BASIC ACCOUNTING

1. What is accounting ?

Ans. Accounting is an art of recording all transaction and getting result

there off.

2. What is event ?

Ans. Event refferes to that types of occurrence which may or not be money
related also does not effect any business or organisation.

3. What is transactions ?

Ans. Transactions reffers to that types of occurrence which must be

monetery , its have two sides also effected any business or organisation.

Identify the following statement as event or transaction

1. Suppose today is mr. Rahul’s birthday .

2. Rahul recevied rs 2000 from his father for birthday celebration
3. Then rahul went to a restaurent on foot
4. There he placed an order of meal costing rs800 .
5. After meal he paid the bill rs 800
6. Then he went back home by bus and paid rs 20 as bus fare.
7. He write an applications to the sbi branch manager for opening a new
savings account with balance rs 10000
8. Next day he went to the bank and deposited the money rs 10000 for his
new savings account.
9. Next day he deposited rs 50000 again in his savings account.
10. Then he went to a friend’s home near to the bank .

ACCOUNT

THERE ARE THREE TYPES OF ACCOUNT.

PERSONAL ACCOUNT REAL ACCOUNT NOMINAL ACCOUNT

RAM A/C, SBI A/C, TATA FURNITURE A/C , PURCHASE A/C , SALES
PVT LTD A/C MACHINERY A/C, CASH A/C, RENT A/C
A/C , BANK A/C
GOLDEN RULES OF ACCOUNTS

ACCOUNT NAME RULES EFFECT

PERSONAL ACCOUNT DEBIT THE RECEIVER
CREDIT THE GIVER
REAL ACCOUNT DEBIT WHATS COMES IN
CREDIT WHATS GOES OUT
NOMINAL ACCOUNT ALL EXPENSES AND LOSSES ARE DEBIT
ALL INCOME OR PROFIT ARE CREDIT

1. CASH RECEIVED FROM RAM RS 2000

2. CASH DEPOSITED INTO SBI RS 5000
3. PAID RS 5000 FOR RENT
4. RECEIVED RS 1000 AS INTEREST
5. PURCHASE GOODS RS 10000
6. PURCHASE MACHINERY RS 5000
7. PURCHASE GOODS ON CREDIT FROM AMIT RS 12000
8. PURCHASE LAPTOP ON CREDIT FROM AKASH RS. 45000

ACCOUNT INVOLVE ACCOUNT RULES EFFECT DEBIT OR

TYPES
CREDIT

1. RAM A/C PERSONAL A/C GIVER CREDIT

CASH A/C REAL A/C COMES IN DEBIT

2. CASH A/C REAL A/C GOES OUT CREDIT

SBI A/C
PERSONAL A/C RECEIVER DEBIT
RENT A/C NOMINAL A/C EXPENSE DEBIT
CASH A/C
REAL A/C GOES OUT CREDIT

INTEREST A/C
NOMINAL A/C INCOME CREDIT
CASH A/C
REAL A/C COMED IN DEBIT
 PURCHASE A/C NOMINAL EXPENSE DEBIT

CASH A/C REAL GOES OUT CREDIT

MACHINERY A/C REAL A/C COMES IN DEBIT

CASH A/C REAL A/C GOES OUT CREDIT

PURCHASE A/C NOMINAL A/C EXPENSE DEBIT

AMIT A/C PERSONAL GIVER CREDIT

LAPTOP A/C REAL A/C COMES IN DEBIT

AKASH A/C PERSONAL A/C GIVER CREDIT

What is capital ?

ANS. CAPITAL REFFERS TO THAT TYPES OF AMOUNT OR ASSET WHICH IS

INVESTED TO THE BUSINESS FOR START HIS BUSINESS BY THE BUSINESS
OWNER.

WHO IS PROPRIETOR OR BUSINESS OWNER ?

ANS. THE PERSON WHO INVEST MONEY INTO THE BUSINESS AND BEAR RISK
OF IT , IS CALLED THE BUSINESS OWNER OR PROPRIETOR.

