Saturday, May 22, 2010
what is Ware house? Solved
A warehouse is a place or an establishment for sale storage of goods.The warehouse is specially Built for preserving Goods from the time they produced until they are need for consumption.The warehouse built for the storage of goods differ in size designs and construction of goods depending upon the nature of goods to be stored.
Friday, May 14, 2010
JOURNAL BOOK
JOURNAL (BOOK):
When a business supplies goods to a customer, an invoice of the type described earlier is made out, i copy is sent to the purchaser who records it in his purchase journal. The delivery of the goods will i place, but meanwhile the seller who made out the invoice has to record the transaction in his book, in which he records the transaction is now the 'Sales Journal'. The second copy of the invoice, i if retained by the seller, will be entered into this book of original entry.
There are so many customers to whom goods are sold in a day. So every day a bundle of invoices [ by the invoice department of the seller, whose top copies have already been sent to the purchasers, sgivcn to the Sales Journal clerk, who will enter them in the Sales Journal. The ruling of the Sales Journal is exactly the same as the Purchase Journal, and is illustrated below i help of an example. Suppose, on 20.1.2005, we sold to Waseem & Sons. 10 cartons of Sunlight < Rs. 300 per cartoon. We made out an invoice and sent the top copy of invoice to Waseem & Sons. copy of the .invoice is retained by us. This transaction is recorded in the Sales Journal on the •bis copy. The sales book will be as follows.
When a business supplies goods to a customer, an invoice of the type described earlier is made out, i copy is sent to the purchaser who records it in his purchase journal. The delivery of the goods will i place, but meanwhile the seller who made out the invoice has to record the transaction in his book, in which he records the transaction is now the 'Sales Journal'. The second copy of the invoice, i if retained by the seller, will be entered into this book of original entry.
There are so many customers to whom goods are sold in a day. So every day a bundle of invoices [ by the invoice department of the seller, whose top copies have already been sent to the purchasers, sgivcn to the Sales Journal clerk, who will enter them in the Sales Journal. The ruling of the Sales Journal is exactly the same as the Purchase Journal, and is illustrated below i help of an example. Suppose, on 20.1.2005, we sold to Waseem & Sons. 10 cartons of Sunlight < Rs. 300 per cartoon. We made out an invoice and sent the top copy of invoice to Waseem & Sons. copy of the .invoice is retained by us. This transaction is recorded in the Sales Journal on the •bis copy. The sales book will be as follows.
JOURNAL BOOK
JOURNAL (BOOK):
When a business supplies goods to a customer, an invoice of the type described earlier is made out, i copy is sent to the purchaser who records it in his purchase journal. The delivery of the goods will i place, but meanwhile the seller who made out the invoice has to record the transaction in his book, in which he records the transaction is now the 'Sales Journal'. The second copy of the invoice, i if retained by the seller, will be entered into this book of original entry.
There are so many customers to whom goods are sold in a day. So every day a bundle of invoices [ by the invoice department of the seller, whose top copies have already been sent to the purchasers, sgivcn to the Sales Journal clerk, who will enter them in the Sales Journal. The ruling of the Sales Journal is exactly the same as the Purchase Journal, and is illustrated below i help of an example. Suppose, on 20.1.2005, we sold to Waseem & Sons. 10 cartons of Sunlight < Rs. 300 per cartoon. We made out an invoice and sent the top copy of invoice to Waseem & Sons. copy of the .invoice is retained by us. This transaction is recorded in the Sales Journal on the •bis copy. The sales book will be as follows.
When a business supplies goods to a customer, an invoice of the type described earlier is made out, i copy is sent to the purchaser who records it in his purchase journal. The delivery of the goods will i place, but meanwhile the seller who made out the invoice has to record the transaction in his book, in which he records the transaction is now the 'Sales Journal'. The second copy of the invoice, i if retained by the seller, will be entered into this book of original entry.
There are so many customers to whom goods are sold in a day. So every day a bundle of invoices [ by the invoice department of the seller, whose top copies have already been sent to the purchasers, sgivcn to the Sales Journal clerk, who will enter them in the Sales Journal. The ruling of the Sales Journal is exactly the same as the Purchase Journal, and is illustrated below i help of an example. Suppose, on 20.1.2005, we sold to Waseem & Sons. 10 cartons of Sunlight < Rs. 300 per cartoon. We made out an invoice and sent the top copy of invoice to Waseem & Sons. copy of the .invoice is retained by us. This transaction is recorded in the Sales Journal on the •bis copy. The sales book will be as follows.
