Duration: 60

mins
Slides: 18

LMT SCHOOL OF MANAGEMENT, THAPAR

UNIVERSITY
Masters of Business Administration

Course: Financial Reporting and Analysis

Faculty: Dr. Sonia Garg (Email:
sonia.garg@thapar.edu)

Session 4: Process of Preparation of Financial

Statements: Primary Book of Accounts

The Accounting Process

Analysis of business transactions that are capable of being

expressed in money terms

Documentation of business transactions through a voucher

Chronological recording of vouchers in a day book called

journal

Classifying the transactions so recorded by their nature, e.g.

putting all purchases at one place, in a ledger

Summarizing the classified transactions to understand the

effect of various activities in a statement called trial
balance

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Process of Preparation of Financial

Statements: Primary Book of
Accounts

Bifurcating the trial balance into P/L account and B/S

Dual Aspect Concept

Every transaction has two sides, e.g. in case of cash sale

business receives cash and and gives away finished product
inventory

Business should account for both addition of cash and

reduction of inventory which is done in the form of debit
and credit, general rules of debit and credit are as follows

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Process of Preparation of Financial

Statements: Primary Book of
Accounts

Dual Aspect for Accrual

Accounting

In case of credit sales business receives a receivable note

and gives away finished product inventory

Business should account for both addition of account

receivable and reduction of inventory which is done in the
form of debit and credit, general rules of debit and credit
for accrual accounting are as follows

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Process of Preparation of Financial

Statements: Primary Book of
Accounts

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Process of Preparation of Financial

Statements: Primary Book of
Accounts

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Process of Preparation of Financial

Statements: Primary Book of
Accounts

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Process of Preparation of Financial

Statements: Primary Book of
Accounts

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Process of Preparation of Financial

Statements: Primary Book of
Accounts

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Statements: Primary Book of
Accounts

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Statements: Primary Book of
Accounts

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Statements: Primary Book of
Accounts

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Statements: Primary Book of
Accounts

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Statements: Primary Book of
Accounts

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Statements: Primary Book of
Accounts

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Statements: Primary Book of
Accounts

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Statements: Primary Book of
Accounts

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Statements: Primary Book of
Accounts

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Statements: Primary Book of
Accounts

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