CLASSIFICATION OF ACCOUNTS

1.PERSONAL ACCOUNT=RELATED TO PERSON,FIRM,ORGANISATION AND

COMPANIES

 NATURAL PERSON =RAM A/C SOHAN A/C

 ARTIFICIAL PERSON=SCHOOL A/C ,COLLEGE A/C ,RELIANCE
A/C ,INFOSYCS
 REPRESENTATIVE PERSON OUTSTANDING SALARY
,PREPAID RENT ,UNPAID PREMIUM ,CAPITAL A/C
2. REAL ACCOUNT =RELATED TO GOODS AND ASSETS
 TANGIBLE ASSETS =WHICH CAN TOUCH AND SEEEN
=LAND,BUILDING,CASH,FURNITURE
 INTANGIBLE ASSETS =GOODWILL,PATENTS, COPYRIGHT
3..NOMINAL ACCOUNTS =RELATED TO INCOME LOSSES AND GAINS
 EXPENSES =RENT,SALARY,TRAVELLING EXPENSES,ELECTRICITY
EXPENSES ,TELEPHONES EXPENSES
 INCOME= COMMISSION INCOME AND SALES
 GOLDEN RULE OF ACCOUNTS
1. PERSONAL ACCOUNTS = DEBIT THE RECEIVER AND CREDIT THE
GIVER
EX=PAID RS. TO 10,000 TO RAVI
RAVI IS PERSONAL ACCOUNT AND HE IS RECEIVER AND 10,000 IS
CASH A/C
RAVI D.r 10,000
TO CASH A/C 10,000

(BEING CASH PAID TO RAVI )

2. REAL ACCOUNTS =DEBIT WHAT COMES IN AND CREDIT WHAT

GOES OUT
EX= PURCHASED MACHINERY Rs.2000
MACHINERY A/C(WHAT COMES IN),
(WHAT GOES OUT)
MACHINERY A/C …………………………………………………..Dr.3000
TO CASH A/C BEING PURCHASED MACHINERY)
 3. NOMINAL ACCOUNTS =DEBIT ALL EXPENSES AND LOSSES AND
CREDIT ALL INCOME AND PROFIT
EX= PAID SALARY Rs. TO 1300
SALARY IS NOMINAL A/C AND CASH IS REAL ACCOUNT
SALARY A/C Dr.1300
TO CASH A/C 1300
(BEING PAID SALARY )

PERSONAL A/C REAL A/C NOMINAL A/C

RAVI A/C CASH A/C PURCHASE A/C

SEEMA A/C FURNITURE A/C SALES A/C

ABC LTD A/C BUILDING A/C SALARY

SCHOOL A/C VEHICLES A/C RENT

INSTITUTE A/C GOODWILL A/C WAGES

BANK A/C COMPUTER A/C ADVERTISEMEN

T
CAPITAL A/C PATENTS A/C ELECTRICITY

DRAWING A/C COPYRIGHT A/C BAD DEBTS

DEBITOR A/C TRADEMARK A/C BAD DEBTS

RECOVERY

CREDIROR A/C FRANCHISE A/C DIS.ALLOWED

OUTSTANDING STOCK A/C DIS.RECEIVED

RENT

PREPAID COMPUTER STATIONARY

SALARY SOFTWARE
 TYPES OF
ACCOUNTS
 ASSESTS=LAND,BUILDING,CASH,DEBTOR,BANK BALANCE((WHO OWNS PROPERTY)
 LIABILITIES=OUTSTANDING SALARY,BANK LOAN AND CREDITOR(HAVE TO PAY
 NOT DONE YET)
 INCOME /PROFIT=SALES,COMMISSION INCOME,INTEREST INCOME ,RENT INCOME AND
PROFIT ON GOODS SOLD
 EXPENSE/LOSS=TRAVELLING,ELECTRICITY,TELEPHONE,PURCHASEA
 CAPITAL/DRAWING=FOR OWNER CAPITAL AND DRAWING ACCOUNT

