Accountancy

Errors should not be corrected by erasing or overwriting. It reduces the authenticity of accounting records. Method of rectification depends on the stage at which it is detected. In case an error is detected in the book of original entry before its posting to the ledger, it may be neatly corrected by crossing out the […]

A trial balance is a summary of balances of all accounts recorded in the ledger. The format of trail balance is as fallows :Trial Balance of M/s…………as on 31st Jan., 2005According to J. R. Batliboi trial balance is a statement, prepared with debit and credit balances of ledger accounts to test the arithmetical accuracy of

Sometimes the bank balance shown in the Cash book does not tally with pass book or balance shown by the statement of account provided by the bank. To reconcile the balances, bank reconciliation statement is prepared.The causes of difference between the two balances are as follows :Cheques Paid in to Bank but not yet Collected

The ledger is the main book of accounting system. It contains different accounts where transactions relating to that account are recorded.A ledger is a collection of all the accounts, debited or credited in the given journal and various special journals. A ledger may be in the form of a bound register, or cards, or separate

Besides cash book there are few other subsidiary books to keep accounts in order.Purchases bookAll credit purchases of goods are recorded in the purchases book. ‘Goods’ have mean only those things in which the firms is dealing. These are the articles which are purchased for resale. Purchases book is also known as ‘Invoice Book’ or

The subsidiary books may be defined as books where the transactions are entered first and then ledger accounts are opened. These subsidiary books are also known as ‘Books of Original Entry.’ This subdivision of books is essential due to the expanding size of the business.Advantages of subsidiary booksWork is Assigned According to Ability : There

The process of recording transactions is known as journalising. Such transaction is separately recording after determining the particular amounts to be debited and credited. The first column in a journal is date which shows the date of transaction. The second column is of particulars. In this column the account to be debited is written in

The recording of transactions considering the debit and credit aspect is known as double entry system. The different books in which the transactions are recorded are as follows :Books of Original Entry : The book in which the transactions are recorded for the first time is called journal or book of original entry. The transactions

Various transactions are made in business everyday, such as sales & purchases of goods and services, receipt and payment of cash, etc. Every business transaction is required to be supported by documentary evidence, such as invoice or bill, debit or credit note, cash receipt, cash memo, cheque, etc. All such documents are known as source

Basic assumptions or postulates guide the recording of transactions in the books of account. These are the foundation of accounting records.Basic AssumptionsThus the basic assumptions may be defined as, “Basic postulates or assumptions which serve the basis of actual recording.” They are referred to as generally accepted accounting principles.These assumptions are :Accounting Entity/Business Entity Assumptions

Business Transactions : All those activities which are related to exchange of goods, and services in monetary nature come under business transactions. Their special features are as follows :(a) They are monetary in nature.(b) They involve exchange of goods and services like packaging, storage, transportation etc.(c) All business transactions are recorded in accounting books.(d) Owners

Accounting is the process of identifying, measuring, recording and communicating the economic events of the organization to interested users of the information.Definitions1. “Accounting is the art of recording, classifying and summarising in a significant manner and in terms of money, transactions and events, which are, in part or least, of financial character, and interpreting the