ACCOUNTING PROCESS :

TRANSACTIONS JOURNAL LEDGER TRIAL BALANCE

FINANCIAL STATEMENT ( 1. BALANCE SHEET 2.

PROFIT & LOSS)

WHAT IS JOURNAL ?

ANS. JOURNAL IS THE FIRST BOOKS OF ACCOUNTING WHERE ALL THE

ACCOUNT KEPT IN A PARTICULAR MANNER.

WHY JOURNAL IS CALLED THE BOOKS OF ORIGINAL ENTRY ?

ANS. AS JOURNAL IS THE FIRST BOOKS OF ACCOUNTING SO IT IS CALLED THE
BOOKS OF ORIGINAL ENTRY.

JOURNAL TABLE

DATE PARTICULARS L.F. DEBIT CREDIT

AMOUNT AMOUNT

2023 CASH A/C DR. 2000

APR TO Ram a/c 2000

01 (being cash received from ram )

Prepare the following transaction to journal

1. Started business with cash Rs 60000

2. Purchased machinery Rs 15000
3. Sold goods for cash rs 16000
4. Purchased goods for cash Rs 10000
5. Paid salary Rs 2500
6. Sold goods to raju on credit Rs 5000
7. Received commission in cash Rs 1000
8. Received cash from raju Rs 3000
9. Paid rent by cheque rs 6000
10.Cash deposited into bank Rs 4000

JOURNAL ENTRIES

DATE PARTICULARS L.F. DEBIT CREDIT

AMOUNT AMOUNT

1. Cash a/c dr. 60000

To capital 60000
 2. Machinery a/c dr. 15000

To Cash 15000

3. Cash a/c dr 16000

To sales 16000

4. Purchases a/c dr. 10000

To cash 10000

5. Salary a/c dr 2500

To cash 2500

6. Raju a/c dr. 5000

To sales 5000

7. Cash a/c dr. 1000

To commission 1000

8. Cash a/c dr. 3000

To raju 3000

9 Rent a/c dr. 6000

To bank 6000

10 Bank a/c dr. 4000

To cash 4000

What is ledger ?

Ans. Ledger is the main books of accounting.

Ledger account

Cash account
 Dr. cr

date particulars j.f. amount date particulars j.f. amount

TO CAPITAL A/C 60000 BY MACHINERY 15000

A/C
TO SALES A/C 16000
BY SALARY A/C
TO COMMISSION 1000 2500
BY PURCHASE A/C
TO RAJU A/C 3000 10000
BY BANK A/C
4000
BY BALANCE C/D
48500

