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Financial Accounting 2nd Sem Short Notes

This document provides short notes on key concepts in financial accounting, including the basics of accounting, final accounts of sole proprietors, depreciation methods, bills of exchange, bank reconciliation statements, consignment accounts, joint ventures, error types and rectification, capital and revenue items, and accounting standards. It outlines essential rules, formulas, and definitions relevant to each topic. The notes serve as a concise reference for students in their second semester of financial accounting.

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13 views3 pages

Financial Accounting 2nd Sem Short Notes

This document provides short notes on key concepts in financial accounting, including the basics of accounting, final accounts of sole proprietors, depreciation methods, bills of exchange, bank reconciliation statements, consignment accounts, joint ventures, error types and rectification, capital and revenue items, and accounting standards. It outlines essential rules, formulas, and definitions relevant to each topic. The notes serve as a concise reference for students in their second semester of financial accounting.

Uploaded by

sudev
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Financial Accounting - 2nd Semester Short Notes

1. Basics of Accounting

- Accounting: Systematic process of recording, classifying, summarizing, and interpreting financial transactions.

- Golden Rules of Accounting:

- Personal A/c - Debit the receiver, Credit the giver.

- Real A/c - Debit what comes in, Credit what goes out.

- Nominal A/c - Debit all expenses/losses, Credit all incomes/gains.

- Types of Accounts: Personal, Real, Nominal.

2. Final Accounts of Sole Proprietor

- Trading A/c: Gross Profit = Sales - (Opening Stock + Purchases + Direct Expenses)

- Profit & Loss A/c: Net Profit = Gross Profit - Indirect Expenses + Other Incomes

- Balance Sheet: Shows financial position - Assets = Liabilities + Capital

3. Depreciation Accounting

- Depreciation: Decrease in value of assets due to wear and tear.

- Methods:

- Straight Line Method (SLM)

- Written Down Value Method (WDV)

- Formula (SLM): Annual Depreciation = (Cost - Scrap Value) / Useful Life

4. Bills of Exchange

- Bill of Exchange: Order by seller to buyer to pay a certain amount in future.

- Terms: Drawer, Drawee, Payee, Endorser.

- Discounting: Selling bill to bank before maturity.


Financial Accounting - 2nd Semester Short Notes

- Dishonour: When bill is not paid on due date.

5. Bank Reconciliation Statement (BRS)

- Purpose: Reconcile differences between Cash Book and Bank Statement.

- Causes: Cheques not cleared, bank charges, wrong entries.

- Start with balance as per Cash Book/Pass Book and adjust items.

6. Consignment Accounts

- Consignment: Goods sent by consignor to consignee for sale.

- Ownership remains with consignor.

- Commission: Ordinary & Del-Credere (to bear bad debts).

7. Joint Venture

- Joint Venture: Temporary partnership for specific business.

- Methods: Separate books / Memorandum method.

8. Errors and Rectification

- Types:

- Error of Omission

- Error of Commission

- Compensating Error

- Principle Error

- Suspense A/c used to temporarily adjust errors.


Financial Accounting - 2nd Semester Short Notes

9. Capital & Revenue Items

- Capital Expenditure: For acquiring or improving fixed assets.

- Revenue Expenditure: Daily expenses like rent, salary.

- Deferred Revenue: Expense benefiting multiple years.

10. Accounting Standards (AS)

- Issued by ICAI for consistency.

- Example: AS-1 (Disclosure), AS-6 (Depreciation - merged now under Ind AS).

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