Thursday, May 6, 2010
Solve Accounting Problems and become Expert
PROBLEMS
Rs,
1. (a) Imran started business with cash. 100,000
(b) Bought goods fromAstf and cash paid. 20,000
, . (c) Purchased a typewriter for the business. 4,000
(d) Paid carriage on goods bought 1,200
(e) ' Paid octroi on goods. 800
(f) Sold goods to Waseem For Rs. 12,400 at 5% trade discount and cash received.
(g) Paid insurance premium . 500
(h) Paid Rs. 4,000 to Salt cm as advance against oar order for goods worth Rs. 20,000.
(i) Paid office rent. 1,000
(j) Paid Saleem Rs. 8,000 on account.
(k) Paid for salaries and wages. 5}QQO
(1) Paid Rsl 2,000 to traveling salesman Moeen for his traveling expenses, (m) Paid Rs. 6,000 to Mushtaq for sundry expenses.
^
(n) Purchased office furniture of Rs. 4,000 from Sarfraz and paid him cash.
(o) Cash sales Rs. 10,000.
(p) Selling expenses paid Rs. 1,000.
tij) rurciiaMHl stationery tor Rs, 2,400 and cash paid.
(t) Pwrcliased one ottice aimirah of Rs. 9,000 for cash.
Reg : - Enter the above transactions in a Single Column Cash Book of Imran. Ans : (Cash Balance Rs. 52,880]
2. Enter the following transactions in a Double Column Cash Book (with Cash and Bank Columns) and in a Pass Book of khan & Co. and find out the balance on 7.1.2005.
2005 Rs-
Jan. 1. Cash in hand 100,000
Cash at bank 14,00,000
Paid salaries 80,000
Paid rent by cheque 60,000
Bought goods by cheque 8,60,000
Sold goods for cash 1,50,000
Bought machinery by cheque 230,000
Deposited into bank 1,40,000
Withdrawn from bank for business use 90,000 *
Cash sales 1,80,000
Withdrawn cash from business for personal use 80,000
Received bank interest 6,000
Rs,
1. (a) Imran started business with cash. 100,000
(b) Bought goods fromAstf and cash paid. 20,000
, . (c) Purchased a typewriter for the business. 4,000
(d) Paid carriage on goods bought 1,200
(e) ' Paid octroi on goods. 800
(f) Sold goods to Waseem For Rs. 12,400 at 5% trade discount and cash received.
(g) Paid insurance premium . 500
(h) Paid Rs. 4,000 to Salt cm as advance against oar order for goods worth Rs. 20,000.
(i) Paid office rent. 1,000
(j) Paid Saleem Rs. 8,000 on account.
(k) Paid for salaries and wages. 5}QQO
(1) Paid Rsl 2,000 to traveling salesman Moeen for his traveling expenses, (m) Paid Rs. 6,000 to Mushtaq for sundry expenses.
^
(n) Purchased office furniture of Rs. 4,000 from Sarfraz and paid him cash.
(o) Cash sales Rs. 10,000.
(p) Selling expenses paid Rs. 1,000.
tij) rurciiaMHl stationery tor Rs, 2,400 and cash paid.
(t) Pwrcliased one ottice aimirah of Rs. 9,000 for cash.
Reg : - Enter the above transactions in a Single Column Cash Book of Imran. Ans : (Cash Balance Rs. 52,880]
2. Enter the following transactions in a Double Column Cash Book (with Cash and Bank Columns) and in a Pass Book of khan & Co. and find out the balance on 7.1.2005.
2005 Rs-
Jan. 1. Cash in hand 100,000
Cash at bank 14,00,000
Paid salaries 80,000
Paid rent by cheque 60,000
Bought goods by cheque 8,60,000
Sold goods for cash 1,50,000
Bought machinery by cheque 230,000
Deposited into bank 1,40,000
Withdrawn from bank for business use 90,000 *
Cash sales 1,80,000
Withdrawn cash from business for personal use 80,000
Received bank interest 6,000
Test your Knowledge in Accounting
TEST YOUR KNOWLEDGE
Whether the following statements are true or false;
(a) Discount columns of the Cash Book represent Discount A/c in the Ledger.
