Select Page

2nd Sem Accountancy Notes

Introduction to Accounting

Introduction to Accounting

Accounting is the language of business. It is the system of recording, summarizing, and analyzing an economic entity's financial transactions. The American Accounting Association offers this definition: "The process of identifying, measuring and communicating economic...

read more
Accounting Types and Classification

Accounting Types and Classification

Types of Accounting Financial Accounting Cost Accounting Management Accounting Tax Accounting Social Responsibility Accounting 1) Financial Accounting The main purpose of this branch of accounting is to record the business transaction in a systematic manner, to...

read more
Principles of Accounting

Principles of Accounting

The principles can be classified mainly into three categories: Basic assumption or concepts Basic principle Modifying Principles Basic assumption or concepts These assumptions provide a foundation for accounting process.No enterprises can prepare its financial...

read more
Systems of Accounting

Systems of Accounting

The systems of recording transaction in the books of accounts are two types. Double Entry System Single Entry System Double Entry System Double entry is an almost universally used system of business record keeping. It is a system of recording business transaction...

read more
Primary Books (Journal): Meaning and Definition

Primary Books (Journal): Meaning and Definition

Journal is the book of original entry in which, after following the rules of debit and credit, all business transactions are recorded in a chronological order. The word journal has been derived from the French word “jour”, which means “a day”. Thus, journal means a...

read more
Format of Journal

Format of Journal

Format of Journal: Date Particulars L.F Amount Amount Account to be debited .............................Dr. Account to be credited (Narration) XXX XXX   The various columns of the journal are explained in details below: Date: This column is used to write the...

read more
Rules of Debit and Credit

Rules of Debit and Credit

Debit and credit are simply additions to or subtraction from an account. In accounting, debit refers to the left-hand side of any account and credit refers to the right-hand side. Asset, expenses and losses accounts normally have debit balances; liability, income and...

read more
Opening entry, Simple and Compound entries

Opening entry, Simple and Compound entries

Opening entries Opening entries are those entries which record the balances of assets and liabilities, including capital brought forward, from a previous accounting period. In the case of going concerns, there is always a possibility of having balances of assets and...

read more
Practical Problems on Primary Books (Journal)

Practical Problems on Primary Books (Journal)

Problem 1: Enter the following transactions in the Journal of Bhagwat and sons.. Year 2006 Amount (Rs) January 1 Tarun started business with cash 1,00,000 January 2 Goods purchased for cash 20,000 January 4 Machinery Purchased from Vibhu 30,000 January 6 Rent paid in...

read more
Secondary Book (Ledger): Meaning and Uses

Secondary Book (Ledger): Meaning and Uses

A ledger is an accounting book that facilitates the transfer of all journal entries in a chronological sequence to individual accounts. The process of recording journal entries into the ledger is called posting. The book in which accounts are maintained is...

read more
Formats of Secondary Book (Ledger)

Formats of Secondary Book (Ledger)

Standard Form of Ledger Account: To understand clearly as to how to write the accounts in ledger, the standard form of an account is given below with two separate transactions: Date Particulars J.R Amount Date Particulars J.R Amount 2005 Dec. 17 Cash A/C 1,200 2005...

read more
Posting in Secondary Book (Ledger)

Posting in Secondary Book (Ledger)

The process of transferring the transaction written in the journal to the ledger account is called Posting. The following procedure is followed for posting the debit and credit aspect of the transaction recorded in the journal. 1.Posting of an Account debited in a...

read more
Practical Problems of Secondary Book (Ledger)

Practical Problems of Secondary Book (Ledger)

Format of a ledger sheet The format of a ledger sheet is as follows : POSTING OF JOURNAL PROPER INTO LEDGER You know that the purpose of opening an account in the ledger is to bring all related items of this account which might have been recorded in different books of...

read more
Subsidiary Books its Need and Uses

Subsidiary Books its Need and Uses

Subsidiary Books  Relating to something that is added but is not essential  Functioning in a subsidiary or supporting capacity  supplementary  auxiliary  ancillary  additional  contributory  secondary Subsidiary Books used in Financial Accounting are Books which are...

read more
Cash book Introduction

Cash book Introduction

The cash book is set up as a ledger in which all cash transactions are recorded according to date. It is a book of original entry and final entry. That is, the cash book serves as the general ledger. Features of Cash Book It plays a dual role. It is both a book of...

read more
Simple, Double and Three Column Cash Book

Simple, Double and Three Column Cash Book

There are three types of cash books 1.Simple Column Cash Book: For recording cash transaction only. This is the simplest form of Cash Book and is used in businesses where payments are made and received mostly in cash and where usually no cash discount is received or...

read more
Practical Problem on Cashbook

Practical Problem on Cashbook

Problem Enter the following transactions of the Premier Trading Company in Cash Book with three columns- Discount, Cash and Bank and balance the accounts as on 31st December 2004: 2004 Dec. 1 Cash in hand Rs 4,000 2004 Dec. 1 Bank Rs 1,000 (Cr.) 2004 Dec. 3 Received a...

read more
Bank Reconciliation Statement

Bank Reconciliation Statement

A bank reconciliation is the balancing of a company's cash account balance to its bank account balance. A nice video to watch before you go further.. https://www.youtube.com/watch?v=qBKOYZYl3NM A businessman maintains cash book with bank column to record cash and bank...

read more
Reasons for difference in Pass Book and Cash Book Balances

Reasons for difference in Pass Book and Cash Book Balances

The main reason for a difference between a cash book and a passbook is the timing of when transactions are recorded. A cash book is maintained by the account holder to record all cash transactions, whereas a passbook is a record of all transactions maintained by the...

read more
Preparation of Bank Reconciliation Statement

Preparation of Bank Reconciliation Statement

It is very easy to prepare the bank reconciliation statement. While preparing the bank reconciliation statement the accountant has to go step by step. We are describing the various steps to be taken while preparing of bank reconciliation statement:- First of all, the...

read more
Trial Balance Introduction

Trial Balance Introduction

A trial balance is a bookkeeping worksheet in which the balances of all ledgers are compiled into debit and credit columns. A nice video to help you get started smoothly:- https://www.youtube.com/watch?v=e-e5Fpi5zko   Trial Balance is a list of closing balances...

read more
Methods of Trial Balance

Methods of Trial Balance

There are three methods for the preparation of trial balance. These methods are: Total or gross trial balance Balance or net trial balance Total - cum - balance trial balance The method 1 and 2 are described below: Total or Gross Trial Balance Under this method, the...

read more
Limitations of Trial Balance

Limitations of Trial Balance

A trial balance has some limitations : It does not prove that all transactions have been recorded It does not prove that the ledger is correct Numerous errors may exist even though the trial balance columns agree It cannot find the missing entry from the journal It...

read more
Practicals: Trial Balance

Practicals: Trial Balance

Please note. In following answers:- tl stands for Total Dr stands for Debit Cr stands for Credit Problem - 1 Record the following transactions in the Journal and post them into ledger and prepare a Trail Balance Oct 1st : Neel started business with a capital of 80,000...

read more
Final Accounts

Final Accounts

Final accounts are the statement prepared at the end of the accounting period to show financial performance during the accounting period and financial position of the business as on that date. The final accounts or financial statements consists of: Trading and profit...

read more
Procedure for preparation of Final Accounts

Procedure for preparation of Final Accounts

Preparation of Trading Account  Trading Account is a Nominal Account and all expenses which relate to either purchase or manufacturing of goods are written on the Dr. side of the Trading Account. Item written on the Dr. side of the Trading Account: Opening Stock: The...

read more