PERSONAL
ACCOUNT DEBIT;THE RECEIVER, CREDIT; THE GIVER

REAL ACCOUNT DEBIT;WHAT'S COMES IN ,CREDIT WHAT'S GOES OUT

NOMINAL ACCOUNT DEBIT; ALL EXPENSES ,CREDIT ALL INCOME



RULES OF MODERN METHOD

DEBIT CREDIT

ASSETS/EXPENSE

LIABILITIES
/INCOME/CAPITAL

GOODS=BUSINESS MAIN JO DAINIK ROOP SE KHARIDA

JATA HAI USE GOODS KEHTE HAI USE MAAL YA SAMAN BHI
KEHTE HAI
THOSE COMMODITIES WHICH PURCHASE FOR PURPOSE OF
SELLING ,THEN IN THEIR ORIGINAL FORM OR THEY WERE
PURCHASED AS RAW MATERIALS FOR MANUFACTURE THE
PRODUCT WHICH IS TO BE SOLD ,THEN SUCH RAW MATER
AIALSARE TREATED AS GOODS
EX=IF I AM INTO MANUFACTURER OF SHIRT AND I
PURCHASED COTTON IT WILL BE GOODS FOR ME BUT IF I
PURCHASE MACHINE TO MAKE SHIRT THEN IT WILL NOT BE
GOODS AS MACHINE IS NOT FOR RESALE….COTTON IS FOR
RESALE.
PEN……..INK(GOODS)
GOODS ARE CLASSIFIED INTO GOODS;
1.PURCHASE=INK,PLASTIC AND NIP
2.PURCHASE RETURN=INK RETURN,PLASTIC
RETURN AND NIP RETURN
3.SALES=PEN
4.SALES RETURN/RETURN INWARD=PEN
RETURN
5.STOCK IN TRADE=JO SIRF KHRIDTE AUR
BECHTE H DIRECT
PEN PURCHASED FOR RESALE
6.STOCK=BACHA HUA MAAL
UNSOLD PEN(UNSOLD FINISHED GOODS)
UNSOLDINK,PLASTIC,NIP(UNSOLD RAW
MATERIALS)
HALF MADE PEN(WORK IN PROGRESS
PURCHASE=WHEN GOODS ARE PURCHASED ,WE DEBIT
PURCHASE AND NOT GOODS GOODS PURCHASED WITH
OBJECT OF RESALE IS TREATED AS PURCHASE.IN
MANUFACTURING INDUSTRY ,RAW MATERIAL PURCHASED
FOR MAKING A PRODUCT INCLUDED IN PURCHASE.

EX=FURNITURE PURCHASED FOR PURPOSE OF BUSINESS

OPEN THEN FURNITURE WILL NOT BE TREATED AS
PURCHASE OF GOODS.MERCHANT DEALS IN TRADING OF
FURNITURE THEN PURCHASE WILL BE TREATED AS GOODS .

1.CASH PURCHASE=PURCHASED GOODS

OF RS 1000 IN CASH
CASH (ASSESTS,Dr.) AND PURCHASE A/C
(EXPENSE,Dr.)
PURCHASE A/C ………………………………..Dr
TO CASH A/C

2.CREDIT PURCHASE=PURCHASED
GOODS OF RS 1000 FROM RAM ON
CREDIT
PURCHASE(EXPENSE,Dr) AND
CREDITOR(LIABILITIES,Cr)
PURCHASE A/C…………………………Dr
TO CREDITOR A/C
SALES=GOODS WHICH ARE PURCHASED
FOR PURPOSE OF RE-SALE .IF ANY
FIXEDASSETS SOLD IT WOULD NOT BE
INCLUDED IN SALE.
MERCHANT OF FURNITURE SELLS
FROM THEN IT IS SALE BUT IF HE SELLS
SOME FURNITURE WHICH ARE USED IN
HIS OFFICE WILL NOT CONSIDERED AS
SALES.
TERM SALES=NEVER USED FOR SALE OF
ASSESTS
CASH SALES=SOLD GOODS OF RS 5000
IN CASH
CASH (ASSETS,Dr) AND
SALES(INCOME,Cr)
CASH A/C……………………………Dr
TO SALES A/C
CREDIT SALES=SOLD GOODS OF RS
5000 ON CREDIT SALES
 SALES (INCOME,Cr) AND
DEBTOR(ASSETS,Dr)
DEBTORA/C…………………………Dr
TO SALES A/C
DEBTOR=represent the persons or firms to whom
have been sold or service which has been rendered
on credit &payment has not received from them.

e.g.Goods are sold to Mr A for Rs 50000 and Mr A

has paid only 20000 due from A will be shown as
debtor (because Mr A has not paid 30000 till now.

Bill Receivable =means bill of exchange accepted

by a debtor the amount of which will be received
as the specified date ‘

Trade Receivable= debtor+Bill Receivable

80000=30000+50000

Cash Rs 100000 to Mr A (15th May 2022)

Cash is 20000 and debtor is 80000
50000 B./R debtor 30000
CREDITOR=is the person or firm to whom an enterprise owes
amount credit purchase of goods or services taken.
e.g. goods purchased from reliance of Rs.of 70000 and have paid
only 30000 Rs 40000 as creditor in the books of accounts (balance
sheet of liability side)
bills payable=means bill of exchange accepted, the amount of
which will be paid
trade payable=amount payable for purchase of goods or services
taken in ordinary course of business
trade payable=creditor+bill payable

Case example entry

When question Cash purchased for Cash transaction
clearly says that it is Rs.5666 from Ram in Purchase a/c ………Dr
cash transaction cash To cash a/
(even if the party’s
name is given)
When question is Purchased goods for Cash transaction
silent on cash or Rs.2000 Purchase a/c …….Dr
credit transaction To cash a/c
and party name is
not given
When question is Purchased goods for Purchase a/c…….Dr
silent on cash or ram Rs 5600 To ram/c
credit transaction
and party name is
given
When question says Purchased goods Purchase a/c …….Dr
that it is credit from ram Rs.5600 on ram a/c
transaction (even if credit
the party name is
given or not)

