Management begins with planning.
Small business organizations lack the size required to reap the benefits of labour specialization.
The division of labour and specialization often improves an employee's job p
A/c 20,000 30/6/13 By Balance c/d 22,400 30/6/13 To Interest A/c
2,400 22,400 22,400 1/7/13 To Balance b/d 22,400 Dr. Loss by Fire
Account Cr. Date Particulars J.F. Amt. (`) Date Particulars J.F. Amt. (`)
15/6/13 To Purchases A/c 5,500 30/6/13 By Balance
Cash A/c 4,500 31/1/13 By Sundries as per Sales Book 8,875 13,875
13,875 1/2/13 By Balance b/d 13,875 Dr. Return Inwards Account Cr.
Date Particulars J.F. Amt (`) Date Particulars J.F. Amt (`) 31/1/13 To
Sundries as per return inwards book 500 31/1/13 By
estimation of amounts relating to conditions existing at the Balance
Sheet date. In the present case, before the closing of books of account,
the immovable property was sold, i.e., the agreement was effected
before the Balance Sheet date but the registrat
Directors of a company. Accounting Standards 2.22 I FINANCIAL
ACCOUNTING Similarly, para 8.1 states that events which occur
between the Balance Sheet Date and the date on which the financial
statements are approved, may indicate the need for adjustments t
Cash A/c Dr. 1,200 To M/s Kunal & Sons A/c 1,500 (Being goods
returned & received on account) 29-Apr Cash A/c Dr. 250 To
Commission A/c 250 (Being commission received) 30-Apr Conveyance
A/c Dr. 450 To Cash A/c 450 (Being conveyance paid to manager) Total
financial statements should be adjusted. Illustration 19. What will be
the treatment of the following in the financial statements of accounts
for the year ended 31st May 2013 of a limited company? On 15th April
2013 due to destruction of the factory by fi
- 5,000 Interest A/c 150 - M/s Kunal & Sons A/c 2,000 - Discount
A/c - 100 Return Inwards A/c 300 - Commission A/c - 250
Conveyance A/c 450 - Total 49,550 49,550 Illustration 24. Enter the
following transactions in the proper subsidiary books and post the
3,150 Dr. M/s Vinaykumar Account Cr. Date Particulars J.F. Amt (`)
Date Particulars J.F. Amt (`) 5/1/13 To Sales A/c 2,000 25/1/13 By
Return Inwards A/c 500 31/1/13 By Balance c/d 1,500 2,000 2,000
1/2/13 To Balance b/d 1,500 Dr. M/s Rajnikant Account Cr.
1/5/13 To Balance b/d 6,700 Dr. Sales Account Cr. Date Particulars J.F.
Amt. (`) Date Particulars J.F Amt. (`) 30/4/13 To Balance c/d 4,200
7/4/13 By Cash A/c 700 24/4/13 By M/s Kunal & Sons A/c 3,500 4,200
4,200 1/5/13 By Balance b/d 4,200 Dr. M/s Bhanda
evidence to assist the estimation of amount relating to conditions
existing at the Balance Sheet Date. Thus, sale and profit on such sale
would be recognised i.e., this is an item to be adjusted. Illustration 21
What will be the treatment of the following
in full settlement of A/c. June 25: Cash stolen from cash box ` 1,000.
June 27: Received from Vishakha ` 14,500 and discount allowed ` 200.
June 30: Interest received ` 2,400 directly added in our bank account.
Solution In the books of Gaurav Journal Dr.
sheet. If contingency does not exist on balance sheet date on provision
nor notes to accounts is required. Meaning of the words used in flow
chart is as under: Probable The future event or events are likely to
occur. Reasonably possible The chance of the
para 21, inventories are usually valued at lower of cost and net
realisable value on an item-by-item basis: Cotton Woolen Synthetic
Cost Price ` Net Realisable ` Value of Closing Stock ` 5,600 3,450 1,500
4,960 4,540 2,000 4,960 3,450 1,500 10,550 11,500
finished goods are on stock at the year end. Solution: (i) As per para
24, AS 2, materials and other supplies held for use in the production of
inventories are not written-down below cost if the finished products in
which they will be incorporated are exp
commission ` 250. Apr. 30: Paid conveyance to manager ` 450.
Accounting Process 1.82 I FINANCIAL ACCOUNTING Solution: In the
books of M/s Kothari and Sons Journal Dr. Cr. Date Particulars L.F.
Amount ` Amount ` 2013 1-Apr Cash A/c Dr. 40,000 To Capital A/
automated. So actually, most of the potential errors can be avoided.
There is an increased feeling among students that when there are
automated systems available, why should one go through the study of
manual processes. This is absolutely essential for gr
Aniket in full settlement & discount received) 25-Jun Loss by Theft A/c
Dr. 1,000 To Cash A/c 1,000 (Being cash stolen) 27-Jun Cash A/c Dr.
14,500 Discount A/c To Vishakhas A/c (Being amount received from
Vishakha & discount allowed) 200 14,700 30-Jun Ban
already included as income it must be reduced. The entry for this is:
Respective Income A/c Dr. To Income received in advance A/c The
effects while preparing final account are: One Reduce from
respective income and two show it as liability in Balance Shee
of Stock to be taken (lower of Cost Price & Net Realisable Value) ` P S T
12,000 (`10,000 + ` 2,000) 5,000 ( ) 15,000 (`12,000 + ` 3,000) 14,000
(`15,000 ` 1,000) 4,000 (` 4,500 ` 500) 16,000 (`18,000 ` 2,000)
12,000 4,000 15,000 31,000 So, Value of Stock
Vinaykumar A/c 1,500 - M/s Rajnikant A/c 2,375 - M/s
Narendrakumar A/c 5,700 - Furniture A/c - 1,200 Total 28,025
28,025 Illustration 25. The total of debit side of Trial Balance of a
larger boot and shoe repairing firm as on 31.12.2013 is ` 1,66,590 and
than covered by AS-29) Contingencies relating to Contingencies
relating to Expected outcome No accounting treatment is required,
neither by way of provision nor by giving accounting notes Existing
condition or situation at the balance sheet date Contingen
should be included in the cost of finished goods. But the cost of entire
abnormal wastage (i.e. 1,000 x ` 50) ` 50,000 should be charged
against Profit and Loss Account of the company. (iii) As per para 9, AS
2, the allocation of fixed production overhead
last years balance sheet. The entry can be given as: All Asset A/cs Dr.
To All Liabilities A/c To Owners Capital A/cs Illustration 26. Consider
the following balances in the Balance Sheet as on 31st March 2013.
Pass the opening entry on 1st April 2013. Su
provided for, its nature and an estimate of financial effect should be
disclosed by way of note. If estimate of financial effect cannot be
made, the fact should be disclosed. Illustration 16. Explain how the
following matters will be dealt with in the fin
TRANSFER ENTRIES AND RECTIFICATION ENTRIES (i) Opening Entries:
The opening entry is an item which is passed in the Journal Proper or
General Ledger. The purpose of passing this entry is to record the
opening balances of the accounts transferred from the
event; assumptions are made as follows: The conditions of
insolvency existed at the balance sheet date. The entity could not
collect the complete information about the collectability of the
receivable because of the unreasonable effort and cost required t