Meaning & Definition

Accounting is the systematic process of identifying, measuring, recording, classifying,

summarizing, interpreting and communicating financial information. Accounting gives
information on:

According to the American Institute of Certified Public Accountants “Accounting is the

art of recording, classifying and summarizing in a significant manner and in terms of money,
transactions and events which are in part, at least of a financial character and interpreting the
results thereof ”.
Following are the objectives of accounting:
(i) To keep a systematic record of financial transactions and events
(ii) To ascertain the profit or loss of the business enterprise
(iii) To ascertain the financial position or status of the enterprise
(iv) To provide information to various stakeholders for their requirements
(v) To protect the properties of an enterprise and
(vi) To ascertain the solvency and liquidity position of an enterprise
The main functions of accounting are as follows:
(i) Measurement
The main function of accounting is to keep systematic record of
transactions, post them to the ledger and ultimately prepare the final
accounts. Accounting works as a tool for measuring the performance of
the business enterprises. It also shows the financial position of the
business enterprises.
(ii) Forecasting
With the help of the various tools of accounting, future performance and
financial position of the business enterprises can be forecasted.
(iii) Comparison
Accounting helps to compare the actual performance with
the planned performance. It is also possible to compare with the accounting
policies. Through comparison of the actual financial results of the business
enterprises with projected figures and standards, effective measures can be
taken to enhance the efficiency of various operations.
(iv) Decision making
Accounting provides relevant information to the
management for planning, evaluation of performance and control. This will
help them to take various decisions concerning cost, price, sales, level of
activity, etc.
Control
As accounting works as a tool of control, the strengths and weaknesses are
identified to provide feedback on various measures adopted. It serves as a
tool for evaluating compliance of business policies and programmes.

(v) Assistance to government

Government needs full information on the financial aspects of the
business for various purposes such as taxation, grant of subsidy, etc.
Accounting provides relevant information about the business to
exercise government control on business enterprises.

.
 Branches of Accounting
(i) Cost Accounting
It involves the collection, recording, classification and appropriate allocation of expenditure for the
determination of the costs of products or services and for the presentation of data for the purposes of
cost control and managerial decision making.
(ii) Management Accounting
It is concerned with the presentation of accounting information in such a way as to assist
management in decision making and in the day-to-day operations of an enterprise. The information
collected from financial accounting, cost accounting, etc. are grouped, modified and presented as per
the requirements of management for discharging their functions and fordecision making.
(iii) Social Responsibility Accounting
It is concerned with presentation of accounting information by business entities and other
organisations from the view point of the society by showing the social costs incurred such as
environmental pollution by the enterprise and social benefits such as infrastructure development and
employment opportunities created by them. It arises because of corporate social responsibility.
(iv)Human Resources Accounting
It is concerned with identification, quantification and reporting of investments made in human
resources of an enterprise.
1.1 Bases of Accounting
There are three bases of accounting in common usage, namely
(i) Cash basis
(ii) Accrual or mercantile basis
(iii) Mixed or hybrid basis.
(i) Cash basis
Under cash basis of accounting, actual cash receipts and actual cash payments are recorded. In this
basis, revenue is recognised when cash is received and expenses are recognised when cash is paid.
Credit transactions are not recorded till cash is actually received or paid. Under this basis,
(a) Any income received
(b) Any expenditure paid
(c) Any asset purchased for which cash is paid
(d) Any liability paid during the accounting period whether related to the past, present or future is
taken into account.
(ii) Accrual or mercantile basis
Under accrual basis of accounting, the revenue whether received or not, but has been earned or
accrued during the accounting period and expenses incurred whether paid or not are recorded. In
other words, revenue is recognised when it is earned or accrued and expenses are recognised when
these are incurred. Under this basis,
(a) Any income earned whether received or not
(b) Any expenditure incurred whether paid or not
(c) Any asset purchased whether cash is paid or not
(d) Any liability incurred whether paid or not during the accounting period is recorded.
Under section 128(1) of the Indian Companies Act, 2013, all the companies are required to
maintain the books of accounts according to the accrual basis of accounting.
(iii) Hybrid or mixed basis
This basis is a combination of cash basis and accrual basis of accounting. Under mixed basis of
accounting, both cash basis and accrual basis are followed. Revenues and assets are generally recorded
on cash basis whereas expenses and liabilities are generally taken on accrual basis.
2.1.1 Meaning of book-keeping
Book-keeping is the process of recording financial transactions in the books of accounts. It is the
primary stage in the accounting process. It includes recording the transactions and classifying the
same under proper heads. Book-keeping work is of routine nature. Transactions may be recorded in

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 the accounting note books and ledgers or may be recorded in a computer.
2.1.2 Definition of book-keeping
“Book-keeping is an art of recording business dealings in a set of books”. - J.R.Batliboi.
“Book-keeping is the science and art of recording correctly in the books of account all
those business transactions of money or money’s worth”. -R.N.Carter.