80000

80000

48500
TO BALANCE B/D

CAPITAL ACCOUNT

date particulars j.f. amount date particulars j.f. amount

TO BALANCE C/D 60000 BY CASH A/C 60000

60000

60000

BY BALANCE B/D 60000

 MACHINERY A/C

date particulars j.f. amount date particulars j.f. amount

TO CASH A/C 15000 BY BALANCE C/D 15000

15000

15000

TO BALANCE B/D 15000

SALES A/C

date particulars j.f. amount date particulars j.f. amount

TO BALANCE C/D 21000 BY CASH 16000

BY RAJU 5000

21000

21000

21000
BY BALANCE B/D

SALARY A/C

date particulars j.f. amount date particulars j.f. amount

TO CASH 2500 BY BALANCE C/D 2500

2500

2500

TO BALANCE B/D 2500

 PURCHASE A/C

date particulars j.f. amount date particulars j.f. amount

TO CASH 10000 BY BALANCE C/D 10000

10000

10000

TO BALANCE B/D 10000

RAJU A/C

date particulars j.f. amount date particulars j.f. amount

TO SALES 5000 BY CASH A/C 3000

BY BALANCE C/D 2000

5000

5000

TO BALANCE B/D
2000

COMMISSION

date particulars j.f. amount date particulars j.f. amount

TO BALANCE C/D BY CASH 1000

1000

1000
 BY BALANCE B/D 1000

RENT A/C

date particulars j.f. amount date particulars j.f. amount

TO BANK A/C 6000 BY BALANCE C/D 6000

6000

6000

TO BALANCE B/D 6000

BANK

date particulars j.f. amount date particulars j.f. amount

TO CASH 4000 BY RENT A/C 6000

TO BALANCE C/D 2000

6000

6000

BY BALANCE B/D 2000

TRIAL BALANCE

PARTICULARS DEBIT CREDIT

CASH A/C 48500

CAPITAL A/C 60000

MACHINERY 15000

SALES 21000

SALARY A/C 2500

 PURCHASE A/C 10000

RAJU A/C 2000

COMMISSION 1000

RENT 6000

BANK A/C 2000

84000 84000

Leger accounting (practical notes)

THERE ARE TWO PREDEFINED LEDGER IN TALLY – 1. CASH A/C

2. PROFIT & LOSS A/C.

WHAT IS GROUPS?

ANS. GROUPS IS THE COLLECTION OF LEDGER IN SAME NATURE.

THERE ARE 28 PREDEFINED LEDGER IN TALLY . IN WHICH 15 ARE CALLED

PRIMARY GROUPS AND REMAINING 13 ARE CALLED SUB GROUP .

15 PRIMARY GROUP :

1. CAPITAL ACCOUNT
2. CURENT ASSET ACCOUNT
3. CURRENT LIABILTIES ACCOUNT
4. FIXED ASSET
5. INVESTMENT
6. LOAN (LIABILITY)
7. SUSPENSE ACCOUNT
8. MISCLENEOUS EXPENSES (ASSET)
9. SALES ACCOUNT
10.PURCHASE ACCOUNT
11.BRANCH / DIVISION
12.DIRECT EXPENSE
13.DIRECT INCOME
14.INDIRECT EXPENSES
15.INDIRECT INCOME

UNDER GROUP LEDGER ACCOUNT NAME

RELATED THIS GROUP

1. CAPITAL ACCOUNT ANY KIND OF CAPITAL NAME

EXCEPT CAPITAL RESERVE LIKE
CAPITAL A/C , SHARE CAPITAL
A/C

2. CURRENT ASSET ANY KIND OF PREPAID OR

RECEIVABLE RELATED NAME

LIKE BILLS RECEIVABLE,

PREPAID SALARY, PREPAID
RENT ETC

3. CURRENT LIABILITY ANY KIND OF OUTSTANDING

AND PAYBLE RELATED NAME
LIKE OUTSTANDING ELECTRIC
BILL, BILLS PAYBLE ETC.

4. FIXED ASSET ANY KIND OF ASSET WHICH

WE CAN SEE ,TOUCH , FEEL
AND LIFE TIME IS MORE THAN
ONE YEAR IS CALLED FIXED
ASSET LIKE FURNITURE,
MACHINERY, COMPUTER ETC

5. INVESTMENT ANY KIND OF INVESTMENT

NAMED LIKE INVESTMENT,
INVESTMENT AT SBI

6. LOAN (LIABILITY) ANY KIND OF LOAN WE TAKES

FROM OTHERS, THESE TYPES
OF LOAN IS CALLED LOAN
 LIABILITY. LIKE LOAN FROM
FRIENDS OR RELATIVES , LOAN
FROM AMIT ETC

7. SUSPENSE ACCOUNT ANY KIND OF SUSPENSE

RELATED NAMED LIKE
SUSPENSE ACCOUNT. IT IS A
TEMPORARY ACCOUNT.

8. MISCLENEOUS EXPENSES ANY KIND OF MISCLENEOUS

(ASSET) RELATED NAMED LIKE
MISCLENEOUS EXPENSES.

