Question 1) Accounting is an art of recording, classifying and summarizing in a significant manner and in terms of money transactions and events. Explain the accounting process and write the obectives of accounting . Solution Question -1):a) Explanation of accounting process. Ans :- The process of accounting are:: !dentifying the transactions and events :- When money goods or services are • transferred from one person or account to another person or account, is knon as transaction "easuring# -This means e!pressing the value of events an d transactions in terms • of money "#upees in $ndia)% &easuring has 'ecome an important challenge for the accountants and 'usiness entities due to the folloing reasons: a) (hangi (hanging ng nature nature of 'usin 'usiness ess acti activit vities ies ') usiness crossing international 'orders $ecording# -The ne!t process after measuring the transactions is the recording%it • deals ith recording of identified transactions and events in a systematic manner in the 'ooks of original entry in accordance ith the principles of accountancy% accou ntancy% The 'ook in hich transactions are first recorded is called the *ournal% %lassifying :- All the recorded transactions do not make any sense unless they are • processed and presented in a manner that is useful to the intended user% +or this purpose separate 'ook called edger is maintained% The transaction that appear in the 'ooks of original entry "ournal) are transferred to appropriate places in the 'ook of final entry "edger) 'y a process called .osting% &ummarizing# -The end o'*ective of any an y 'usiness is to make profit% This re/uired • analy0ing total e!penses or losses, total income or gain, total assets such as income statement, 'alance sheet, statement of chan ges in financial position and cash flo statement% Analyzing# - $t deals ith the esta'lishment of relationship 'eteen the various • items or group of items taken from income statement or 'alance sheet or 'oth to identify the financial strengths and eaknesses of an enterprise involving various tools like #atio Analysis, +und +lo Analysis, (ash +lo Analysis, etc% "discussed in su'se/uent units)% !nterpreting# - This step e!plains the importance of all the data in a manner that • the ends user of financial statements can make a meaningful *udgment a'out the financial position and profita'ility of the 'usiness% %ommunicating# - $t deals ith communicating the analy0ed and interpreted data • in the form of financial reports or statements to the users of financial information% b) 'bectives of accounting. Ans :- Accounting involves: Accounting assists in systematic recording of all 'usiness events or transactions% • Accounting measure the financial performance of en terprises% •
Print document • •
•
In order to print this document from Scribd, you'll
Accounting facilitates reporting of results to 'oth internal and e!ternal users% first need to download it. Accounting is re/uired to fulfill the statutory re/uirements of various regulatory 'odies such as registrar of companies% Cancelcontrol Download And Accounting helps in internal 'y holding thePrint concerned persons responsi'le for any errors, lapses or under performance%
Question () Journal is a book of original entry and only one journal is maintained if the business is very small in size and the transactions are limited. Give the meaning of a subsidiary book. List and explain all the types of subsidiary books. Solution Question -):-
Print document
In order to print this document from Scribd, you'll a) Explanation of subsidiary boos. first need to it. only one *ournal is Ans :- ournal is a 'ook of originaldownload entry and maintained if the 'usiness is very small in si0e and the transactions are limited% 2oever for large 'usinesses numerous $t Cancel having Download Andtransactions% Print 'ecomes difficult if all transactions here to 'e recorded in the same 'ook% 2ence the need for su' dividing the *ournal arises such su' divisions of *ournal are called su'sidiary 'ook%
b) Explanation of all types of subsidiary boos. Ans :-There are seven types of su'sidiary 'ook s are popular% .urchases 'ook:- This 'ook is meant for recording purchases% • 2oever only credit purchases of goods are recorded in this *ournal as the cash purchases ill pass through the cash 'ack% Sales 'ook:- Sales 'ook or sales day 'ook is the su'sidiary 'ook • meant for recording sales% 2oever only credit sales ill pass through the cash 'ook% .urchases returns 'ook:- .urchases return refers vto good returned • to the supplier out of purchases made from him%the reason for such return of goods can 'e 'ecause the goods ere damaged ere not as per specifications, or ere not as per the sample approved% Sales returns 'ook:- Sales returns refer to goods returns 'y the • customer out of sales made to him %the reason for such return of goods can 'e 'ecause the goods ere damaged% ills receiva'le 'ook :- ill receiva'le 'ook is one of the • su'sidiary 'ooks% To prepare this 'ook one should kno a'out the 'ill of e!change% A 'ill of e!change is defined 'y the $ndian negotia'le instrument act ,1331 as 4an instruments in riting containing an unconditional order signed ' y the maker% ills paya'le 'ook 5 ills paya'le 'ook is a su'sidiary 'ook meant • for recording acceptance given to creditors% (ash 'ook:- (ash 'ook is the most important su'sidiary 'ook%it is • 'ook meant for recording all cash transactions i%e%, cash receipts and cash payments made during a particular period%
Question *) +or the following balances extracted from a trial balance, prepare a trading account.
articulars
&toc on 1-1-(/
Amount in $s.
00
Print document In order to print this document from Scribd, you'll first need to download it. Cancel