S. No Basis of distinction Book-keeping Accounting

1 Scope It is concerned with recording It is concerned with recording,
and classifying the business classifying, summarising,
transactions. analysing and interpreting the
financial data.
2 Stage Book-keeping is the primary Apart from the primary stage, it
stage in accounting. It is the includes secondary stage of
base for accounting. analysis and interpretation.
3 Nature of job It is routine and clerical in It is analytical in nature.
nature.
4 Knowledge required It requires basic knowledge of It requires thorough
the principles of journalising knowledge of accounting
and posting. principles, procedures and
practices.
5 Skill required Analytical skill is not required It requires analytical skill.
for book-keeping.

The important accounting concepts and conventions are discussed below:

(i) Business entity concept
This concept implies that a business unit is separate and distinct from the owner or owners, that is,
the persons who supply capital to it.
Based on this concept, accounts are prepared from the point of view of the business and not
from the owner’s point of view. Hence, the business is liable to the owner for the capital contributed
by him/her.
According to this concept, only business transactions are recorded in the books of accounts. Personal
transactions of the owners are not recorded. But, their transactions with the business such as capital
contributed to the business or cash withdrawn from the business for the personal use will be
recorded in the books of accounts. It implies that the business itself owns assets and owes liabilities.
(ii) Money measurement concept
This concept implies that only those transactions, which can be expressed in terms of money, are
recorded in the accounts. Since, money serves as the medium of exchange transactions expressed in
money are recorded and the ruling currency of a country is the measuring unit for accounting.
Transactions which do not involve money will not be recorded in the books of accounts. For
example, working conditions in the work place, strike by employees, efficiency of the management,
etc. will not be recorded in the books, as they cannot be expressed in terms of money.

It helps in understanding of the state of affairs of the business as money serves as a common measure by means of which
heterogeneous facts about the business are recorded. For example

if a business has 5 computers, 2 tables and 3 chairs, the assets cannot be added to give
useful information, unless, they are expressed in monetary terms ` 1,00,000 for
computers, ` 10,000 for tables and ` 1,500 for chairs.
(iii) Going concern concept
It is the basic assumption that business is a going concern and will continue its
operations for a foreseeable future. Going concern concept influences accounting
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 practices in relation to valuation of assets and liabilities, depreciation of the fixed assets,
treatment of outstanding and prepaid expenses and accrued and unearned revenues.
For example, assets are generally valued at historical cost. Any increase or decrease in
the value of assets in the short period is ignored.
(iv) Cost concept
An asset is recorded in the books on the basis of the historical cost, that is, the
acquisition cost. Cost of acquisition will be the base for all further accounting. It
does not mean that the asset will always be shown at cost. It is recorded at cost at the
time of its purchase, but is systematically reduced in its book value by charging
depreciation.
The cost concept has the following limitations:
a) In an inflationary situation, when prices of commodities increase, valuing the
assets athistorical cost may not represent the true position of the business.
b) The results of business units established at different dates are not comparable if
assets are recorded on historical basis.
c) Assets which do not have acquisition cost such as human resources are not
recognisedunder this concept.
(v) Dual aspect concept
According to this concept, every transaction or event has two
aspects, i.e., dual effect.
For example, when Arun starts a business with cash `
5,00,000, on the one hand, the business gets cash of `
5,00,000 and on the other hand, a liability arises, that is, the
business has to pay Arun a sumof ` 5,00,000.
This is the concept which recognises the fact that for every
debit, there is a corresponding and equal credit. This is the
basis of theentire system of double entry book-keeping.
From this concept arises the basic accounting equation, that is,
Capital + Liabilities = Assets
(vi) Periodicity concept
This concept deals with preparing accounts for a particular period. As the proprietors,
investors, creditors, employees and the government are interested in knowing the
performance of the business unit periodically, it becomes necessary to select a
particular period, normally one year for measuring performance. Hence, financial
statements are prepared after every accounting period and not at the end of its life.