PURCHASE AND SALES RETURN

1.5APRIL 2022 Goods purchased from
ankit .Rs12000
 2.7April 2022 goods returned to ankit
Rs1000
3Machinery purchased in cash Rs .40000
4.Goods sold to neha Rs 7000
5.Goods returned to Neha Rs 300
5.Goods returned from Manav Rs 12000 in cash
6.Goods returned Rs 100 from manav
7.Furniture returned to home depot ltd Rs700
DATE PARTICULAR L.F AMT(Dr) AMT(Cr)
5APRIL PURCHASE 12000 12000
2022 A/C ……….Dr
TO AMIT
7APRIL AMIT 1000 1000
A/C……….Dr
TO
PURCHASE
RETURN
9APRIL MACHINERY 40000 40000
A/C ……….Dr
TO CASH
A/C
11APRIL NEHA 7000
A/C……Dr
TO SALES
A/C
12 APRIL SALES
RETURN…………………………………………………….D r
A/C TO NEHA A/C
13 APRILPURCHASE A/C ………………………………………………………Dr
 TO CASH A/C
14 APRIL MANAV A./C…………………………………………………Dr
TO PUCHASE RETURN
15 APRIL HOME DEPOSIT A./C……………………………………………………Dr
TO FURNITURE A/C

OUTSTANDING EXPENSE
WHEN EXPENSE IS IN PAID
EXPENSE ………………………………………………………………………………Dr
TO CASH /BANK A/C
WHEN EXPENSE ARE CLOSED
EXPENSE………………………………………………………………………………..Dr
TO OUTSTANDING EXPENSE A/C
1RENT PAID .Rs 5000
RENT A/C
……………………………………………………………………..Dr5000
TO CASH A/C 5000
2.RENT OUTSTANDING Rs.200
RENT A/C …………………………………………………………….Dr200
TO OUTSTANDING RENT A/C
200
3.TELEPHONE EXPENSE OUTSTANDING FOR THE MONTH
OF FEB AND MARCH 2022 (PER MONTH CHARGES Rs 1000)
TELEPHONE EXPENSES A/C ………………………………………….
Dr2000 2000
4.SALARY TO ONE EMPLOYEE (ANNUAL SALARY OF Rs
600000)WERE PAID ONLY Rs 4500000 THIS YEAR.BALANCE
AMOUNT STILL TO BE PAID
SALARY A/C ………………………………………………………..Dr
150000
TO O/S SALARY 150000
TO O/S RENT

PREPAID EXPENSES
WHEN EXPENSES IS IN PAID
EXPENSE A/C
TO BANK A/C
WHEN BOOK ARE CLOSED
PREPAID EXPENSE A/C
TO EXPENSE A/C
IST APRIL 2022 RENT PAID RS 370000

IST APRIL 2022 PAID RS 600 FOR TELEPHONE EXPENSE FOR 4YEARS

31ST MARCH 2023 PAID RS 14000 INTERNET EXPENSE(RS 1000 PER MONTH)

31ST MARCH 2023 OUT OF RENT PAID THIS YEAR RS 1000 RELATED TO NEX

1. RENT A/C
…………………………………………………………….Dr37000
TO CASH A/V 37000
2.TELEPHONE EXPENSES
A/C…………………………….Dr600
TO CASH A/C 600
 3.PREPAID TELEPHONE EXP.A/C
………………………..Dr450
TO CASH A/C 450
4.INTERNET EXP.A/C……………………………………
Dr14000
TO CASH A/C 14000
5.PREPAID INTERNET EXP.A/C ………………………Dr200
TO INTERNET EXPENSES A/C 200
PREPAID RENT A/C 1000
TO RENT A/C1000
COMPOUND ENTRY
DATE PARTICULAR

5TH APRIL 2022 STARTED BUSINESS WITH CASH (RS 1,00,000,BUILDING 1,0

6th APRIL 2022 PURCHASED GOODS FROM AMAR RS 5000 PAID 3000 IN C

7TH APRIL 2022 PURCHASED FURNITURE RS 20000 AND MACHINERY RS 30

8TH APRIL 2022 SOLD GOODS TO RAM FOR RS 8000 RECEIVED 25% PAYM

1.CASH A/C
…………………………………………………………..Dr 100000
BUILDING A/C ……………………………………………….Dr
100000
VEHICLE A/C
………………………………………………………..Dr 40000
TO CAPITAL A/C 240000
2.PURCHASE A/C
………………………………………….Dr5000
TO CASH A/C 3000
AMARTO 2000
 3.FURNITURE A/C
……………………………………………….Dr 20000
MACHINERY A/C ……………………………………………Dr
30000
TO CASH A/C 50000
4. CASH A/C ……………………………………………………….Dr
2000
RAM A/C
……………………………………………………………….Dr 6000
TO SALES 8000

