(i) maintaining systematic records :- Accounting records the financial transaction in the Systematic manner.

(ii) Communication the financial result :- Accounting is used to communicate financial information like net profit.

(iii) Meeting legal needs :- Accounting helps for meeting legal needs for various legal purposes like annual accounts, income tax return, sales tax return

(iv) protecting business assets :-  Accounting maintains proper rewards various assets and helps to management to protects business assets by providing relevant information.

(v) Accounting assists the management in decision making :- Accounting assists the management in decision making planning, controlling and coordination of business Activities.

(vi) Ascertaining the business profit and losses :- Accounting helps in determining the coredt net profit and loss of enterprises.

(vii) Ascertaining the financial position :- Accounting helps in determining the financial position of an enterprises with helps of balance sheets.

Financial statements are those statements which are prepared for reporting to decision-maker on the basis of trial balance containing balances of ledger accounts. These are prepared to throw light on the financial results of operation of business during the period under consideration and the financial position at the end of the period. 

In financial accounting through financial statement profit is measured in two stages, i.e. Gross profit and Net profit.
To ascertain the gross profit, trading account is prepared and to ascertain the net profit, P&L account is prepared. To report on financial position of business enterprise, its assets, liabilities and owner equity balance sheet is prepared. Financial statements are the statements, which present periodic reports on the process of business enterprises and the results achieved during a given period.
Financial statements include Trading and Profit and Loss account, balance sheet and other statements and explanatory notes, which form part thereof. Information provided by financial statements is useful to management to plan and control the business operations. Financial statements are also useful to creditors, shareholders and employees of the enterprise.
Information Provided by Financial Statements
Trading and Profit and Loss account present a true and fair view of the financial performance of the business in the form of profit or loss during the year.
Balance sheet presents a true and fair view of the financial position of the business.

At times it might be necessary to return a few goods back to a supplier when an order is received. This situation may arise due to the poor quality of products, inaccurate quantity, untimely delivery or other such reasons.

Purchase returns are also called returns outward and an appropriate purchase returns or returns outward book is maintained for recording entries related to such books. All returns are primarily recorded in the purchase returns book unless the returns are not that frequent, in which case they are recorded in the journal. The journal entry to be passed in the case of purchase returns is

Creditor A/c – Dr.                    XX

To Purchase return A/c                       XX

 

In the given query the entry will be: Pankaj A/c – Dr.                    12,000 To Purchase return A/c                       12,000

 

Journal Ledger Depreciation Accounting equation Debit and credit Bank reconciliation Basis of accounting Goods and service tax Subsidiary book ( cash, sales, purchase book)

All chapters are important dude

??

Accrual Basis of Accounting: Under this system of accounting, revenue and expenses are recorded when they are recognized i.e., Income is recorded as Income when it is accrued (when transaction takes place) irrespective of fact whether cash is received or not. Similarly, expenses are recorded when they are incurred or become due and not when the cash is paid for them.

Under this system, expenses such as outstanding expenses, prepaid expenses, accrued income and received in advance are identified and taken into account.

Under the companies’ amendments Act 2013, all companies are required to maintain their accounts according to accrual basis of accounting.

In the simplest of terms, bookkeeping is responsible for the recording of financial transactions whereas accounting is responsible for interpreting, classifying, analyzing, reporting, and summarizing the financial data. Bookkeeping and accounting may appear to be the same profession to an untrained eye.

Assets	Liabilities
What does it mean?
Assets are items possessed by a business that will provide it benefits in future.	Liabilities are items that are obligations for a business
Impact of Depreciation
Assets are depreciable in nature	Liabilities are non-depreciable in nature
Formula used
Assets = Liabilities + Shareholder’s Equity	Liabilities = Assets – Shareholder’s Equity
Impact on cash flow
It is responsible for generation of cash flow for a business	It is responsible for outflow of cash from a business
Different Types
The different types of assets are tangible, intangible, current and noncurrent	The different types of non-current liabilities are long term(non-current) and current liabilities
Examples
Cash, Account Receivable, Goodwill, Investments, Building, etc.,	Accounts payable, Interest payable, Deferred revenue etc.

Assets are the firm's property and liabilities are something the firm is liable to pay

The debts that cannot be recovered

Drawings a/c Dr 5000

____To purchase a/c 5000

(being goods taken for personal use)

The goods taken by the proprietor for personal use, reduces the inventory of the business. Hence,it is placed on a temporary drawings account. It reduces the Owner's equity account. It is not an expense of the business.

B A N K    R EC  ON C I  L IA  T I O N   S T A T E M E N T

Bank Reconciliation Statement is prepared to reconcile the difference between the bank Balance shown by the Cash Book and Bank Pass Book.

A schedule showing the items of difference between the bank statement and the bank column of Cash Book is known as Bank Reconciliation Statement (BRS).

Cash a/c... Dr To capital a/c....