This concept helps the business in distribution of income to the owners and comparing
and evaluating performance of different periods.
(vii) Matching concept
According to this concept, revenues during an accounting period are matched with
expenses incurred during that period to earn the revenue during that period. This
concept is based on accrual concept and periodicity concept. Periodicity concept fixes
the time frame for measuring performance and determining financial status.
All expenses paid during the period are not considered, but only the expenses related
to theaccounting period are considered.
On the basis of this concept, adjustments are made for outstanding and prepaid

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 expenses and accrued and unearned revenues. Also due provisions are made for
depreciation of the fixed assets, bad debt, etc., relating to the accounting period. Thus,
it matches the revenues earned during an accounting period with the expenses
incurred during that period to earn the revenues before sharing any profit or loss.
(viii) Realisation concept
According to realisation concept, any change in value of an asset is to be recorded only
when the business realises it. When assets are recorded at historical value, any change in
value is tobe accounted only when it realises.
(ix) Objective evidence concept
Objective evidence concept requires that all accounting transactions recorded should
be based on objective evidence. The objective evidence includes documentary
evidence like cash receipts, invoices, etc. It ensures authenticity, accuracy and reliability
of transactions enteredin the books of accounts.
(x) Accrual concept
According to accrual concept, the effects of the transactions are recognised on
mercantile basis, i.e., when they occur and not when cash is paid or received. Revenue
is recognised when it is earned and expenses are recognised when they are incurred.
All expenses and revenues related to the accounting period are to be considered
irrespective of the fact that whether revenues are received in cash or not and whether
expenses are paid in cash or not.For example, i) Credit sale is recognised as sale though
the amount has not been received immediately. ii) Rent for the month of March-2018
has not been paid and if the accounting period is 1.4.2017 to 31.3.2018, it will still be
recorded as an expense for the accounting year 2017-2018 because it had become due.
(xi) Convention of consistency
The consistency convention implies that the accounting policies must be followed
consistently from one accounting period to another. The results of different years will be
comparable only when same accounting policies are followed from year to year. For
example, if a firm follows the straight line method of charging depreciation since its
purchase or construction, the methodshould be followed without any change. However,
it does not mean that changes are not possible.
(i) Convention of full disclosure
It implies that the accounts must be prepared honestly and all material information
should be disclosed in the accounting statement. This is important because the
management is differentfrom the owners in most of the organisations.
The disclosure should be full, fair and adequate so that the users of the financial
statements can make correct assessment about the financial position and performance
of the business unit.
(ii) Convention of materiality
According to this convention, financial statements should disclose all material items
which might influence the decisions of the users of financial statements. Hence, any
item which is not significant and is not relevant to the users need not be disclosed in the
financial statements.
This principle is basically an exception to the full disclosure principle. The term
materiality is subjective in nature. Materiality depends on the amount involved in the
transaction, size of the business, nature of information, requirements of the person
making decision, etc. An item material to one person may be immaterial to another