BANKING TRANSACTIONS
1.WHEN CASH IS DEPOSITED IN BANK
BANK A/C …………………………………………………………Dr
TO CASH A/C
2.WHEN CASH IS WITHDRAWN FROM THE BANK
CASH
A/C…………………………………………………………………..Dr
TO BANK A/C
3.WHEN THE CHEQUE IS RECEIVED FROM THE
CUSTOMER AND DEPOSITED IN BANK ON SAME
DATE
BANK A/C …………………………………………………………….Dr
TO CUSTOMER PERSONAL A/C
4.WHEN THE CHEQUE IS RECEIVED FROM THE
CUSTOMER AND NOT DEPOSITED IN BANK ON SAME
DATE
CHEQUE IN HAND A/C……………………………………….Dr
TO CUSTOMER PERSONAL A/C
5.ON THE DATE WHEN THE CHEQUE IS SENT TO
BANK
BANKA/
C………………………………………………………………..Dr
TO CHEQUE IN HAND
6.WHEN A CUSTOMER DIRECTLY DEPOSITED THE
AMOUNT IN OUR BANK ACCOUNT
BANK A/C…………………………………………………………Dr
TO CUSTOMER PERSONAL A/C
7.WHEN A CHEQUE PREVIOUSLY DEPOSITED INTO
BANK IS DISHONOURED
CUSTOMER PERSONAL A/C
……………………………………….Dr
TO BANK A/C
8.WHEN A CHEQUE IS RECEIVED FROM A CUSTOMER
AND DISCOUNT IS ALLOWED TO HIM AND IF THE
CHEQUE IS DEPOSITED IN THE BANK ON SAME DATE
BANK A/C………………………………………………………….Dr
DISCOUNT
A/C………………………………………………………….Dr
TO CUSTOMER PERSONAL A/C
9.IN THE ABOVE CASE IF THE CHEQUE IS DISHOURED
THE DISCOUNT ALLOWED TO THE CUSTOMER WILL
BE WITHDRAWN
CUSTOMER PERSONAL
A/C……………………………………………Dr
TO BANK A/C
TO DISCOUNT ALLOWED
10.WHEN THE PAYMENT IS MADE BY ISSUE BY
CHEQUE
PERSONAL A/C……………………………………………….Dr
TO BANK
11.WHEN THE EXPENSE IS PAID BY THE ISSUE OF
CHEQUE
EXPENSE A/C……………………………………………………Dr
TO BANK A/C
12.WHEN THE CASH IS WITHDRAWN FROM THE
BANK FOR PERSONAL USE OF THE OWNER
DRAWING A/C………………………………………………….Dr
TO BANK A/C
13.WHEN INTEREST IS CHARGED IS CHARGE BY THE
BANK
 INTEREST A/C……………………………………………………Dr
TO BANK A/C
14.WHEN INTEREST IS ALLOWED BY THE BANK
BANK
A/C……………………………………………………………….Dr
TO INTEREST RECEIVED
15.WHEN BANK CHARGES SOME AMOUNT FOR THE
SERVICE RENDERED BY THE BANK
BANK CHARGES A/C………………………………………….Dr
TO BANK A/C

EXAMPLE:
12TH MAY 2022 CASH OF RS 1000 DEPOSITED IN THE BANK

14TH MAY 2022 CASH OF RS 300 WITHDRAWN FROM BANK

CHEQUE OF RS 5000 IS RECEIVED FROM THE CUSTOMER AND DEPOS

15TH MAY 2022 SAME DATE

CHEQUE OF RS 6000 IS RECEIVED FROM THE CUSTOMER AND NOT

16th MAY 2022 BANK

17th MAY 2022 ABOVE CHEQUE OF RS 6000 DEPOSITED IN THE BANK

18th MAY 2022 MANAV DIRECTLY DEPOSITED THE AMOUNT OF RS 4000 IN OUR BANK

19th MAY 2022 INTEREST IS CHARGED BY THE BANK OF RS 300

21Th MAY 2022 CASH OF RS 4000 WITHDRAWN FROM CURRENT ACCOUNTS FPR PERS

1.BANK A/C
…………………………………………………………..Dr1000
TO CASH A/C 1000
 2.CASH A/C…………………………………………..Dr300
TO BANK A/C 300
3.BANK A/C …………………………………………..Dr 5000
TO DEBTOR 5000
4.CHEQUE IN HAND
……………………………………….Dr6000
TO DEBTOR 6000
5. BANK A/C……………………………………………….Dr 4000
TO DEBTOR (MANAV) 4000
6.INTEREST EXPENSES A/C………………………………Dr
300
TO BANK A/C 300
7.DRAWING A/C ……………………………………………Dr
4000
TO BANK A/C
4000
8.BANK A/C
……………………………………………………….Dr 200
TO INTEREST INCOMEA/C
200
PAYMENT IN FULL SETTLEMENT
IST APRIL 2022 PURCHASED GOODS FROM AAKASH 40000

