2. Identification of duel aspectIdentification of duel aspect
How can a transaction have two aspects ?How can a transaction have two aspects ?
1.1. Mr. Lal started a small business withMr. Lal started a small business with
Rs. 2 lakhs.Rs. 2 lakhs.
Assets = LiabilityAssets = Liability
Accounting ProcessAccounting Process
Liability Assets
Capital 2,00,000 Cash 200,000
3. 2. Mr. Lal took a loan from the bank2. Mr. Lal took a loan from the bank Rs.1 lacRs.1 lac
Accounting ProcessAccounting Process
Liability Assets
Capital 2,00,000 Cash 3,00,000
Loan 1,00,000
-------- --------
3,00,000 3,00,000
======== ========
Owners equity + outsiders’ Claim = Assets
4. 3. Out of the available cash he purchased a3. Out of the available cash he purchased a
Small Machine for Rs. 75,000Small Machine for Rs. 75,000
Accounting ProcessAccounting Process
Liability Assets
(source ) (application)
Capital 2,00,000 Machine 75,000
Cash 2,25,000
Loan 1,00,000
-------- --------
3,00,000 3,00,000
======== ========
Owners equity + outsiders’ Claim = Assets
Source = Application
5. 4. Mr. Lal bought furniture from M/s Lakdiwala on4. Mr. Lal bought furniture from M/s Lakdiwala on
credit .credit .
Assets
) (application)
2,00,000 Machine 75,000
1,00,000 Furniture 25,000
r 25,000 Cash 2,25,000
-------- --------
3,25,000 3,25,000
======== ========
Owners equity + outsiders’ Claim = Assets
6. 5. Mr. Lal Withdrew Rs. 10,000 from the business5. Mr. Lal Withdrew Rs. 10,000 from the business
for his personal use.for his personal use.
Assets
) (application)
2,00,000 Machine 75,000
1,00,000 Furniture 25,000
25,000 Cash 2,25,000
-------- --------
3,25,000 3,25,000
======== ========
Assets
) (application)
1,90,000 Machine 75,000
1,00,000 Furniture 25,000
r 25,000 Cash 2,15,000
-------- --------
3,15,000 3,15,000
======== ========
Owners equity + outsiders’ Claim = Assets
7. 6. Assume business entered a few sales and6. Assume business entered a few sales and
purchase transactions on cash and made a profit ofpurchase transactions on cash and made a profit of
Rs. 50,000/-Rs. 50,000/-
Assets
) (application)
2,40,000 Machine 75,000
1,00,000 Furniture 25,000
r 25,000 Cash 2,65,000
-------- --------
3,65,000 3,65,000
======== ========
Owners equity + outsiders’ Claim = Assets
8. AccountingAccounting ProcessProcess
Identification of duel aspectIdentification of duel aspect
Source = ApplicationSource = Application
Owners equity+ out side liability= AssetsOwners equity+ out side liability= Assets
Total liability = total assetsTotal liability = total assets
9. Liability , Revenue & profitLiability , Revenue & profit
Cr=sourceCr=source
Dr= UseDr= Use
Assets expenses & lossesAssets expenses & losses
Dr = useDr = use
Cr=sourceCr=source
Accounting ProcessAccounting Process
10. Assigning meaning to the accountAssigning meaning to the account
Debit ( debited )Debit ( debited )
Credit (credited)Credit (credited)
Accounting ProcessAccounting Process
Total Assets of the
firm Increased &
total liability of the
firm decreased
Total Assets of the
firm decreased &
total liability of the
firm increased
11. Type of accountType of account
Rule of Debit and CreditRule of Debit and Credit
Recording of transactionsRecording of transactions
Accounting ProcessAccounting Process
12. Financial accountingFinancial accounting
Principle: double entry systemPrinciple: double entry system
Cash transactions
Cash book
Credit transactions
Journal
Ledger
Trial balance
Balance sheetProfit and loss account
14. Write journal entries in the books ofWrite journal entries in the books of
Mr. AjayMr. Ajay
1/1/071/1/07. He started business with Rs. 2 lacs. He started business with Rs. 2 lacs
2/1/072/1/07. Deposited Rs. 10,000 with bank to. Deposited Rs. 10,000 with bank to
start an account with bank.start an account with bank.
3/1/073/1/07. Paid for furniture & fittings. Paid for furniture & fittings
Rs.25000/-Rs.25000/-
15. 4/1/074/1/07 Purchased goods worth Rs. 10,000Purchased goods worth Rs. 10,000
5/1/07 Sold Goods worth Rs. 8,000/-5/1/07 Sold Goods worth Rs. 8,000/-
6/1/07 Purchased goods from Sam & co for6/1/07 Purchased goods from Sam & co for
Rs. 40,000Rs. 40,000
7/1/07 Sold goods to Ramesh & company7/1/07 Sold goods to Ramesh & company
Rs. 50,000/-Rs. 50,000/-
16. 8/1/078/1/07 Paid wages Rs. 700Paid wages Rs. 700
9/1/079/1/07 Paid Rs. 10000 to Sam & coPaid Rs. 10000 to Sam & co
10/1/0710/1/07 Purchased stationery item forPurchased stationery item for
Rs. 1000Rs. 1000
Notes de l'éditeur
Need to give eg increase and decrease in liability and assets