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 person.
(iii) Convention of conservatism or prudence
It is a policy of caution or playing safe. While recording the business transactions one
has toanticipate no income but provide for all possible losses.
For example, the closing stock in the factory is valued at ` 35,000 at cost price and `
25,000 at its realisable price. But while recording in the books the value of ` 25,000 will
be considered being the lower of the two. According to realisation concept, any increase
in value is not to be accounted unless it has materialised. The conservatism convention
puts further restriction on it. Any unrealised gain is not to be anticipated but provision
can be made against all possible losses.
3.6.2.1 Classification of accounts:
Under double entry system of book keeping, for the purpose of recording the various
financial transactions, the accounts are classified as personal accounts and impersonal
accounts.
(i) Personal account: Account relating to persons is called personal account. The
personalaccount may be natural, artificial or representative personal account.
(a) Natural person’s account: Natural person means human beings. Example:
Vinothaccount, Malini account.
(b) Artificial person’s account: Artificial person refers to the persons other than
human beings recognised by law as persons. They include business
concerns, charitable institutions, etc. Example: BHEL account, Bank account.
(c) Representative personal accounts: These are the accounts which represent
persons natural or artificial or a group of persons. Example: Outstanding
salaries account, Prepaid rent account. When expenses are outstanding, it is
payable to a person. Hence, it represents a person.
(ii) Impersonal accounts: All accounts which do not affect persons are called
impersonal accounts. These are further classified into a) Real accounts and b)
Nominal accounts.
(a) Real account: All accounts relating to tangible and intangible properties and
possessions are called real accounts.
1. Tangible real accounts: These include accounts of properties and
possessionswhich can be seen and touched. These have physical existence.
Example: Plant,Machinery, Building, Furniture, Stock.
2. Intangible real accounts: These include accounts of properties and
possessions which can not be seen and touched. These do not have
physical existence. Example: Goodwill, Patents, Copy rights.
Nominal account: The accounts relating to expenses, losses, revenues and gains are called nominal accounts. Example:
Salaries, wages, rental income, interest income, etc. These are temporary accounts and are transferred to Trading and
Profit and Loss account depending on whether these are direct or indirect respectively
Golden rules of double entry system

Personal account Debit the receiver Credit the giver

Real account Debit what comes in Credit what goes out
Nominal account Debit all expenses and losses Credit all incomes and gains

Classify the following into personal, real and nominal accounts.

(a) Capital (b) Building

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 (c) Carriage inwards (d) Cash
(e) Commission received (f) Bank
(g) Purchases (h) Chandru
(i) Outstanding wages
Sl. No. Items Classification
(a) Capital Personal account
(b) Building Real account
(c) Carriage inwards Nominal account
(d) Cash Real account
(e) Commission received Nominal account
(f) Bank Personal account
(g) Purchases Nominal account
(h) Chandru Personal account
(i) Outstanding wages Personal account

Journal

According to Professor Carter, “The journal as originally used, is a book of prime entry in which
transactions are copied in order of date from a memorandum or waste book. The entries as they are
copied are classified into debits and credits, so as to facilitate their being correctly posted, afterwards in
the ledger”
The format of journal is given below:
In the books of……….
Journal
.
Date Particulars L.F. Debit ` Credit `
Application of rules of
double entry system

(i) Personal account

‘Debit the receiver and Credit the giver’. In case of personal accounts, the rule is
debit the account of the person who receives the benefit and credit the account of
the person whogives the benefit.
Example 1 : Paid Anbu ` 10,000 by cheque
Accounts affected : Anbu account and Bank account
Nature of accounts : Both are personal accounts in nature
Rule : Debit the receiver and credit the giver
Applying the rule : Anbu is the receiver and the Bank is the giverDebit Anbu accou
Credit Bank account

(i) Real account

‘Debit what comes in and Credit what goes out’. In case of real accounts, the rule is
debit what comes in and credit what goes out.
Example 2 : Furniture purchased for cash ` 5,000
Accounts affected Furniture account and Cash account
]Nature of accounts : Both are real accounts in nature
Rule : Debit what comes in and credit what goes outApplying the rule :
Furniture comes in and cash goes out
Debit Furniture account

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 Credit Cash account

(i) Nominal account

‘Debit all expenses and losses and Credit all incomes and gains’. For nominal
accounts,the rule is debit all expenses and losses and credit all incomes and gains.

Debit all expenses and losses and Credit all incomes and gains’. For nominal
accounts,the rule is debit all expenses and losses and credit all incomes and gains.

Example 3 :Paid rent of ` 5,000 in cash

Accounts affected : Rent account and cash
account
ature of accounts: Rent is a nominal account and cash account is a real account
ule : Debit all the expenses and losses and credit all the incomes and gains
pplying the rul: Rent is an expense and cash goes out

ebit Rent account

redit Cash account

Sum I

Jeyaseeli is a sole proprietor having a provisions store. Following are the transactions during the
month of January, 2018.
Journalise them.

