Basic Accounting Complete Theory
Basic Accounting Complete Theory
Sales Return or Rejection out or Inward Invoice: Sales return means the
return of the full or a part of the goods sold by the customer to the businessman.
Assets: Assets are the things and properties possessed by a businessman not for resale
but for the use in the business.
Liabilities: All the amounts payable by a business concern to outsiders are called
liabilities.
Creditor: Creditor is the person to whom amounts are owed by the businessman.
Drawings: Drawings are the amounts withdrawn (taken back) by the businessman
from his business for his personal, private and domestic purpose. Drawings may be
made in the form cash, goods and assets of the business.
Trail Balance: It is a statement of all the ledger account balances prepared at the end
of particular period to verify the accuracy of the entries made in books of accounts.
Profit and loss account: It is prepared to ascertain actual profit or loss of the
business.
Types of accounts
Personal account: Personal accounts are the accounts of persons, firms, concerns
and institutions which the businessmen deal.
Real Account: These are the accounts of things, materials, assets & properties.
It has physical existence which can be seen & touch.
Ex. Cash, Sale, Purchase, Furniture, Investment etc.
Expenses:- The amount which is paid by the business to the outsider for getting any benefit are
known as expenses.
Losses :- The amount which is paid by the business to the outsider without getting any benefit are
known as losses.
Income :- The amount which is received by incurring some expenditure are known as income.
Gain :- The amount which is received without incurring any expenditure are known as gain.
Profit :- Excess of income over the expenditure are known as profit.
Direct expenses :- The expenses directly engaged in production are known as direct expenses. Or
the expenses completely relating to the factory are known as direct expenses.
Direct income :- The income which comes from factory are known as direct income.
Indirect expenses :- The expenses completely relating to the office are known as indirect
expenses.
Indirect income:- The income which comes from office are known as indirect income.
Purchase :- The process of collecting goods from the supplier with some consideration is known as
purchase.
Purchase return:- The goods return to supplier on inferiority is termed as ‘purchase return’.
Sales :- The process of transferring the goods to the customer with some consideration is known as
sales.
Sales return:- The goods return from customer on inferiority is termed as ‘sales return’.
Fixed asset:- The assets which are used for more than one accounting period are known as fixed
asset.
Debtor :- The credit customer of the business is known as debtor.
Creditor : The person from whom businessman used to purchase certain items is known as creditor
Sundry debtor:- All the credit customers are known as sundry debtor.
Sundry creditor:- The summation of all the creditors are known as sundry creditor.
Depreciation :- The amount which is reduced by the regular use of fixed asset is known as
depreciation.
Proprietor:- The real owner of the business is known as proprietor.
Outstanding expenses:- The amount which is due but not yet paid are known as outstanding
expenses.
Prepaid expenses:- The amount which is paid in advance but the benefit will get in future period are
known as prepaid expenses.
Accrued income:- The income which are earned but not yet received are known as accrued
income.
Income received in advance:- The income which is received in advance but not yet earned are
known as income received in advance.
Journalize the following transactions
American accounts
Particulars Rs.
2.Bought goods from Anil on credit Rs. 4,000 and for cash Rs.5,000.
Advertisement payable to Media Advertiser Rs. 1,00,000 (Inv. No. 1284, due days 10
days)
Oct: 5 Purchased goods from Aroma Traders Rs. 85,000 (bill No: 108)
Oct: 6 Telephone charge paid by SBT cheque Rs. 1800 (Ch No:123456789)
Oct: 8 Goods returned to Aroma traders Rs. 5,000 (agst Bill No: 108)
Oct: 25 Cash withdrawn from SBT Bank for personal use Rs. 5,000
Single ledger: - It is a method of dealing with the ledger one by one. It means a business man
can maintain only one item at a time under single ledger. Single ledger contain 4 different
program.
1. Create ledger.
2. Display ledger.
3. Alter ledger.
4. Delete ledger.
Multiple ledger: - It is a method of dealing with the ledger all at a time. It means a business
man can deal with more than one item under multiple ledger. Multiple ledger also contain four
different program.
1. Create ledger.
2. Display ledger.
3. Alter ledger.
4. Delete ledger.*
1. Contra voucher:- The transaction completely related to the bank should be recorded under
contra voucher.
Eg :- Cash deposited into bank.
Cash withdrawn from bank
2. Payment voucher:- Any payment made by business to the outsider in terms of cash or cheque
should be recorded.
Eg :- Salary paid by cash.
Rent paid by cheque.
3. Receipt voucher:- In this voucher any receipt made by business from the outsider in terms of
cash or cheque should be recorded.
Eg :- Discount received by cash
Commission received by cheque.
4. Journal voucher:- All the non monetary transaction should be recorded under journal
voucher.
Eg :- Depreciation on machinery.
Salary outstanding.
5. Sales voucher:- All the credit sale and cash sales of goods should be recorded.
Eg :- goods sold by cash.
Goods sold on credit to Mr. Anup.
6. Purchase voucher:- All the credit purchase and cash purchase of goods should be recorded.
Eg :- Purchase goods by cash.
Purchase goods on credit from Mr. Ankit.
7. Credit Note:- The goods return from customer for any inferior quality should be recorded.
Eg :- The goods return from Mr.Anil.
8. Debit note:- The goods return to supplier for any inferior quality should be recorded.
Eg :- The goods return to Mr.Ankit.
9. Memorandum Voucher:- All the doubtful transaction should be recorded under this voucher.
Eg:- All Mis- happening entries.