The Basic Information About Accounting Rules Details of Final Accounts Elements of Accounting

OPENING STOCK ALL THESE NOTES ARE RELATED TO DEBITD SIDE
it is unsold of the last year’s purchase. it is available from stock A/c in the ledger and has debit balance in the Trial Balance. It indicates the value Of good lying unsold at the end f last year. Now it will become A part of the current Year’s Purchases. Last Year’s closing stock is current Year’s opening stock Again. Current Year, s Closing stock will be next year, s opening stock .In the case of a newly set up business There cannot however, be any opening stock.
Purchases:
it is the value of all goods purchased in the current accounting year and it is available from purchases A/c in the Ledger .Purchases Return Are deducted From purchases and Net Purchases are shown on the debit side of the Trading account.
Carriage inward:
it means the expenses incurred on bringing purchased goods from the place where they have been purchased, To the shop or go down of the business :It should be Remembered That expenses for sending sold goods to customer ,s shop or house are not recorded in this account. They are debited To carriage outwards A/c an indirect expense which is transferred to profit and loss A/c .carriage inward is transferred to the debit side of the Trading A/c sometime in examination ,Only the word carriage is mentioned .In the That case it should be regarded carriage inward and debited to the Trading A/c.
Wages :
This refers to the Remuneration Paid To the workers For the Loading And unloading of purchased goods or it is the remuneration Paid to the workers who are directly engaged in productive activities .Any how This is an expense which is directly related with salable goods an is always debited the the trading account.
INSURANCE IN TRANSIT:
while bringing goods from outside, they may be destroyed or stolen in transit .south loss may be insured against. The amount of premium paid to the insurance company is debit to the insurance in Transit a/c and is transferred to the debit side of the trading a/c being an expense connected with the purchased of goods.
In this connection , it should be noted that premium paid for insurance of building ,plant machinery furniture stock etc..Against loss by fire or accident is debited To profit and Loss account being and indirect expense.
CUSTOMS DUTY:
The duty imposed by government on import &export of gods is known as customs duty. customs duty is of two types-import duty &export duty .duty paid on goods imported from Abroad is known as import duty and is debited to the Trading A/c but Duty paid on goods exported expense connected with sales, is debited to profit and loss account so import duty on goods purchased from abroad is a direct expense and export duty on goods sold is indirect expense.
CLEARING CHARGES :
in case of imports from abroad goods are cleared from ports. For this port authorities charges something which is called clearing charges. This is a direct expense and is debited To Trading Account.
FREIGHT INWARDS:
charges paid on bringing purchased goods from abroad through steamer, rail or air are known as freight inward. being an expense connected with purchased of goods it is debited to the Trading Account
EXCISE DUTY ON GOODS MANAFACTURED:
duty imposed by the movement on goods manufactured or produced within the country, is called excise duty. This being an expense connected with salable goods or production , is debited to the manufacturing account or trading account as the case maybe.
ROYALTY:
in a word, royalty means rent. A manufacturer has to pay such rent. when he acquires the right to produce an article. For example , amount payable to the owner of patent for the use of patent right ,amount payable to the author of a book an acquiring the right to publish this book tec. it should be noted here that royalty may be based on either production of goods or sale of goods. when the royalty is paid on production.
DOCK CHARGES:
these are the dues imposed on ships and their cargoes when they are unloaded on the port. This is a direct expense and debited to the TRADING ACCOUNT.
COAL ,COKE FUEL ,GAS OIL ,MOTIVE POWER ETC..
these items of expenditure being connected with production of goods (as required to run the plant a machinery) should be debited to the manufacturing Account or the Trading a/c as the case maybe.
OCTORI DUTY:
This is a duty which is imposed by the municipal corporation of the municipal committee when goods purchased enters its territory .so when the goods are purchased from another city, this duty has to be paid. it is an expense connected with purchase of good and is debited to the Trading A/c..
CONSUMEABLE STORES:
These are the expenses incurred to keep the machine in right condition and include engine oil, soft soap cotton waste oil grease and waste consumed in factory .The amount of such stores consumed during he year will be debited to the trading a/c.
MANUFACTURING EXPENSES:
all expenses incurred in manufacturing or producing the goods in a factory insurance, Factory rent , depreciation on factory building ,lighting are direct expense and ar debited to manufacturing ac or Trading a/c as the case maybe.
Now ALL NOTES OF ACCOUNTING WILL BE TREATED AS CREDIT SIDE BALANCE
SALES:
it is the value of all the goods sold during the current accounting year and it is available from the sale a/c in the Ledger .It is a Major source of revenue in a business which deals in goods .Sales return are deducted from sales and the net sales are shown on the credit side of the Trading A/c
STOCK CLOSSING:
it indicates the value of goods lying unsold at the end of the current accounting year. At the End of the year a list of unsold goods is prepared showing the quantity and value of each item. The Total Of the list represents the value of closing stock. The list should be prepared with utmost care and attention .ALTHOUGH closing stock in an asset, yet it is shown on the credit of the trading account.