(!) j IS ank columns of the Cash Book represent Bank A/c in the Ledger,
(c). Cash columns of the Cash Book represent Cash A/c in the Ledger,
(d). Bank columns of the Cash Book always show debit balance.
(e) Discount columns of the Cash Book always show credit balance.
(f) Contra entries appear on both sides of the Cash Book.
[True: b,c,f. Fqlse: a, d, e.]
The following are some of the causes of difference between^the Cash Book and the Pass Book balances. If you start with the Cash Book balance (Dr.) in the Bank Reconciliation Statement, will you add mem or deduct?
Cheque issued but not paid by the bank. Cheque deposited but not credited by the bank.
Amount directly deposited by a customer into the bank but not recorded in the Cash Book.
Dividend collected by the bank but not entered in the. Cash Book. Insurance premium paid by the bank but not recorded in the Cash Book.' . Interest on deposits credited by the bank but not recorded in the Cash, Book. Bank charges debited by the bank but not recorded in the Cash Book.
Cheque deposited and "returned dishonored by the bank but no entry for dishonor was
passed in the Cash Book.
Cheque issued but returned dishonored by the creditor, not recorded in the Cash Book.
Cheque deposited but no entry was passed in.the Cash Book.
Cheque debited in the Cash Book but omitted to be banked.
Cheque deposited but wrongly entered in die Cash Column of the Cash Book.
Cheque deposited but wrongly entered on the Credit, side of the Cash Book.
Cheque issued but no entry was made in the Cash Book,
Cheque issued but wrongly recorded in the Cash Column of the Cash Book. .. •
Cheque issued but wrongly debited in the <^ash Book.
Cheque issued but the bank recorded it wrongly on the credit side of the Cash Book.
Credit side of the1 Cash Book was under cast,
Debit side the Cash book was overcast. .
Cheque deposited into the bank but recorded twice in the Cash Book.
i , - '
Cheque issued but recorded twice in the Cash Book: Cheque deposited but entered twice in the Pass Book, Cheque issued but entered twice in the pass Book.: a, c, d, i, j, I, m, r,v,w.
Deduct: b,e,f,g,h,k, n, o, p, q, s, t, u, x.J
Whether the following statements are true or false;
(a) Discount columns of the Cash Book represent Discount A/c in the Ledger.
(!) j IS ank columns of the Cash Book represent Bank A/c in the Ledger,
(c). Cash columns of the Cash Book represent Cash A/c in the Ledger,
(d). Bank columns of the Cash Book always show debit balance.
(e) Discount columns of the Cash Book always show credit balance.
(f) Contra entries appear on both sides of the Cash Book.
[True: b,c,f. Fqlse: a, d, e.]
The following are some of the causes of difference between^the Cash Book and the Pass Book balances. If you start with the Cash Book balance (Dr.) in the Bank Reconciliation Statement, will you add mem or deduct?
Cheque issued but not paid by the bank. Cheque deposited but not credited by the bank.
Amount directly deposited by a customer into the bank but not recorded in the Cash Book.
Dividend collected by the bank but not entered in the. Cash Book. Insurance premium paid by the bank but not recorded in the Cash Book.' . Interest on deposits credited by the bank but not recorded in the Cash, Book. Bank charges debited by the bank but not recorded in the Cash Book.
Cheque deposited and "returned dishonored by the bank but no entry for dishonor was
passed in the Cash Book.
Cheque issued but returned dishonored by the creditor, not recorded in the Cash Book.
Cheque deposited but no entry was passed in.the Cash Book.
Cheque debited in the Cash Book but omitted to be banked.
Cheque deposited but wrongly entered in die Cash Column of the Cash Book.
Cheque deposited but wrongly entered on the Credit, side of the Cash Book.
Cheque issued but no entry was made in the Cash Book,
Cheque issued but wrongly recorded in the Cash Column of the Cash Book. .. •
Cheque issued but wrongly debited in the <^ash Book.
Cheque issued but the bank recorded it wrongly on the credit side of the Cash Book.
Credit side of the1 Cash Book was under cast,
Debit side the Cash book was overcast. .
Cheque deposited into the bank but recorded twice in the Cash Book.
i , - '
Cheque issued but recorded twice in the Cash Book: Cheque deposited but entered twice in the Pass Book, Cheque issued but entered twice in the pass Book.: a, c, d, i, j, I, m, r,v,w.
