Presentation is loading. Please wait.

Presentation is loading. Please wait.

Journal is a book of records where daily monetary transactions of a business is posted. Though it brings all the transactions together, it creates confusion.

Similar presentations


Presentation on theme: "Journal is a book of records where daily monetary transactions of a business is posted. Though it brings all the transactions together, it creates confusion."— Presentation transcript:

1

2 Journal is a book of records where daily monetary transactions of a business is posted. Though it brings all the transactions together, it creates confusion between small and important expenses. Thus, a ledger was introduced, where all the transactions are recorded under the individual accounts.

3 A ledger account can be defined as a summary statement of all the transactions relating to a person, asset, expense or income which have taken place during a given period of time and shows their net effect. Thus, a group of accounts is known as ledger.

4  Ledger contains same information as journal.  It summarizes the transactions relating to person, asset, expense or income.  It is a book of accounts as it helps in achieving the objective of accounts.  It’s easier to understand and maintain than journal.

5 1. What are the total sales to an individual customer? 2. What are the total purchases from an individual supplier? 3. How much amount is owed by debtors? 4. How much amount is owed to debtors? 5. What is the amount of profit or loss made during a particular period? 6. What is the financial position of the firm on a particular date?

6 GENERAL LEDGER A collection of group of accounts that supports the value items shown in the major financial statements SUBSIDIARY LEDGER Subset of general ledger

7 DATEPARTICU- LARS F.AMOUNTDATEPARTICU- LARS F.AMOUNT To Name Of Credit Account Rs.By Name Of Debit Account Rs. Dr. Cr.

8  Each account in the ledger is divided into two equal parts by a vertical line.  The left hand side is known as debit (Dr.) side.  The right hand side is known as credit (Cr.) side.  The two sides are further divided into four columns, date, particulars, folio and amount.  ‘F’ is the folio page number of the journal or subsidiary book.

9 Every transaction is initially recorded in journal as journal entry. From the journal, it’s transferred to the respective accounts in the ledger. This process of transferring from the journal to ledger is known as posting. Lets see how do we post an entry from journal to ledger:

10 Journal entry: 2010, April 1. Goods sold for cash Rs. 2,500 Dr. Cr. 2010 April 1Cash Account Dr. To Sales Account Rs. 2,500 Rs. 2,500 Now, lets see how the posting on ledger takes place:

11 DATEPARTICU- LARS F.AMOUNTDATEPARTICU- LARS F.AMOUNT 2010 APRIL 1 To Sales Account Rs. 2,500 Rs. DATEPARTICU- LARS F.AMOUNTDATEPARTICU- LARS F.AMOUNT Rs.2010 April 1 By Cash Account Rs. 2,500 SALES ACCOUNT CASH ACCOUNT

12 Now lets see how the compound journal entry works: Ledger posting of compound journal entry is: 2010, April 30 paid for: Charity- Rs. 101 Salaries- Rs. 2,000 Stationery- Rs. 199 2010 April 30 Charity Account Dr. Salaries Account Dr. Stationery Account Dr. To Cash Account (Being amount paid for charity, salaries and stationery) Rs. 101 2,000 199 Rs. 2,300 Dr. Cr. Now lets see how the posting in ledger takes place:

13 DATEPARTICU- LARS F.AMOUNTDATEPARTICU- LARS F.AMOUNT 2010 APRIL 30 To Cash Account Rs. 101 Rs. DATEPARTICU- LARS F.AMOUNTDATEPARTICU- LARS F.AMOUNT 2010 APRIL 30 To Cash Account Rs. 2,000 Rs. CHARITY ACCOUNT SALARIES ACCOUNT

14 DATEPARTICU- LARS F.AMOUNTDATEPARTICU- LARS F.AMOUNT 2010 APRIL 1 To Sales Account Rs. 2,500 Rs. STATIONERY ACCOUNT DATEPARTICU- LARS F.AMOUNTDATEPARTICU- LARS F.AMOUNT 2010 APRIL 1 To Sales Account Rs. 2,500 Rs. CASH ACCOUNT

15 EXAMPLE: Question: Post the following transactions in the ledger of Imran: 2010 Rs. Jan. 1 Started business with cash 45,000 Jan. 2 Paid into bank 25,000 Jan. 2 Goods purchased for cash 15, 000 Jan. 3 Purchase of Furniture and payment by cheque 5,000 Jan. 5 Sold goods for cash 8,500 Jan. 8 Sold goods to Arvind Walia 4,000 Jan. 10 Good purchased from Amrit Lal 7,000 Jan. 12 Goods returned to Amrit Lal 1,000 Jan. 15 Goods returned to Arvind Walia 200

16 Jan. 18 Cash received from Arvind Walia Rs. 3,760 and discount allowed to him 40 Jan. 21 Withdrew from bank for private use 1,000 Withdrew from bank for use in the business 5,000 Jan. 25 Paid telephone rent for one year 400 Jan. 28 Cash paid to Amrit Lal in full settlement of his account 5,940 Jan. 30 Paid for: Stationery 200 Rent 1,000 Salaries to staff 2,500