1. Commenced business with cash 80,000

2. Deposited cash with bank 40000
3. Purchased goods by paying cash 5000
4. Purchased goods from Lipton & Co. on credit 10000
5. Sold goods to Joy and received cash 11000
6. Paid salaries by cash 5000
7. Paid Lipton & Co. by cheque for the purchases made on 4th Jan
8. Bought furniture by cash 4000
9. Paid electricity charges by cash 1000
10. Bank paid insurance premium as per standing instructions 300

In the books of JeyaseeliJournal entries

Date Particulars L.F. Debit ` Credit `

2018
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Jan. 1 Cash A/c Dr. 80,000
To Jeyaseeli’s Capital A/c 80,000
(Jeyaseeli commenced business with cash)
2 Bank A/c Dr. 40,000
To Cash A/c 40,000
(Deposited cash into bank)
3 Purchases Dr. 5,000
A/c To 5,000
Cash A/c
(Goods purchased by cash)
4 Purchases A/c Dr. 10,000
To Lipton & Co. A/c 10,000
(Goods purchased on
credit)
5 Cash A/c Dr. 11,000
To Sales A/c 11,000
(Cash sales
made)
6 Salaries A/c Dr. 5,000
To Cash 5,000
A/c
(Salaries paid)
7 Lipton & Co. A/c Dr. 10,000
To Bank A/c 10,000
(Payment made by cheque)
8 Furniture Dr. 4,000
A/c To 4,000
Cash A/c
(Furniture bought for cash)
9 Electricity charges A/c Dr. 1,000
To Cash A/c 1,000
(Electricity charges paid)
10 Insurance premium Dr. 300
A/cTo Bank A/c 300
(Insurance premium paid)

Ledger
A ledger is a book containing accounts in which the classified and summarized information from the journals is posted as
debits and credits. It is also called the second book of entry.
Format

Date Particulars J.F. Amount ` Date Particulars J.F. Amount `

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 Basis Journal Ledger
1. Recording As and when transactions take In ledger, entries may be posted
place entries are made in journal. either on the same day or at the end
of a specified period such as weekly
or fortnightly especially when
subsidiary books are maintained.
2. Stage of recording Recording in the journal is the Recording in the ledger is the
firststage second stage, which is done on the
basis of entries made in the journal.
3. Order of recording Entries aremade in Entries are made accountwise.
thechronological order, i.e.,
datewise in the order of
occurrence.
4. Process The process of recording in The process of recording in the
journalis called journalising ledgeris called posting.
5. Facilitating Amount from the journal does Ledger balances serve as the basis
preparation of not serve as the basis for forpreparing trial balance.
trial balance preparing trial balance.
6. Basis of entries Entries in the journal are made Posting is done in ledger on the
onthe basis of source basisof journal entries.
documents.
7. Net position Net position of an account cannot Net position of an account can be
be ascertained from journal. ascertained from ledger account.

Sum I

Pass journal entries for the following transactions and post them in the ledger
accounts.2017
June 1 Basu started business with cash ` 50,000
4 Purchased furniture by paying cash for ` 6,000
7 Purchased machinery on credit from Harish ` 10,000
10 Bought goods for cash ` 4,000
18 Paid insurance premium ` 100
Date Particulars L.F. Debit ` Credit `
2017 Cash A/c Dr. 50,000
June 1 To Basu’s capital A/c 50,000
(Started business with
cash)
4 FurnitureA/c Dr. 6,000
To Cash A/c 6,000
(Furniture bought for cash)

7 Machinery A/c Dr. 10,000

To Harish A/c 10,000
(Machinery bought on credit from Harish)

10 Purchases A/c Dr. 4,000

To Cash A/c 4,000
(Goods bought for cash)

18 Insurance premium A/c Dr. 100

To Cash A/c 10

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 (Insurance premium paid)

Dr Cash account Cr.

Date Particulars J.F. ` Date Particulars J.F. `

2017 2017 Basu’s Capital account
June 1 To Basu’s capital 50,000 June 4 By Furniture A/c 6,000
A/c
10 By Purchases A/c 4,000
18 By Insurance premium A/c 100
Date Particulars J.F. ` Date Particulars J.F. `
2017
June 1 By Cash A/c 50,000

Furniture Account

Date Particulars J.F. ` Date Particulars J.F. `

2017
June 4 To Cash A/c 6,000

Machinery Account

Date Particulars J.F. ` Date Particulars J.F. `

2017
June 7 To Harish A/c 10,000

Harish Account

Date Particulars J.F. ` Date Particulars J.F. `

2017
June 7 By Machinery 10,000
A/c

Purchase Account
Date Particulars J.F. ` Date Particulars J.F. `
2017
June 10 To Cash A/c 4,000 Insurance Premium Account