Deduct: b,e,f,g,h,k, n, o, p, q, s, t, u, x.J
Accounting
7. THE BANK CHARGES ETC. AND INTEREST ON OVERDRAFT!
Our account is debited with the bank charges and interest on overdraft and the intimation is sent to by the bank. On receiving the intimation from the bank, we record them in the Cash Book, For this I Cash Book will show more balance and the Pass Book will show leu balance.
9. ERRORS AND OMISSIONS:
The Cash Book balance and the Pass Boole balance can also disagree if there is any error or tnisu in the Cash Book or in the Pass Book. A few examples of such errors and omissions are given below;
S.(a) We have received a cheque from a debtor and recorded it in the Cash Book (debited in Cash Boc but have forgotten to sent it to the bank for collection. For such omission, the Cash Book will show me balance and the Pass Book will show less balance.
8.(b) We .have received a cheque from a debtor and deposited It into the bank for collection but hi forgotten to record it in the Cash Book, or wrongly recorded in the 'cash column' of the Cash Book or "Bankxolumn of Cash Book on 'credit side' instead of debit side. For such errors, the Cash Book v show bss balance and the Pass Book will show more balance.
8.(c) We have received a cheque'from a debtor, and deposited it into the bank and recorded it in the Ci Book, but the bank has forgotten to record it in the Pass Book or wrongly recorded it on the debit si [withdrawal side) of the Pass Book. For such mistake, the Cash Book will snow more balance and 1 Pass Book wID shew less balance.
&(B.(«) We have issued a cheque to our creditor and the bank has paid the cheque but has forgotten to recc it in the Pass Book. For this the Cash Book will show less balance and the Pass Book will show dm balance.
8.(I) There may be a mistake in casting (Totaling) the Cash Book. Suppose the debit side of the Ci Book is overcast by Rs. 100 (Totaling is made more by Rs. 100). For this, the Cash Book will show mo balance and the Pass Book will show less balance.
8,(g) On the other hand, if the credit side of the Cash Book is overcast, for this, the Cash Book will she feu balance and the Past Book *IU show more balance.
8.(h) If the bank has wrongly debited our account (Pass Book), for mis. the Cash Book will show mo balance and the Pass Book will show less balance.
8.(t) If the bank has wrongly credited our account (Pass Book), for this, the Cash Book will show k balance and the Pan Book will snow more balance.
B»(f) We may have more than one accounts with the bank, e.g. Account No. 1188 and Account No. 1 It A cheque drawn on Account No. 1188 may be wrongly recorded in Account No. 1189 by the bank. Insu it case for Account No. 1188, the Cash Book will show less balance and the Pass Book of A/c No. Ill win show more balance.
Our account is debited with the bank charges and interest on overdraft and the intimation is sent to by the bank. On receiving the intimation from the bank, we record them in the Cash Book, For this I Cash Book will show more balance and the Pass Book will show leu balance.
9. ERRORS AND OMISSIONS:
The Cash Book balance and the Pass Boole balance can also disagree if there is any error or tnisu in the Cash Book or in the Pass Book. A few examples of such errors and omissions are given below;
S.(a) We have received a cheque from a debtor and recorded it in the Cash Book (debited in Cash Boc but have forgotten to sent it to the bank for collection. For such omission, the Cash Book will show me balance and the Pass Book will show less balance.
8.(b) We .have received a cheque from a debtor and deposited It into the bank for collection but hi forgotten to record it in the Cash Book, or wrongly recorded in the 'cash column' of the Cash Book or "Bankxolumn of Cash Book on 'credit side' instead of debit side. For such errors, the Cash Book v show bss balance and the Pass Book will show more balance.
8.(c) We have received a cheque'from a debtor, and deposited it into the bank and recorded it in the Ci Book, but the bank has forgotten to record it in the Pass Book or wrongly recorded it on the debit si [withdrawal side) of the Pass Book. For such mistake, the Cash Book will snow more balance and 1 Pass Book wID shew less balance.
&(B.(«) We have issued a cheque to our creditor and the bank has paid the cheque but has forgotten to recc it in the Pass Book. For this the Cash Book will show less balance and the Pass Book will show dm balance.
8.(I) There may be a mistake in casting (Totaling) the Cash Book. Suppose the debit side of the Ci Book is overcast by Rs. 100 (Totaling is made more by Rs. 100). For this, the Cash Book will show mo balance and the Pass Book will show less balance.