17 DATEPARTICU- LARS F.AMOUNTDATEPARTICU- LARS F.AMOUNT 2010 JAN. 1 5 18 21 31 To Capital A/c To Sales A/c To Arvind Walia To Bank A/c To Balance b/d Rs. 45,000 8,500 3,760 5,000 62,260 12,220 2010 JAN. 1 2 25 28 30 By Bank A/c By Purchase A/c By Telephone rent A/c By Amrit Lal By Stationery A/c By Rent A/c By Salaries A/c By Balances c/d Rs. 25,000 15,000 400 5,940 200 1,000 2,500 12,220 62,260 CASH ACCOUNT

18 DATEPARTICU- LARS F.AMOUNTDATEPARTICU- LARS F.AMOUNT 2010 JAN 30 To Balance c/d Rs. 45,000 2010 JAN 1 DEC.1 By Cash A/c By Balance b/d Rs. 45,000 CAPITAL ACCOUNT

19 DATEPARTICU- LARS F.AMOUNTDATEPARTICU- LARS F.AMOUNT 2010 JAN 1 31 To Cash A/c To Balance b/d Rs. 25,000 14,000 2010 JAN 3 21 30 By Furniture A/c By Drawings A/c By Cash A/c By Balance c/d Rs. 5,000 45,000 5,000 14,000 25,000 BANK ACCOUNT

20 DATEPARTICU- LARS F.AMOUNTDATEPARTICU- LARS F.AMOUNT 2010 JAN 2 10 31 To Cash A/c To Amrit Lal To Balance b/d Rs. 15,000 7,000 22,000 14,000 2010 JAN 30By Balance c/d Rs. 22,000 PURCHASES ACCOUNT

21 DATEPARTICU- LARS F.AMOUNTDATEPARTICU- LARS F.AMOUNT 2010 JAN 3 31 To Bank A/c To Balance b/d Rs. 5,000 2010 JAN 30By Balance c/d Rs. 5,000 FURNITURE ACCOUNT

22 DATEPARTICU- LARS F.AMOUNTDATEPARTICU- LARS F.AMOUNT 2010 JAN 30 31 To Balance c/d To Balance b/d Rs. 12,500 14,000 2010 JAN 5 8 By Cash A/c By Arvind Walia Rs. 8,500 4,000 12,500 SALES ACCOUNT

23 DATEPARTICU- LARS F.AMOUNTDATEPARTICU- LARS F.AMOUNT 2010 JAN 8To Sales A/c Rs. 4,000 22,000 4,000 2010 JAN 15 18 By Returns Inwards By Cash A/c By Discount A/c Rs. 200 3,760 40 4,000 ARVIND WALIA

24 DATEPARTICU- LARS F.AMOUNTDATEPARTICU- LARS F.AMOUNT 2010 JAN 12 28 To Returns Outwards To Cash A/c To Discount A/c Rs. 1,000 5,940 60 7,000 2010 JAN 10By Purchase A/c Rs. 7,000 AMRIT LAL

25 DATEPARTICU- LARS F.AMOUNTDATEPARTICU- LARS F.AMOUNT 2010 JAN 15 31 To Arvind Walia To Balance b/d Rs. 200 2010 JAN 30By Balance c/d Rs. 200 RETURNS INWARDS ACCOUNT

26 DATEPARTICU- LARS F.AMOUNTDATEPARTICU- LARS F.AMOUNT 2010 JAN 30To Balance c/d Rs. 1,000 2010 JAN 12 31 By Amrit Lal To Balance b/d Rs. 1,000 RETURNS OUTWARDS ACCOUNT

27 DATEPARTICU- LARS F.AMOUNTDATEPARTICU- LARS F.AMOUNT 2010 JAN 18 10 To Arvind Walia To Amrit Lal Rs. 40 20 60 2010 JAN 28 31 By Amrit Lal By Balance b/d Rs. 60 20 DISCOUNT ACCOUNT

28 DATEPARTICU- LARS F.AMOUNTDATEPARTICU- LARS F.AMOUNT 2010 JAN 21 31 To Bank A/c To Balance b/d Rs. 1,000 2010 JAN 30By Balance c/d Rs. 1,000 DRAWINGS ACCOUNT

29 DATEPARTICU- LARS F.AMOUNTDATEPARTICU- LARS F.AMOUNT 2010 JAN 25 10 31 To Cash A/c To Amrit Lal To Balance b/d Rs. 15,000 7,000 22,000 14,000 2010 JAN 30By Balance c/d Rs. 22,000 TELEPHONE RENT ACCOUNT

30 DATEPARTICU- LARS F.AMOUNTDATEPARTICU- LARS F.AMOUNT 2010 JAN 30 31 To Cash A/c To Balance b/d Rs. 200 2010 JAN 30By Balance c/d Rs. 200 SALARY ACCOUNT

31 DATEPARTICU- LARS F.AMOUNTDATEPARTICU- LARS F.AMOUNT 2010 JAN 30 31 To Cash A/c To Balance b/d Rs. 1,000 2010 JAN 30By Balance c/d Rs. 1,000 RENT ACCOUNT

32 DATEPARTICU- LARS F.AMOUNTDATEPARTICU- LARS F.AMOUNT 2010 JAN 30 31 To Cash A/c To Balance b/d Rs. 2,500 2010 JAN 30By Balance c/d Rs. 2,500 SALARIES ACCOUNT

33 THANK YOU


Download ppt "Journal is a book of records where daily monetary transactions of a business is posted. Though it brings all the transactions together, it creates confusion."

Similar presentations


Ads by Google