BOOK KEEPING

Meaning:Recording of business data in a systematic manner.

Advantages:To know the financial results

by preparing Trading Account P & L Account

To know the financial position

by preparing Balance sheet

Advantages (Contd..)
Meeting legal requirements
Sales Tax Income-tax, etc.

Keeps systematic record Protects the properties of the business

Recording of transactions is done in

1. Journal 2. Ledger

Journal
Book of first or prime or original entry Book for chronological record Book of source entry
has greater weight as legal evidence than ledger

Proforma of Journal Date Particulars L.F. N o. Debit Rs. Credit Rs.

Ledger
Book of second entry Book for analytical record A set of all Accounts

In the Journal transactions are recorded

in the form of JOURNAL ENTRIES

POSTING
It is the process of recording in the Ledger from the Journal.

Double Entry System

Recording of the two-fold effect of every business transaction.

An ACCOUNT is
In the form of English alphabet T Left side is called DEBIT side Right side is called CREDIT side

Dr. Date Particulars To J.F. No. Amount Rs. Date Particulars By J.F. No

Cr. Amount Rs.

Types of ACCOUNTS
1. Personal Accounts 2. Real Accounts 3. Nominal Accounts

Personal Accounts
Natural Persons Accounts Artificial Persons Accounts Representative Personal Accounts

Real Accounts
Relates to properties of the business Tangible real accounts
Ex. : Furniture, Plant, Buildings, etc.

Intangible real accounts

Ex. : Goodwill, Patent rights, Copy rights, etc.

Nominal Accounts
Relating to
Income Gain Expenses Losses

Ex. : Salaries, Rent, Commission, Discount, Interest, etc.

Rules

For PERSONAL ACCOUNTS

Debit the Receiver Credit the Giver

For REAL ACCOUNTS

Debit what comes in Credit what goes out

For NOMINAL ACCOUNTS

Debit all expenses and losses Credit all incomes and gains

Rules in a nut-shell:
Personal Accounts

Debit the receiver and credit the giver

Real Accounts

Debit what comes in and credit what goes out

Nominal Accounts

Debit all losses and expenses and credit all gains and incomes

JOURNALIZE THESE TRANSACTIONS

JOURNALIZE THE TRANSACTION (Contd..)

Rent paid

JOURNALIZE THE TRANSACTION (Contd..)

Building purchased

JOURNALIZE THE TRANSACTION (Contd..)

Rent received

JOURNALIZE THE TRANSACTION (Contd..)

Taken loan from X

JOURNALIZE THE TRANSACTION (Contd..)

Capital introduced

JOURNALIZE THE TRANSACTION (Contd..)

Interest paid

JOURNALIZE THE TRANSACTION (Contd..)

Goods purchased from X

JOURNALIZE THE TRANSACTION (Contd..)

Goods purchased from Z for cash

JOURNALIZE THE TRANSACTION (Contd..)

Goods sold to Y

JOURNALIZE THE TRANSACTION (Contd..)

Goods returned to X

JOURNALIZE THE TRANSACTION (Contd..)

Goods returned by Y

JOURNALIZE THE TRANSACTION (Contd..)

Purchased furniture from Ram for cash

JOURNALIZE THE TRANSACTION (Contd..)

Amount paid to the creditor, Mr. Suresh through cheque

JOURNALIZE THE TRANSACTION (Contd..)

Goods withdrawn from business for personal use.

JOURNALIZE THE TRANSACTION (Contd..)

Received cash from Z Rs. 4,950 Discount allowed Rs. 50

JOURNALIZE THE TRANSACTION (Contd..)

Paid rent to the landlord, S, by cheque

JOURNALIZE THE TRANSACTION (Contd..)

Took loan from John at 10% p.a. Rs. 1,00,000

JOURNALIZE THE TRANSACTION (Contd..)

Received commission from Uday

JOURNALIZE THE TRANSACTION (Contd..)

Bank charges as per bank pass book - Rs. 150

JOURNALIZE THE TRANSACTION (Contd..)

Bank collected dividend on shares - Rs. 350

Journalize the following transaction

Bought goods for cash

Journalize the following transaction

Sold goods

Journalize the following transaction

Purchased building

Journalize the following transaction

Bought furniture on credit from K.

Journalize the following transaction

Sold old typewriter to A

Journalize the following transaction

Paid salaries to the watchman P

Journalize the following transaction

Received dividend on shares by cheque.

Journalize the following transaction

Received commission from Z

Journalize the following transaction

Received cash from A, on account

Journalize the following transaction

Taken loan from Krishna

Journalize the following transaction

Loan given to S by cheque

Journalize the following transaction

Paid wages to Q for the installation of Machinery.

Journalize the following transaction

Amount sent by Money Order to Rama Rao Rs. 1,000 M.O. commission paid Rs. 50

Journalize the following transaction

Taken loan from John @ 20% per annum -----Rs. 1,00,000

Journalize the following transaction

Received cheque from Hari towards Rent

Journalize the following transaction

Cash withdrawn from bank

Journalize the following transaction

Withdrawn from bank for personal use

Journalize the following transaction

Withdrawn cash for personal use

Journalize the following transaction

Paid to A, a trade creditor, Rs. 950. He allowed a discount of Rs. 50

Journalize the following transaction

A, a debtor, became insolvent. He owed Rs. 5,000. A final dividend of 50 paise in a rupee is received.

Journalize the following transaction

Received Rs. 2,500 from A whose account was written off previously as bad debt.

Journalize the following transaction

Sold goods to L subject to trade discount of 10%. Marked price of the goods is Rs. 1,000

Journalize the following transaction

Interest receivable from K

Journalize the following transaction

Commission payable to Mohan

THANK YOU

Give Journal Entries for the following and write Cash account also:
X started business by investing cash Rs. 5,00,000/ He bought goods of Rs. 40,000 Bought furniture for Rs. 5,000 Purchased building for Rs. 1,00,000 Purchased goods for Rs. 30,000 Purchased goods from Y Rs. 25,000 Paid cartage to Z Rs. 200 Sold goods for cash to Clinton Rs.2,400 Deposited cash into Bank Rs. 8,000 Withdrew from bank Rs. 3,000 for private use