Accounts Essay

343 WordsMar 24, 20142 Pages
Journal “Journal” or “daily record” is a book of prime or original entry in which all financial transaction of a business are systematically recorded according to their dates of occurrence. Rules based on the types of Account a. Personal Account: is a record of person. Debit the receiver and Credit the giver b. Real Account: is a record of assets. Debit what comes in and Credit what goes out c. Nominal Account: is a record of expense or loss and income or gain Debit all expenses and losses Credit all incomes and gains Exercise: 1. Shyam commenced a business with a cash amount of Rs. 1, 00,000. 2. Purchased good worth Rs. 5,000 for cash. 3. Purchased goods worth Rs. 5,000 from Prakash on credit. 4. Sold goods worth Rs.5,000 for cash 5. Sold furniture costing Rs.5000 for cash at a profit of Rs.1000 6. Sold computer costing Rs.10000 for cash at a loss of Rs.1000 7. Sold goods worth Rs. 2,000 to Kiran on credit 8. Paid to Keshab (creditor) Rs. 2,000 on account. The business settled Keshab account of Rs. 2,000 9. Received from Prakash (debtor) Rs. 2,000 on account. 10. Purchase machinery of Rs. 1,00000 for cash 11. Paid rent of Rs. 1,500 12. Received commission of Rs. 1,000 Ledger The ledger is a principal book of accounts, which provides details of information of the financial transactions of the business in a classified manner so as to ascertain its profit or loss and financial position for a specified period of time. Trial Balance The trial balance is a statement which is prepared by using the debit and credit totals or balances of all ledger accounts with a view to ascertain the arithmetic accuracy of the recording the financial transactions of the business. Rules: Assets, losses, drawing and debtors are recorded under the debit side of trial

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