2ND APRIL 2022 PAID AAKASH IN FULL SETTLEMENT 39000

IST APRIL 2023 PURCHASED GOODS FROM HEMANT 75000

3rd APRIL 2022 PAID HEMANT 72000

IST APRIL 2024 SOLD GOODS TO MANAV 80000

4th APRIL 2022 RECEIVED FROM MANAV IN FULL SETTLEMENT 77000

IST APRIL 2025 SOLD GOODS FROM SATISH 8000

5th APRIL 2022 RECEIVED GOODS FROM SATISH 7600

1.PURCHASE
A/C………………………………………………….Dr 40000
TO AAKASH A/C 4000
.AAKASH A/C ……………………………………….Dr40000
TO CASH A/C 39000
TO DISCOUNT RECEIVED
1000
2.PURCHASE A/C……………………………………………Dr
75000
TO HEMANT 75000
3.HEMANT A/C………………………………………………..Dr
72000
TO CASH A/C
72000
4.MANAV A/C………………………………………………
Dr80000
TO SALES 80000
5.CASH A/C ………………………………………….Dr 77000
DIS.ALLOWED ……………………………………….Dr3000
TO MANAV
80000
6.SAKSH A/C ………………………………………………….Dr
8000
TO SALES ……………………………………8000
7.CASH A/C ………………………………………………Dr
7600
 TO SALES 7600
TRADE AND CASH DISCOUNT
TRADE DISCOUNT
 TRADE DISCOUNT IS THE REBATE ALLOWED BY THE
SELLER ON THE BASIS OF SALES.
 SALES OR PURCHASE ARE ALWAYS RECORDED AT NET
VALUE i.e NET OF TRADE DISCOUNT.
 NOT RECORDED IN THE BOOKS OF ACCOUNTS.
CASH DISCOUNT
 CASH DISCOUNT IS THE REBATE ALLWED FOR TIMELY
PAYMENT OF DUE AMOUNT
 RECORDED IN BOOKS OF ACCOUNTS OF BOTH THE
PARTIES.
 IT’S AN EXPENSE FOR THE PARTY WHO ALLOW
DISCOUNT AND INCOME FOR THE PARTY WHO GET THE
DISCOUNT.

PURCHASED 10 PEN @RS20 (RS 30 LIST PRICE)

FROM NAVNEET .CASH DISCOUNT OF 5% IN 15
DAYS
1ST APRIL 2022

2nd APRIL 2022 PAID NAVNEET PUBLICATION FULLY

PURCHASED GOODS IN CASH FROM MOHIT AT

THE LIST PRICE OF RS 40000 AT 10% TD AND 5%
CD
3rd APRIL 2022

LIST PRICE 40000 -TD (4000)=36000

LESS CD 1800=34200
 PURCHASE A/C…………………………………………………….Dr
200
TO NAVNEET PUBLICATION …………
200
2.NAVNEET PUBLICATION A/C………………………………….Dr
290
TO CASH 190
TO DISCOUNT RECEIVED 10
3.PURCHASE A/C…………………………………………………………Dr
36000
TO CASH A/C 34200
TO DIS RECEIVED 1800
IST JUNE 2022 SOLD GOODS TO HARSH FOR RS
50000 AT 20% TRADE DISCOUNT AND 5% CASH
DISCOUNT. HARSH PAID 40% IMMEDIATELY IN
CASH
50000 (20% OF TD) 40000
SALE 40000
CASH SALES 40000X40%=16000
MANISH 40000X60%=24000 ASSETS
SALE/PURCHASE WILL BR CREDITOR /DEBITOR AT AMT
AFTER TRADE DISCOUNT BUT BEFORE CASH DISCOUNT.
CASH
A/C………………………………………………………………..Dr15200
DISCOUNT ALLOWED…………………………………………Dr800
HARSH A/C (DEBTOR)…………………………………………..Dr24000
TO SALES 40000
8TH JUNE 2022 SOLD GOODS TO PUJA RS 40000 AT 10% CASH
DISCOUNT AND 20% TRADE DISCOUNT .HALF OF THE
AMOUNT RECEIVED AT TIME OF SALES IN CASH AND HALF
IN CHEQUE
40000-8000=32000 20%TD
SALES 32000 CASH 16000^ DIS=1600 CASH 14400 ^,BANK
16000 ^DIS ALLOWED 1600 BANK 14400^
CASH A/C ……………………………………………………….Dr14400
BANK A/C………………………………………………………….Dr14000
DISCOUNT ALLOWED………………………………………….Dr3200
TOSALES 32000
12TH JUNE 2022 PURCHASE GOODS FROM AGARWAL
TRANSPORT LTD FOR RS 200000 AT 20% TRADE DISCOUNT
AND 5% CASH DISCOUNT PAID 30% IMMEDIATELY IN
CHEQUE AND 10% IN CASH
PURCHASE
A/C………………………………………………………………..Dr160000

TO BANK A/C 45600

TO CASH A/C
15200
TO DISCOUNT ALLOWED
3200(2400+800)
TO AGARWAL TRANSPORT LTD A/C 96000
200000-40000=160000
SALES 160000 ,BANK 160000X30%=48000 (DISCOUNT
RECEIVED 48000X5%=2400 BANK 48000-2400=45600 AND
CASH 160000X10%=16000(DISCOUNT RECEIVED
=16000X5%=800 CASH 16000-800=15200)
AGARWAL TRANSPORT LTD 160000X60%=96000