9. SALES ACCOUNT ANY KIND OF SALES RELATED

NAMED LIKE SALES ACCOUNT,

SALES RETURN ACCOUNT

10.PURCHASES ACCOUNT ANY KIND OF PURCHASE

RELATED NAMED LIKE
PURCHASES ACCOUNT,
PURCHASE RETUN ACCOUNT

11.DIRECT EXPENSES ANY KIND OF EXPENSES

RELATED TO OFFICE OR MAIN
BUSINESS LIKE WAGES , OFFICE
EXPENSES

12.INDIRECT EXPENSES ANY KIND OF EXPENSES

EXCEPT DIRECT EXPENSES

LIKE OTHERS EXPENSES,

ASVERTISEMENT, RENT,
SALARY ETC

13.DIRECT INCOME ANY KIND OF INCOME

RELATED TO MAIN BUSINESS

OR OFFICE LIKE INCOME FROM
 MOBILE RECHARGE

14.INDIRECT INCOME ANY KIND OF INCOME EXCEPT

DIRECT INCOME LIKE OTHERS
INCOME, INTEREST,
COMMISSION

15.BRANCH OR DIVISION ANY KIND OF BRANCH OR

DIVISION RELATRED NAMED
LIKE BALICHAK SBI BRANCH

CREATE THE FOLLOWING LEDGER WITH THEIR OPENING BALANCES

INVESTMENT RS 500000

SALARY RS 12000

OUTSTANDING SALARY RS20000

PREPAID SALARY RS 30000

SBI BRANCH RS 200000

MISCLENEOUS EXPENSES RS 40000

WAGES RS 120000

INTEREST RS 1000

COMMISION RS 2000

INCOME FROM MAIN BUSINESS RS 2000

SALES 20000

PURCHASES RS 10000

COMPUTER RS 45000

13 sub group :

1. Reserve and surplus

2. Bank account
3. Cash-in-hand
4. Deposits (assets)
5. Loans and advance ( asset)
6. Stock –in-hand
7. Sundry debtors
8. Duties and taxes
9. Provisions
10.Sundry creditors
11.Bank OD a/c or bank OCC a/c
12.Secured loan
13.unsecured loan

Under group Ledger account name related this group

1. Reserve and Any kind of reserve related named like reserve &
surplus surplus a/c ,general reserve a/c, capital reserve
a/c etc

2. Bank account All types of bank named like SBI , PNB, HDFC,
ICICI etc

3. Cash-in-hand Any kind of cash named like cash a/c , petty cash
a/c etc

4. Deposits (assets) All types of deposits related named like FD a/c

5. Loan & advance It is a loan which we gave to others .like loan to

(assets) amit a/c, loan to friend or relatives etc.

6. Stock –in-hand Any kind of stock related named like stock-in-

hand, closing stock etc

7. Sundry debtors Any person or party to whom we sold goods on

credit like Akas a/c

8. Duties & tax Any kind of tax related named like VAT , TDS,
CGST, SGST ETC
 9. Provisions All types of provisions named like provisions

10.Bank OD a/c or Bank overdraft and bank over cash credit a/c only
Bank OCC a/c

11.Sundry creditors Any person or party from whom we purchased

goods on credit like Fatima enterprises

12.Secured loan Any kind of loan for takes this loan we have to
give something as security these types of loan is
called secured loan like home loan , car loan ,gold
loan etc

13.Unsecured loan Any kind of loan for get this loan we have to
gave nothing as security to the bank these types
of loan is called unsecured loan like educational
loan, personal loan etc

Create the following ledger with their opening balances

1. General reserve Rs 500000

2. Capital reserve rs 20000
3. Equity capital Rs 30000
4. Invesdtment Rs 20000
5. Loan from Avi rs 500000
6. Loan to Rintu Rs 700000
7. Vehicle Rs 300000
8. SBI rs 80000
9. Petty cash rs 25
10.Salary Rs 40000
11.Outstanding salary rs 25000
12.Prepaid salary rs 35000
13.Wages Rs 5100
14.Cash Rs 250000
15.Profit & loss rs 25000