Professional Documents
Culture Documents
Dr.
To Opening Stock XX Cr.
By Sales XX
To Purchases XX Less Returns (Outwards) XX XX
Less Returns (Outwards) XX XX By Closing Stock XX
To Direct Expenses
Freight & Carriage XX
Customs & Insurance XX
Wages, Fuel, Water, Gas XX
Factory Expenses XX
Royalty on Production XX XX
To Gross Profit C/d XX
XXX XXX
Balancing of Trading A/c
ies
(3) For Gross Profit
Trading A/c Dr.
n tr
To P& L A/c
gE
sin
(4) For Gross loss
Clo
P& L A/c Dr.
To Trading A/c
Manufacturing A/c
Dr. Cr.
To Opening Stock XX By Closing WIP XX
Raw Materials XX By Sale of Scrap XX
Add Purchases XX By Cost of Production XX
Less Cl St. of Raw Mat XX XX
To Op St of WIP XX
To Carriage inwards XX
To Direct Wages XX
To Direct Expenses XX
To Indirect Expenses
Rent, Electr, Coal, XX
Repairs of Pl, Depr, XX
Other indirect exp XX
XXX XXX
Trading P&L A/c for the yr ended….
Dr. Cr.
To OpStock of Finished Goods XX By Sales XX
Add Cost of Prod (Manuf A/c) XX Less Returns (Outwards) XX XX
By Closing Stock of finished Gds XX
• If the above loss is insured then insurance claim a/c or Ins co. a/c dr. to
Abnormal Loss A/c.
• Till the time money is not received Ins claim will find a place in the asset
side of the b/s. When money is received bank a/c dr and ins claim a/c
cr. (If goods are partially insured, the portion not covered by insurance
is to be charged to P&L a/c)
Accidental Loss A/c Dr (actual loss of stock)
To Trading A/c/ Prch A/c
Dr. Cr.
To Salaries By GP B/d
To Office Rent Rates and Taxes By Discount Received
To Printing and Stationery By Commission Received
To Telephone etc By Bank Interest Received
To Postage, Courier By Rent on Property lent out
To Insurance By Dividend from Shares
To Audit Fees By Profit on Sale of Assets
To Legal Charges
To Electricity Charges
To Repairs & Renewals
To Depreciation on (Of Bld, furn, equip)
To Advertisement
Contd:
To Advertisement
To Godown Rent
To Carriage outwards
To Bad Debts
To Provision for Doubtful Debts
To Selling Commission
To Bank Charges
To Interest on loan
To Discount allowed
To loss on sale of assets
To loss by fire/ accident etc
To Net Profit (Transferred to Capital a/c)
Balance Sheet
• Definition: A balance sheet is a list of assets and liabilities of a
business at some specific point of time. It shows the financial
position of the business.
• The main function of a balance sheet is to summarize the various
assets and liabilities of the business in a properly classified and
arranged manner and there by facilitate the determination of the
financial position of the concern. It also acts as the basis for
calculating the liquidity and the solvency position of the concern.
• Limitations: 1) A conventional B/s cannot reflect the true value of
assets (as they are shown at historical cost – dep.) and as such
there is no relationship with Mkt.val. 2) It includes such assets which
has no market value like: preliminary exp, debenture disc etc. Such
assets unduly increase the total assets. 3) It does not reflect values
of certain factors as skill, loyalty etc. 4) Value of a major of current
assets depends on some estimates so it cannot reflect the true
financial position.
Balance Sheet of abc co. as at……
Liability Asset
Current Liabilities: Current Assets
Creditors Cash in Hand
Bills Payable Cash at Bank
Bank O/d Debtors/ Sundry Debtors/ Book Drs.
Outstanding Expenses Debts
Income received in advance Stock/ Inventory
Short term Loans Goods sent on Consignment
Fixed Liabilities (LTL) Bills Receivable
Loan Short term or Trade Investments
Mortgage Prepaid Expenses
Debentures Accrued Income
Sales Tax Collected/ VAT
contd… Contd….
Liability contd…. Asset
Capital Investments (Long Term Loans / Loans
granted)
Add: Net Profit Fixed Assets :
Add: Interest on capital L&B/ Freehold Premises
Add: Interst/sal/comm payable to Machinery/ P&M / Equipment
proprietor
Less: Drawings Tools & Equipment or Loose Tools
Less: Interest on drawings Furniture & Fixtures
Less: Net Loss (if any) Fixtures & Fittings
Less: Income Tax Vehicle
Reserves & Funds Livestock
Gen Reserve Goodwill, Patents, TradeMark
Reserve Fund
Contingency Rsv (Msc Exp: Adv Exp; Disc on issue of Sh/d)
PF/ Employees Comp Fund etc.
XXX XXX
Capital & Revenue Expenditure
• Capital Expenditure: Is the money spent on buying fixed
assets or adding to their value. These assets are
expected to provide benefits to the business for more
than one accounting period. Eg. Purchase of Land or
cost of extension of existing building.
• Characteristics of Capital Exp:
1) Amount involved is generally large
2) The benefit accruing from such exp is available
for more than 1 accounting period.
3) The exp is of non-recurring nature
4) It may result in an increase in the val of an asset
already possessed.
• Revenue Expenditure: Revenue expenditure is the
money spent on running the business on a day-to-day
basis. Eg. Salaries paid to employees, misc. exp etc.
Therefore revenue exp is incurred to carry on the normal
course of business and to maintain the fixed assets in
good condition. Since a revenue expenditure is of benefit
for the current accounting period only it is debited to an
exp. a/c transferable to Tr./P&L A/c.