DEPRECIATION ENTRY
 DEPRECIATION IS CHARGED FOR THE TIME PERIOD OF
ASSETS IN THE BUSINESS.
 CASE
 IF PER ANNUM WORD IS THERE(10%
P.A.)
 DEPRICIATION WILL BE CHARGED FOR THE TIME
PERIOD ASSETS IS IN BUSINESS.
  MACHINE PURCHASED RS 1000 ON IST JULY 21,
DEPRECIATION RATE IS 6%P.A.DEPRECIATION WILL BE
CHARGED FOR 9 MONTH i.e.RS 45.
 IF PER ANNUM WORD IS NOT
THERE(10%)
 DEPRECIATION WILL BE CHARGED FOR FULL YEAR
REGARDLESS OF THE TIME.
 MACHINE PURCHASED RS 1000 ON 1ST JULY
21,DEPRECIATION IS 6%P.A.DEPRECIATION WILL BE
CHARGED FOR 12 MONTHS i.e.RS 60.
DEPRECIATION
A/C…………………………………………………………..Dr
TO ASSETS A/C
JAN IST 2021 BOUGHT MACHINE FOR RS 20000

JAN IST 2022 PURCHASED VEHICLE FOR RS 400000

JAN IST 2023 PURCHASED COMPUTER FOR RS 100000

JAN IST 2024 DEPRECIATION IS TO BE CHARGED ON MACHINE @15%P.A.

JAN IST 2025 DEPRECIATION IS TO BE CHARGED ON VEHICLE @6% P.A.

JAN IST 2026 DEPRECIATION IS TO BE CHARGED ON COMPUTER @20%

1. MACHINE A/C…………………………………………………Dr20000
TO CASH A/C………………………
20000
2. 2. VEHICLE A/C…………………………………………………
Dr400000
TO CASH A/C………………………
400000
3.COMPUTER A/C ………………………………………………Dr
100000
TO CASH A/C
…………………….100000
4.DEPRECIATION A/C
……………………………………………..Dr30000
TO MACHINE 30000
5. DEPRECIATION A/C
……………………………………………..Dr40000
TO VEHICLE 40000
6.DEPRECIATION A/C ……………………………………………
Dr20000
TO COMPUTER…………………20000
CARRIAGE INWARD
PURCHASE-100000

CARRIAGE-20000
PURCHASE
A/C………………………………………………..Dr100000
CARRIAGE A/C……………………………….Dr20000
TO CASH A/C 120000
CASH =120000
MACHINE 10000
CARRIAGE(FREIGHT)2000
MACHINE A/C ………………………………………….Dr12000
TO CASH A/C 12000
CARRIAGE AND OTHER CHARGES
 IF PAID FOR GOODS -SHOW SEPERATELY
 IF PAID FOR ASSESTS OTHER THAN GOODS-
INCLUDE THEM IN ASSESTS

3-Jul-22 PURCHASED A FURNITURE FOR RS 10000.CARRIAGE PAID RS 200

PURCHASED A GOODS FOR RS 20000.CARRIAGE PAID RS500 IN
3-Jul-22 CASH.

MACHINE WAS BROUGHT FOR RS 200000 AND INSTALLATION

CHARGES WERE RS 3000 &FREIGHT FOR MACHINERY
3-Jul-22 TRANSPORTATION FOR RS 1000

BOUGHT SHARE OF 10 SHARE OF RELIANCE LTD @1000 PER

SHARE.BROKERAGE PAID 2%.ALL THE PAYMENT MADE THROUGH
3-Jul-22 BANK

SOLD 20 SHARE OF TATA STEEL LTD @500 PER

SHARE.BROKERAGE PAID 2%.ALL THE TRANSACTIONS DONE
3-Jul-22 THROUGH BANK.

1.FURNITURE
A/C……………………………………………………..Dr 10200
TO CASH 10200
2.PURCHASE A/C………………………………………….Dr 20000
CARRIAGE EXP.A/C…………………………………………..Dr500
TO CASH A/C
……………………………..20500
3.MACHINE 200000
INSTALLMENT EXP.3000
TRANSPORT 1000
204000
MACHINE A/C…………………………………………………………Dr
204000
TO CASH A/C 204000
4.RELIANCE 1000X10-10000
BROKEGE PAID 200
10200
INVESTMENT SHARE(RELIANCE)10200
BANK10200 Cr
INVESTMENT ON SHARE (RELIANCE)…………………………
Dr10200
TO BANK 10200
5.20@500=10000SELL
BROKEGE=200
9800 (BANK)
INVESTMENT IN SHARE Cr(9800)
BANK(9800)
BANK A/C………………………………………………………………Dr
9800
TO INVESTMENT IN SHARE
……….9800
ACCOUNTING FOR DRAWING
 ANY CASH OR VALUE OF GOODS WITHDRAWN
FOR PERSONAL USE BY THE OWNER OR ANY
PRIVATE PAYMENT MADE OUT OF BUSINESS
FUNDS ARE CALLED DRAWING.
  E.g.PAYMENT OF HOUSE RENT OF OWNER FROM
BUSINESS FUNDS.
 DRAWING ACCOUNT ALWAYS OPEN FOR OWNER
DRAWING IN CASH
DRAWING A/C………………………………………………..Dr
TO CASH /BANK /PURCHASE
DRAWING VIA CHEQUE
DRAWING A/C……………………………………………………
Dr
TO BANK
DRAWING OF STOCK
DRAWING
A/C…………………………………………………..Dr
TO PURCHASE
PERSONAL EXP.OF OWNER PAID BY BUSINESS
DRAWING……………………………………………………Dr
TO CASH

