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Dr. Cr.
Date Particulars Rs. Date Particulars Rs.
Mar Mar
1 To Capital A/c 7500 15 By Expenses A/c 1000
17 To Revenue A/c 400 28 By Accounts
25 To Accounts payable A/c 500
receivable A/c 425 31 By Balance c/d 6825
8325 8325
•The total of the accounts on the debit and credit side is referred to as the trial
balance.
•If the debits do not equal the credits, then an error has occurred somewhere in
the process
•If the trial balance is not in balance, then an error has been made somewhere in
the accounting process.
•Common errors that would result in an unbalanced trial balance
•Summation error for the debits and credits of the trial balance
•Error transferring the ledger account balances to the trial balance
columns
•Error in the calculation of a ledger account balance
•Error in posting a journal entry to the ledger
•Error in the journal entry
Account Title Debits Credits
Cash 6825
Capital 7500
Revenue 1100
Expenses 1275
10600 10600
•Cash Book: Records all cash transactions i.e. cash receipts and
cash payments
•Pass Book (Bank’s Ledger): Account maintained by bank for
each customer in which deposits and withdrawals
are recorded
•Bank Reconciliation Statement:
Prepared to reconcile difference between Cash Book Balance
and Pass Book Balance on particular date
Trading Profit & Loss Balance-sheet
•Trading A/c: -Gives gross profit or loss earned by business
-Gross profit or loss is transferred to P & L A/c
•Profit & Loss A/c:- Gives net profit or loss earned by business
at end of year
- Shows all indirect expenses and incomes
- The period a Profit and Loss
Statement covers is called the accounting
period.
If Credit side > Debit side => Profit
If Debit side > Credit side => Loss
•Balance Sheet: Shows financial position of business i.e.
position of assets, liabilities and capital on
particular day
Left side shows liabilities and capital
Right side shows assets
After net profit (or loss) is added to (or subtracted form)
capital account, total of both sides of Balance-sheet should be
same i.e.
Assets = Capital + Liabilities
Dr. Cr.
Particulars Rs. Particulars Rs.
To Salaries 3900 By Gross Profit transferred from Trading A/c 17000
To Advertising 500 By Discount received 400
To Travelling expenses 1100 By Interest received 500
To Printing & Stationary 400 By Rent received 1000
To Office Expenses 200
To Discount Allowed 300
To Net Profit transferred to
Capital A/c 12500
18900 18900
as on 31-3-93
Liabilities Rs. Assets Rs.
Current Liabilities Current Assets
Outstanding Expenses Cash in Hand
Income received in advance Cash at Bank
Creditors Outstanding Income
Bills payable Closing Stock
Bank Overdraft Debtors
Bills Receivable
Long Term Liabilities Investments
Loans
Capital Fixed Assets
Add: Interest on capital Furniture
Add: Net profit Plant & Machinery
Less: Drawings Land & property
Less: Interest on drawings Goodwill