Jamy has purchased a car for Rs. 5,00,000 which he got financed from a bank the extent of Rs. 4,00,000. How will it be shown in the accounting equation?
A n s w e r :
Car increase by 5,00,000.
Loan increase by 4,00,000.

Balance 1,00,000 is paid in cash.. hence, bank balance is reduced by 1,00,000.

cash A/c Dr. 1940 discount A/c Dr. 60 To sales A/c 4000 (being goods sold to Roma)

Cash A/c Dr. 1940

Cash discount A/c Dr. 60

Roma's A/c Dr. 2000

To sales A/c 4000

( being goods sold to Roma )

Explanation:

 

Trade discount = 20% of 5000 = 1000

 

Trade discount is not recorded in the books of accounts.

Cash discount is only allowed on the amount which is being paid in cash at the time of transition.

Cash discount = 3 % of 2000 = 60

Accrued interest is the amount of loan interest that has already occurred, but has not yet been paid by the borrower and not yet received by the lender.

The capital which is not disclosed in the balance sheet is the secret reserve. A secret reserve is the quantity that underestimates an organization's assets or overestimates its liabilities.

The debit balance of a personal account indicated debt owing by the person and credit balance indicates debts owing to the person concerned. For the business, the first one is account receivable or asset, while the second is accounts payable or liability. Every personal account showing debit balance (i.e. excess of debit side over credit side) will reveal the amount by which the debit side is more than the credit side. Debit balance is recoverable from the person whose account shows a debit balance. A debit balance to a personal account is an asset and therefore the more debit balance to a personal account is an asset and therefore the more debit balances to personal accounts, more the assets are in the form of outstanding recoverables. The debit balance of a personal account shows the amount receivable.

Closing stock is the goods that remain unsold at the end of the year. It is valued at Cost price or Realisable Value, whichever is less.

It is based on the principle of Conservatism or prudence, According to which all anticipated losses should be recorded in the books of accounts, but all anticipated or unrealized gains should be ignored.

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Bank Reconciliation Statement is a record book of the transactions of a bank account. This statement helps the account holders to check and keep track of their funds and update the transaction record that they have made. Bank Reconciliation statement is also known as bank passbook. The balance mentioned in the bank passbook of the statement must tally with the balance mentioned in the cash book. In the statement, all the deposit will be shown in the credit column and withdrawals will be shown in the debit column. However, if the withdrawal exceeds deposit it will show a debit balance (overdraft).

Accounting as a Source of Information:

 Accounting is regarded as the language of a business. It is used as a means of communication between a business organization and its shareholders. The accounting process is a source of information, it uses business data and processes it to generate relevant information

Accounting is regarded as the language of a business. It is used as a means of communication between a business organization and its shareholders. The accounting process is a source of information, it uses business data and processes it to generate relevant information.

• The accounting records business transaction which is the source of generating information.
• Proper accounting system makes information more reliable.
• Accounting ensures it is a reliable source of information.
• Accounting works as a management information system to the organization. It helps the management to manage the organization in a proper way.
• Accounting system generator various information in the form of different accounts. These documents have to be to true and fair.

In a business transaction, the source document is the first recorded document for the transaction. In this document, all the important details like date, amount, parties name involved, and the nature of the account is reported. Only from the source document, all the entries in other books are recorded. 

Expenditure is of two types :- Capital expenditure and revenue expenditure revenue expenditure is also called expense

Expenditure will generate future economic benefits for the company, but the expenses will generate the benefit for the current period only. The major difference between Expense vs Expenditure is that the expenditure is a single time investment of money. ... Conversely, Expenses are of the shorter term. In terms of its accounting treatment, an expense is recorded immediately and impacts directly the income statement of the company, reducing its net profit. In contrast, a capital expenditure is capitalized, recorded as an asset and depreciated over time.

Which of the following account will be credited on giving cash donations?

Purchases A/c

Donation A/c

Bank A/c

Cash A/c

A n s w e r : Donation account

Cash ac

Net sales =2,00,000 Gross Profit = 25 multiple by 2,00,000 dividend by 125 = 40,000 There for Sales - Gross Profit = 2,00,000 - 40,000 = 1,60,000

Mr. M starts business with Rs. 20,000 on 1st April 2012. Of this he pays Rs. 15000 into his bank account. His cash transactions during the week were:
April 1 Purchased stationery for cash Rs. 100
April 2 Purchased goods for cash Rs. 2500
April 2 Cash Sales Rs.1500
April 3 Received from J Brown Cash on account Rs. 1000
April 4 Paid to J. R Cash Rs. 2200
April 5 Paid for Advertisement Rs. 400
April 6 Cash Sales Rs. 1800
April 6  Purchased old machinery Rs. 800
April 6 Purchase from sham on credit Rs. 6000

The key difference between T account and ledger is that T account is a graphical representation of a ledger account whereas ledger is a set financial accounts. Therefore, a ledger can also be interpreted as a collection of T accounts.

Straight line method	Written down value method
Depreciation is calculated on the original cost of an asset.	Depreciation is calculated on the reducing balance, i.e., the book value of an asset.
Equal amount of depreciation is charged each year over the useful life of the asset.	Diminishing amount of depreciation is charged each year over the useful life of the asset.
Book value of the asset becomes zero at the end of its effective life.	Book value of the asset can never be zero.
It is suitable for the assets such as patents, copyright, land and buildings which have lesser possibility of obsolescence and lesser repair charges.	It is suitable for assets which needs more repair in the later years such as plant and machinery, car.
As depreciation remains same over the years but repair cost increases in the later years, there will be unequal effect over the life of the asset.	As depreciation cost is high and repairs are less in the initial years but in the later years the repair costs increase and depreciation cost decreases, there will be equal effect over the life of the asset.
It is not recognized under the income tax act.	It is recognized under the income tax act.

The main cashier give some money known as imprest money on the beginning of weak or month to petty cashier and the petty cashier spent the money on petty expenses ....and in the last of week or month ...petty cashier total out the expenses ....and ask main cashier to again give the money for next week or month .....for example ...if the main cashier gives 500 Rs and this money is known as imprest money to petty cashier for the expenses in the beginning of week or month ...and let us suppose that the petty cashier spent 470 money for different expenses .. in a week or a month ...At the last date of month ... Petty cashier balance the money ...the money at last date left was 30 Rs ..then the petty cashier ask main cashier to again give some money for the expenses of next month ..the petty cashier has already 30 Rs so the main cashier give him 470 Rs and this money is known as imbrusement money ...and this whole system is known as Imprest System ..

Petty cash book is made by petty cashier to record small and recurring expenses like wages , telephone paid etc to burden out the work of main cashier who maintain cash book ....petty cash book is a type of cash book in which only petty i.e small expenses are recorded ....