Date Particulars J.F. ` Date Particulars J.F. `

2017
Definition of trial
June 18 To Cash A/c 100
balance
“A trial balance is a statement, prepared with the debit and credit balances of the
ledgeraccounts to test the arithmetical accuracy of the books”.
– J.R. Batliboi
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 1.1 Features of trial balance
Following are the features of trial balance:
(a) Trial balance contains the balances of all ledger accounts.
(b) It is prepared on a specific date. That is why, the word, “as on…” is used at the top.
(c) When double entry system is followed, the totals of the debit and the credit
columns of the trial balance must be equal. Thus, trial balance helps to check the
arithmetical accuracy of entries made in the books of accounts.
(d) If there is a difference between the totals of debit column and credit column of the
trialbalance, it is an indication of errors being committed somewhere.
(e) If both the debit column and the credit column of the trial balance have the same
total, itdoes not mean that there is no mistake in accounting, since some errors are
not disclosed by the trial balance.
1.2 Objectives of preparing trial balance
Trial balance is prepared with the following objectives:
(i) Test of arithmetical accuracy
Trial balance is the means by which the arithmetical accuracy of the book-keeping
work is checked. When the totals of debit column and credit column in the trial balance
are equal, it is assumed that posting from subsidiary books, balancing of ledger
accounts, etc. are arithmetically correct. However, there may be some errors which are
not disclosed by trial balance.
(ii) Basis for preparing final accounts
Financial statements, namely, trading and profit and loss account and balance sheet
are prepared on the basis of summary of ledger balances obtained from the trial
balance.
(iii) Location of errors
When the trial balance does not tally, it is an indication that certain errors have
occurred. The errors may have occurred at one or more of the stages of accounting
process, namely, journalising or recording in subsidiary books, totalling subsidiary
books, posting in ledger accounts, balancing the ledger accounts, carrying ledger
account balances to the trial balance, totalling the trial balance columns, etc. Hence, the
errors should be located and rectified before preparing the financial statements.
(iv) Summarised information of ledger accounts
The summary of ledger accounts is shown in the trial balance. Ledger accounts have to
be seen only when details are required in respect of an account.
Specimen of a Trail Balance
S.No. Particulars L.F. Debit ` Credit `
1 Cash in hand xxx
2 Cash at bank xxx
3 Bills receivable xxx
4 Sundry debtors xxx
5 Opening stock xxx
6 Plant and Machinery xxx
7 Land and Building (Premises) xxx
8 Furniture and Fixtures xxx
9 Vehicles xxx
10 Goodwill xxx
11 Investment xxx
12 Drawings xxx
13 Purchases xxx
14 Sales returns xxx

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15 Carriage inwards xxx
16 Carriage outwards xxx
17 Rent paid xxx
18 Commission paid xxx
19 Interest paid xxx
20 Bad debts xxx
21 Insurance premium xxx
22 General expenses xxx
23 Sundry expenses xxx
24 Electricity charges xxx
25 Selling expenses xxx
26 Travelling expenses xxx
27 Wages xxx
28 Sales xxx
29 Purchases returns xxx
30 Capital xxx
31 Bank loan xxx
32 Sundry creditors xxx
33 Bills payable xxx
34 Bank overdraft xxx
35 Rent received xxx
36 Interest received xxx
37 Provision for bad debts xxx
Total xxx xxx

Meaning of subsidiary books

Subsidiary books are sub-divisions of journal in each of which transactions of similar
nature are recorded. These are the books of prime entry. Instead of recording in one
journal, the transactions are recorded in a number of prescribed books.

Cash transactions Cash book

Transactions Purchases book

Purchases returns book
Sales book
Credit transactions Sales returns book
Bills receivable book
Bills payable book
Journal proper
Illustration 1
Record the following transactions in the purchases book of Shanthi Furniture Mart:
2017
March 1 Purchased from Mohan Furniture Mart,
Madurai20 chairs @ ` 450 each
2 tables @ ` 1,000 each
Less: Trade discount @ 10%
March 6 Purchased for cash from Welcome Furniture,
Vellore2 almirahs @ ` 2,000 each
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 March 7 Bought from Ramesh & Co.,
Royapettah2 stools @ ` 500 each
10 rolling chairs @ ` 200 each
Delivery charges and cartage `
150
March 20 Purchased 2 computers for office use from Anandan & Co.,
Adyaron credit for `15,550 each
March 21 Purchased from Kamal & Co.,
Karaikkal10 chairs @ ` 750 each
15 steel cabinets @ ` 1,500 each
Packing and delivery charges ` 250
Less: Trade discount @ 10%
March 25 Purchased from Jemini & Sons,
Chennai