12-Apr-22 DRAWING MADE IN CASH RS 3000

PURCHASED FURNITURE FOR OFFICE USE(RS 10000)FOR

12-Apr-22 PERSONAL USE (8000)IN CASH FROM BUSINESS FUND

OWNER TOOK GOODS WORTH RS 10000 FOR HIS PERONAL USE

(MARKET PRICE IS RS 12000)

12-Apr-22 PAID INCOME TAX OF RS 1OO FOR OWNER.

12-Apr-22 PAID RENT OF OWNER HOUSE FROM BUSINESS FUNDS VIA

 CHEQUE FOR RS 2000

1.DRAWING………………………………………………………………..Dr
3000
TO CASH A/C 3000
2.FURNITURE A/C ………………………………………………………….Dr
10000
DRAWING
A/C……………………………………………………………….Dr8000
TO CASH A/C 18000
3.DRAWING A/C……………………………………………………..Dr
10000
TO PURCHASE A/C 10000
4.DRAWING A/C…………………………………………………………..Dr
100
TO BANK A/C 100
5.DRAWING
A/C……………………………………………………………….Dr 2000
TO BANK A/C 2000

INTEREST ON CAPITAL
1.INTRODUCED CAPITAL OF RS 100000
CASH A/C…………………………………………………………………
Dr100000
TO CAPITAL A/C 100000
2.INTEREST ON CAPITAL @8%PA
INTEREST ON CAPITAL A/C…………………………………………….Dr
8000
TO CAPITAL 8000
3.INTEREST ON CAPITAL @10%PA WHEN TOTAL CAPITAL
WERE RS 800000
INTEREST ON CAPITAL A/C…………………………………………….Dr
80000
TO CAPITAL 80000
4.PROVIDED INTEREST ON CAPITAL FOR 10 MONTHS ON
CAPITAL OF RS 200000 @6%
INTEREST ON CAPITAL A/C…………………………………………….Dr
10000
TO CAPITAL 10000
.5.PROVIDED INTEREST ON CAPITAL FOR 10 MONTHS ON
CAPITAL OF RS 200000 @6% PER ANNUM
INTEREST ON CAPITAL A/C…………………………………………….Dr
12000
TO CAPITAL 12000

LIVESTOCK
DOMESTIC ANIMALS SUCH AS CATTLE OR HORSES ARE
KNOWN AS LIVESTOCK WHICH IS USED FOR THE PURPOSE
OF BUSINESS.
LIVESTOCKA/C……………………………………………Dr
TO CASH A/C
PURCHASED COW FOR BUSINESS RS 9000
LIVESTOCKA/C……………………………………………Dr9000
TO CASH A/C 9000