So annual depreciation = 90000

Annual depreciation = (1200000-120000)/12

Cash a/c dr 8,400 To sells a/c 7,500 To CGST a/c 450 To SGST a/c 450

Stationary account dr .300

CGst and SGst ....dr 18+18=36

• To cash account.............336

( being cash paid on tax and purchase stationary)

yes

Yes they are in syllabus

Ofcourse they are

Yes they are

Creditors, Bill Payable

1. Bills. 2.dividend payable.

Basic accounting terms Business Transaction An Economic activity that affects financial position of the business and can be measured in terms of money e.g., purchase of goods for use in business. Account: Account refers to a summarized record of relevant transactions of particular head at one place. All accounts are divided into two sides. The left side of an account is called debit side and the right side of an account is called credit side. Capital: Amount invested by the owner in the firm is known as capital. It may be brought in the form of cash or assets by the owner. Drawings: The money or goods or both withdrawn by owner from business for personal use, is known as drawings. Example: Purchase of car for wife by withdrawing money from business. Assets: Assets are valuable and economic resources of an enterprise useful in its operations. Assets can be broadly classified as: Current Assets: Current Assets are those assets which are held for short period and can be converted into cash within one year. For example: Debtors, stock etc. Non-Current Assets: Non-Current Assets are those assets which are hold for long period and used for normal business operation. For example: Land, Building, Machinery etc. They are further classified into: Tangible Assets: Tangible Assets are those assets which have physical existence and can be seen and touched. For Example: Furniture, Machinery etc. Intangible Assets: Intangible Assets are those assets which have no physical existence and can be felt by operation. For example: Goodwill, Patent, Trade mark etc. Liabilities: Liabilities are obligations or debts that an enterprise has to pay after some time in the future. Liabilities can be classified as: Current Liabilities: Current Liabilities are obligations or debts that are payable within a period of one year. For Example: Creditors, Bill Payable etc. Non-Current Liabilities: Non-Current Liabilities are those obligations or debts that are payable after a period of one year. Example: Bank Loan, Debentures etc. Receipts Revenue Receipts: Revenue Receipts are those receipts which are occurred by normal operation of business like money received by sale of business products. Capital Receipts: Capital Receipts are those receipts which are occurred by other than business operations like money received by sale of fixed assets. Expenses: Costs incurred by a business for earning revenue are known as expenses. For example: Rent, Wages, Salaries, Interest etc. Expenditure: Spending money or incurring a liability for acquiring assets, goods or services is called expenditure. The expenditure is classified as : Revenue Expenditure: If the benefit of expenditure is received within a year, it is called revenue expenditure. For Example: rent, Interest etc. Capital Expenditure: If benefit of expenditure is received for more than one year, it is called capital expenditure. Example: Purchase of Machinery. Deferred Revenue Expenditure: There are certain expenditures which are revenue in nature but benefit of which is derived over number of years. For Example: Huge Advertisement Expenditure. Profit: The excess of revenues over its related expenses during an accounting year is profit. Profit = Revenue - Expenses Gain: A non-recurring profit from events or transactions incidental to business such as sale of fixed assets, appreciation in the value of an asset etc. Loss: The excess of expenses of a period over its related revenues is termed as loss. Loss = Expenses - Revenue Goods: The products in which the business deal in. The items that are purchased for the purpose of resale and not for use in the business are called goods. Purchases: The term purchases is used only for the goods procured by a business for resale. In case of trading concerns it is purchase of final goods and in manufacturing concern it is purchase of raw materials. Purchases may be cash purchases or credit purchases. Purchase Return: When purchased goods are returned to the suppliers, these are known as purchase return. Sales: Sales are total revenues from goods sold or services provided to customers. Sales may be cash sales or credit sales. Sales Return: When sold goods are returned from customer due to any reason is known as sales return. Debtors: Debtors are persons and/or other entities to whom business has sold goods and services on credit and amount has not received yet. These are assets of the business. Creditors: If the business buys goods/services on credit and amount is still to be paid to the persons and/or other entities, these are called creditors. These are liabilities for the business. Bill Receivable: Bill Receivable is an accounting term of Bill of Exchange. A Bill of Exchange is Bill Receivable for seller at time of credit sale. Bill Payable: Bill Payable is also an accounting term of Bill of Exchange. A Bill of Exchange is Bill Payable for purchaser at time of credit purchase. Discount: Discount is the rebate given by the seller to the buyer. It can be classified as : Trade Discount: The purpose of this discount is to persuade the buyer to buy more goods. It is offered at an agreed percentage of list price at the time of selling goods. This discount is not recorded in the accounting books as it is deducted in the invoice/cash memo. Cash Discount: The objective of providing cash discount is to encourage the debtors to pay the dues promptly. This discount is recorded in the accounting books. Account : Account refers to a summarised record of relevant transaction of particular head at one place. Income: Income is a wider term, which includes profit also. Income means increase in the wealth of the enterprise over a period of time. Stock : The goods available with the business for sale on a particular date is known as stock. Cost : Cost refers to expenditures incurred in acquiring manufacturing and processing goods to make it saleable. Voucher: The documentary evidence in support of a transaction is known as voucher. For example, if we buy goods for cash we get cash memo, if we buy goods on credit, we get an invoice, when we make a payment we get a receipt. Goods and Service Tax (GST) : GST is an indirect tax which is levied on the supply of goods and service.

(D) Journal proper

Cash purchases are recorded in the Cash Book. Other purchases such as purchases of office equipment, furniture, building, are recorded in the journal proper if purchased on credit or in the cash book if purchased for cash.  On account is an accounting term that denotes the furniture or asset or service is purchased on credit.

(C) Ledger

Subsidiary Books are the sub divisions of a Journal. These books are meant for recording the transactions of a similar nature in a separate book. When there are many transactions, the Journal is sub-divided into subsidiary books to record such voluminous transactions and events in one single book. These books are also termed as 'Special Purpose Books or Special Journals or Book of Original/Primary/Prime entry'.

(₹10,000+₹2,000) - (₹500) = ₹11,500