2 typewriters @ ` 7,750 for office use

Purchase Return book

Enter the following Enter the following
transactions in the purchases returns book of
Hari who is dealing inautomobiles and post
them into the ledger.

Date Particulars Invoice L.F. Amount `

No. Details Total
2017 Mohan Furniture Mart, Madurai
March 1 20chairs@ `450 each 9,000
2 tables@ ` 1,000 each 2,000
11,000
Less: Trade discount @ 10% 1,100
9,900
March 7 Ramesh & Co., Royapettah
2 stools @ ` 500 each 1,000
10 rolling chairs @ ` 200 each 2,000
3,000
150
Add: Delivery charges and
cartage 3,150
March 21 Kamal & Co., Karaikal
7,500
10 chairs @ ` 750 each
22,500
15 steel cabinets @ ` 1,500 each 30,000
Less: Trade discount @ 10% 3,000
27,000
250
Add: Packing and delivery
27,250
charges
Purchases A/c Dr. 40,300

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 2017 Returned to Anand 5 clutch plates @ ` 200 each, not in accordance with
Jan. 5 order.

Jan. 14 Returned to Chandran 4 brake shoes @ ` 200 each and 10 rear view
mirrors @
` 350 each, due to inferior quality.

Date Particulars Debit L.F. Amount Remarks

Note No. Details Total
2017
Jan 5 Anand Not in
5 clutch plates @ ` 200 1,000 accordance
Jan each with order
14 Chandran 800
4 brake shoes @ ` 200 Due to
each 3,500 4,300 inferior
10 rear view mirrors @ ` quality
350each
Purchases Returns A/c Cr. 5,300

Sales Book

From the transactions given below, prepare the sales book of Kumar Stationery for July 2017.
2017
July 5 Sold on credit to Saravana Traders of Sayalkudi
10 packs of A4 sheets @ ` 250 per pack
10 dozens of writing pads @ ` 850 per dozen
Less : 10% trade discount for both
July 8 Sold to Raja for cash
15 packs of A4 sheets @ ` 250 per pack
July 20 Sold to Mohan & Co. of Mudukulathur
5 white boards @ ` 2,200 each
10 dozens of writing pads @ ` 850 per
dozen
July 23 Sold on credit to Narayanan old motor
car for ` 5,000
July 28 Sold to Kumaran for cash 15 packets of
marker pens @ ` 250 per packet
Date Particulars Invoice L.F. Amount
No. Details ` Total `
2017 Saravana Traders, Sayalkudi
July 5 10 packs of A4 Sheets @ ` 250 per pack 2,500
10 dozens writing pads @ ` 850 per 8,500
dozen 11,000
1,100 9,900
July 20 Less: 10% Trade
discount Mohan & Co.,
11,000
Mudukulathur 5 white 19,500
8,500
boards @ ` 2,200 each
10 dozens writing pads @ ` 850 per dozen
Sales A/c Cr. 29,400

Accountancy - Unit-07.indd 17 25-01-2020 15:07:49

 Note No. Details Total
2017
April 6 Shankar
Enter the following transactions in returns inward book of Magesh a textile dealer:
2017 30 Shirts @ ` 150 4,500 Due to
April
April 68 Returned
Amar by
TailorsShankar 30 shirts each costing ` 150 due to inferior quality.
inferior
April 8 Amar
10 T-Shirts @ `returned
Tailors 100 10 T-shirts, each costing ` 100, on account
1,000 quality
of being not in
accordance
April Prema Stores with their order. Not in
April 21 Prema Stores returned 12 Salwar sets each costing ` 200, being accordance
not in with
21 the order
accordance
12 with
Salwar sets @order.
`200 2,400 7,900
Not in
Sales Returns A/c Dr. 7,900 accordancewith
the order

Accountancy - Unit-07.indd 17 25-01-2020 15:07:49