ENTRY FOR FREE SAMPLE AND CHARITY AND

ADVERTISEMENT.
GOODS GIVEN AS CHARITY
GOODS RS 80000 WERE GIVEN AS CHARITY.(SALES VALUE
RS 95000)
CHARITY A/C…………………………………………………….Dr 80000
TO PURCHASE A./C 80000
DONATION
GIVEN RS 5000 VIA BANK AS DONATION TO PRIME
MINISTER RELIEF FUND.
DONATION A/C……………………………………………………….Dr 5000
TO BANK 5000
GOODS GIVEN AS FREE SAMPLE
ADVERTISEMENT A/C……………………………………..Dr
TO PURCHASE A/C
GOODS RS 40000 GIVEN AS FREE SAMPLE (MARKET PRICE
50000)
ADVERTISEMENT A/C……………………………………..Dr 40000 TO
PURCHASE A/C 40000
.LOSS BY FIRE AND LOSS OF GOODS BY THEFT
LOSS OF GOODS BY THEFT OR LOSS BY FIRE-
LOSS BY THEFT
LOSS BY FIRE
TO PURCHASE A/C
IF THE GOODS LOST BY FINE IS INSURED.
INSURANCE COMPANY. A/C ………………………………………………
Dr
TO LOSS BY FIRE /THEFT(WITH THE
CLAIM LODGED)
THE INSURANCE COMPANY DON’T ADMIT FULL CLAIM
BANK A/C ……………………………………………………………Dr
LOSS BY THEFT A/C/THEFT……………………………………………..Dr
TO INSURANCE CO.(CLAIM NOT ADMITTED)
IF THE FULL AMOUNT OF CLAIM IF RECEIVED FOR
INSURANCE COMPANY.
BANK
A/C……………………………………………………………………………..Dr
TO INSURANCE CO.
GOODS OF RS 100000 WERE DESTROYED BY FIRE (MARKET
VALUE RS 120000).ASSUMING GOODS WERE NOT INSURED.
LOSS BY FIRE A/C…………………………………………………………
Dr100000
 TO PURCHASE A/C……………………100000
GOODS OF RS 100000 WERE DESTROYED BY FIRE (MARKET
VALUE RS
120000).ASSUMING GOODS WERE INSURED
60%.INSURANCE COMPANY ADMITTED AND PAID 80% OF
CLAIM.
INSURANCE A/C…………………………………………………..Dr 100000
TO LOSS BY FIRE A/C…………100000
BANK A/C …………………………………………………………Dr 80000
LOSS BY FIRE A/C…………………………………………………Dr20000
TO INSURANCE CO…………100000
GOODS OF RS 100000 WERE DESTROYED BY FIRE (MARKET
VALUE RS
120000).ASSUMING GOODS WERE INSURED
70%.INSURANCE COMPANY REJECT THE CLAIM.
INSURANCE A/C……………………………………………………….Dr
70000
TO LOSS BY FIRE 70000
LOSS BY FIRE A/C………………………………………………………Dr
70000
TO INSURANCE A/C 70000
GOODS OF RS 100000 WERE DESTROYED BY FIRE (MARKET
VALUE RS
120000).ASSUMING GOODS WERE INSURED
70%.INSURANCE COMPANY ADMITTED AND PAID 60% OF
CLAIM.
BANK A/C ……………………………………………………………………….Dr
42000
LOSS BY FIRE A/C
……………………………………………………………..Dr 28000
TO INSURANCE
CO…………………………..70000

FREE SAMPLE
GET FREE SAMPLE RS 10000 (MARKET VALUE RS 12000) FOR
SELLER – NO ENTRY
SOLD ABOVE SAMPLE 8000
CASH A/C…………………………………………………………..Dr 8000
TO OTHER
INCOME……………………….8000
RECEIVED SAMPLE RS 5000 (MARKET VALUE RS 6000). FREE
OF COST (SOLD SAME AT 2000)
CASH A/C…………………………………………………………..Dr 2000
TO OTHER
INCOME……………………….2000
ORDER
RECEIVED AN ORDER FOR GOODS FOR RS 5000 FOR M/S
MANISH CHAND -NO ENTRY
VPP
RECEIVED A VPP (VALUE PAYABLE POINT) FOR SIDDHARTH
FOR RS 5000 SENT AN OFFICE BOY TO COLLECT IT AND PAID
RS 100 FOR CARRIAGE.
PURCHASE A/C ………………………………………………………Dr 5000
CARRIAGE INWARD A/C…………………………………………..Dr 100
TO CASH
A/C……………………………………..5100
LOSS /PROFIT ON SALE OF GOODS IN CASH
VEHICLE PURCHASED RS 40000
VEHICLE
A/C……………………………………………………………………….Dr 40000
TO CASH
A/C…………………………………..40000
VEHICLE SOLD RS 38000
CASH A/C
………………………………………………………………………..Dr38000
LOSS ON SALE OF GOODS ……………………………………………..Dr
2000
TO VEHICLE 40000
FURNITURE SOLD 75000 (BOOK VALUE 90000)
CASH A/C
………………………………………………………………………..Dr75000
LOSS ON SALE OF GOODS ……………………………………………..Dr
15000
TO FURNITURE 90000
LAND SOLD RS 500000 (BOOK VALUE RS 300000)
CASH A/C………………………………………………………………………Dr
500000
TO LAND 300000
TO PROFIT ON SALE ON GOODS
20000
MACHINE SOLD 200000(BOOK VALUE 200000)
CASH A/C…………………………………………………………………………Dr
200000
TO VEHICLE
A/C……………………….200000
DISHONOUR OF CHEQUE
GOODS SOLD TO SURESH ON CHEQUE OF RS 25000
BANK A/C…………………………………………………………………Dr
25000
TO SALES 25000
CHEQUE DISHONOURED GIVEN BY SURESH
SURESH
A/C………………………………………………………………..Dr25000
TO BANK A/C………………..25000
TELEPHONE EXPENSES PAID BY CHEQUE 2000
TELEPHONE EXP………………………………………………………………Dr
2000
TO BANK ……………………….2000
ABOVE TELEPHONE EXPENSES CHEQUE DISHONOURED
BANK
A/C……………………………………………………………………..Dr2000
TO O/S TELEPHONE EXP…………………….2000

BAD DEBTS
RS 5000 BAD DEBTS
BAD DEBTS
A/C………………………………………………………………….Dr 5000
TO DEBTOR A/C
5000
ABOVE BAD DEBT RECOVERED RS 4000 IN CASH