)—prepared to ascertain gross profit/loss and net profit/loss during an accounting period.
* Trading Account is prepared to ascertain the results of the trading activities of the business enterprise. Trading activities means buying and selling of goods. The trading account shows the result(Gross Profit/Gross Loss) of buying and selling of goods.
* Profit and Loss Account shows the net profit/loss during an accounting period. Profit and loss Account is an account, which is prepared to calculate the net profit or net loss of the business for the accounting period. Profit and Loss Account is a Nominal Account and as such, all the indirect expenses and losses are shown on its debit side and all the incomes and gains are shown on its credit side.
(ii) Statement of Financial Position (Balance Sheet)—prepared to ascertain Financial position (assets, liabilities and capital) of an enterprise at a particular point of time. Balance sheet is a financial statement that shows the financial position of a business and the nature and values of its assets and liabilities on a particular date.
- This forms the second part of the final accounts.
- It is a statement showing the financial position of a business.
- Balance sheet is prepared by taking up all personal accounts and real accounts (assets and properties) together with the net result obtained from profit and loss account.
- On the left hand side of the statement, the liabilities and capital are shown.
- On the right hand side, all the assets are shown.
- Balance sheet is not an account but it is a statement prepared from the ledger balances. So we should not prefix the accounts with the words ‘To’ and ‘By’.
Balance sheet is defined as ‘a statement which sets out the assets and liabilities of a business firm and which serves to ascertain the financial position of the same on any particular date’.(particular point of time).
Those expenses which are incurred on purchasing of goods and for converting raw material into the finished goods .
Those expenses which are directly related to production/Manufacturing of goods or purchase of the goods are called direct expenses.
For Example- Manufacturing wages, Expenses on purchases (including all duty and tax paid on purchases, Brokerage on purchases of goods, Commission on purchases of goods), Carriage/Freight/Cartage inwards, Production expenses (such as power and fuel, water, coal,Gas etc.), factory expenses (e.g. lighting, rent and rates), Royalty based on Production etc.
Note : All direct expenses are debited to Trading account.
Direct income is the income which is directly retated to the particular business.eg, sales of the goods.
other words- Direct income is one which is earned directly by way of business activities.
Note : All direct income are credited to Trading account.
Those expenses which are not directly related to production/Manufacturing or purchase of the goods are called indirect expenses. It includes those expenses which are related to office and administration, selling and distribution of goods and financial expenses etc.
For Example- Office & Admin. Expenses Salaries, Rent Rates Taxes, Printing and Stationery, Salaries & Wages, Postages and Telephones , Office Lighting, Insurance Premium, Legal Expenses, Audit Fees, Travelling Expenses , Selling & Distribution Exp. Carriage and Freight Outwards, Commission , Brokerage, Advertisement , Publicity Bad Debts Packing Expenses Salaries of Salesman Delivery Van Expenses ,Financial Exp. Interest paid on loans, Discounts Allowed Rebate Allowed Bank Charges Miscellaneous Exp. Repairs Depreciation on Fixed Assets Entertainment Expenses, Donations & Charity, Stable Expenses Unproductive Expenses
Note :These expenses are shown in the debit side of the Profit and Loss A/c.
Indirect income is one which is earned directly by way of non-business activities. eg- Profit on Sale of fixed Assets, Profit on Sale of Investment, Discount Received, Rent Received, commission Received, Interest Received, Dividend Received etc.
Note : All Indirect income are credited to Profit and loss account
An operating expense is a day-to-day expense incurred in the normal course of business. These expenses appear on the income statement.
Operating expenses are the expenses which are incurred by the business in the normal course of its operations.
Operating expenses are expenses a business incurs in order to keep it running, such Employee Benefit Expenses , Depreciation and Amortisation Expenses , Selling and Distribution Expenses, Office and Administrative Expense, Rent Tax and insurance etc.
Non- Operating Expenses
Such expenses that are neither related to normal course of activities of a business nor related to the production process of a business are known as non-operating expenses.
Non Operating Expenses = Interest on Debentures / Long Term Loans + Loss on sale of Non Current Assets
Non-operating income is the portion of an organization’s income that is derived from activities not related to its core business operations.
Non Operating Incomes = Interest Received on Investment + Profit on sale of Non Current Assets+ Dividend received