8,(g) On the other hand, if the credit side of the Cash Book is overcast, for this, the Cash Book will she feu balance and the Past Book *IU show more balance.
8.(h) If the bank has wrongly debited our account (Pass Book), for mis. the Cash Book will show mo balance and the Pass Book will show less balance.
8.(t) If the bank has wrongly credited our account (Pass Book), for this, the Cash Book will show k balance and the Pan Book will snow more balance.
B»(f) We may have more than one accounts with the bank, e.g. Account No. 1188 and Account No. 1 It A cheque drawn on Account No. 1188 may be wrongly recorded in Account No. 1189 by the bank. Insu it case for Account No. 1188, the Cash Book will show less balance and the Pass Book of A/c No. Ill win show more balance.
DEPRECIATION, PROVISIONS AND RESERVES
DEPRECIATION, PROVISIONS AND RESERVES
Depreciation is the reduction in value of an asset as a .result of fair1 wear and tear. As an asset loses its value/efficiency we reduce the book valuation of it in line with our estimate of loss. Depreciation is a fairly complex topic, where book-keeping merges into Accountancy. The Accounting principle which motivates Accountants' to try different methods of depreciation, is that we are, seeking in our Accounting to achieve a true and fair view' of the position of the business-. This 'true and fair view* requires two things:
Hi) The assets must be valued on the books at a fair Value so far as we can estimate it.
C) If a loss has been suffered it must be charged against the profits to do otherwise Would overstate the profitability of the business. Apply these two rules to the problem of depreciation, we see that if an asset wears out the loss suffered as a result of wear and tear must be written off the profits, At the same time the assets will be reduced in value to show only its present value now that it has been partly worn out. -
DIFFERENT AUTHORS HA VE GIVEN DIFFERENT DEFINITIONS OF DEPRECIATION, SUCH AS:
"Depreciation is the gradual decrease in the efficiency of an asset expressed in monetary terms because of its usage and wear and fear".
.
-, By the Author of the Book
"Depreciation may be defined as the permanent and continuous diminution In the quality, ty or value of an asset".
"Depreciation may be defined as a measure of the exhaustion of the effective life of an asset urn any cause during a given period".
. -
"Depreciation is the diminution in intrinsic value of asset due to use and/Or the lapse of time". - Terminology of the Institute of Cost & Management Accountants, England
"Depreciation is the reduction in value of a fixed asset occasioned by physical "wear and tear,
or the passage of time",
*
From the above definitions it follows that an asset gradually declines on Account of use and passage ' time and this causes permanent reduction in the value and utility of asset. Self in the value or utility of asset is called depreciation. In other words, expired cost or utility of asset is depreciation.
Depreciation is the reduction in value of an asset as a .result of fair1 wear and tear. As an asset loses its value/efficiency we reduce the book valuation of it in line with our estimate of loss. Depreciation is a fairly complex topic, where book-keeping merges into Accountancy. The Accounting principle which motivates Accountants' to try different methods of depreciation, is that we are, seeking in our Accounting to achieve a true and fair view' of the position of the business-. This 'true and fair view* requires two things:
Hi) The assets must be valued on the books at a fair Value so far as we can estimate it.
C) If a loss has been suffered it must be charged against the profits to do otherwise Would overstate the profitability of the business. Apply these two rules to the problem of depreciation, we see that if an asset wears out the loss suffered as a result of wear and tear must be written off the profits, At the same time the assets will be reduced in value to show only its present value now that it has been partly worn out. -
DIFFERENT AUTHORS HA VE GIVEN DIFFERENT DEFINITIONS OF DEPRECIATION, SUCH AS:
"Depreciation is the gradual decrease in the efficiency of an asset expressed in monetary terms because of its usage and wear and fear".
.
-, By the Author of the Book
"Depreciation may be defined as the permanent and continuous diminution In the quality, ty or value of an asset".
"Depreciation may be defined as a measure of the exhaustion of the effective life of an asset urn any cause during a given period".
. -
"Depreciation is the diminution in intrinsic value of asset due to use and/Or the lapse of time". - Terminology of the Institute of Cost & Management Accountants, England
"Depreciation is the reduction in value of a fixed asset occasioned by physical "wear and tear,
or the passage of time",
*
From the above definitions it follows that an asset gradually declines on Account of use and passage ' time and this causes permanent reduction in the value and utility of asset. Self in the value or utility of asset is called depreciation. In other words, expired cost or utility of asset is depreciation.
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