Presentation on theme: "Financial Accounting Teacher : Mohammad Junaid Iqbal"— Presentation transcript:
1 Financial Accounting Teacher : Mohammad Junaid Iqbal Special message BSCS studentThis course offered by NORTHEN UNIVERSTYThe course is not fully uploaded its still updatingAll student of BSCS are informed that check theBelow website daily because this will be updatedDaily INSHALLAHwww . HUBHOOB . com
2 Lecture # 1Book keeping:- The word book or books mean the book of accounts and keeping implies maintaining in proper form & order. The book keeping may be defined as the art of recording business transactions in book in a regular and systematicmanners. OR The science and art of correctly recording in books ofaccount all those business transactions that result In thetransfer of money worth. ORThe science and art of recording business transactions insystematic way as a trader may we know the result of thistrade at the end of certain period and may also prove the
3 accuracy of such records. The science and art of correctly recording business daily in a set of books with a view ofhaving permanent record of transaction andfinancial result there-of.Important terms of book keepingTransactionProprietorDrawingPurchase returnsellerssellers return
4 Debtor Creditor Assets Voucher Cash discount Equity Transaction:- The dealing between two person or things or parties is called transaction.Transactions are of two types1) Cash transaction 2) Credit transaction
5 Credit transaction:- Cash transaction:- when a cash is paid or required as a result ofan exchange the transaction is said to becash transaction.Credit transaction:-when a payment or receipt of cash is postponed for a future data this transaction is said to be credit transaction.Proprietor:-He is the owner of a business, he invest capital in it and give his time and attention to it.
6 The amount with which the trader start his business OR Capital:-The amount with which the trader start his business OR The amount which is actually invested in business at any given time is known as capital.Drawing:-The cash or goods taken away by the proprietor from the business for his personal use are called Drawings.Purchase return:-If a goods purchases are found defter or unsatisfactory. They are sometime return to the
7 person from whom they were purchased are called purchase return. sellers:-sold the goods is called sellers. It has two types1) cash sellers2) credit sellersSellers return:-If a person to whom goods have been sold finds that they are defective and unsatisfactory and return, then are called sellers return.Debtor :- A person who owe money to another is Debtor. When we say that owe Mr. rahim R.s=2000
8 we mean that we have received from Mr. Rahim R we mean that we have received from Mr.Rahim R.s=2000 which we have to repaywe stand as debtor to Mr.rahim for r.s=2000.Creditor:-A person who pays out something or to whom money is owing is a creditor.Assets:-The property that are possessed by the business is called assets.
9 Liabilities:-They are the debts due by a business to it proprietor and others.Voucher:-Any written evidence in support of a business transaction is called voucher.Cash discount:- It is a deduction allowance allowed by a creditor to a debtor. If a person pays his debts before the due date of payment the recipient may grant
10 him an allowance for doing to. This allowance is known as cash discount. Equity:-A clam which can b enforced against the assets of the firm is called Equity .Equity are of two types.1) The right of the creditor2) The right of the ownerThe equities of creditor represent debts of the business and are called liabilities .The equities of the owners is called capital proprietorship or owners equity.
11 Lecture # 2 Double ENTRY BOOK-Keeping The double entry theory of book keepingcan be defined as the system of recording transactions having two fundamental aspects.One involving the receiving of a benifet and the other to giving the benefit in the same set of book.Every transaction involves two fold aspects e.g an aspects of receiving and an aspects of giving.One who receives is a debtor (DR) and
12 one who gives is a creditor (cr). Single entry VS Double entry Single entry system is a system of book-keeping which does not follow the double entry system.as such does not record or give effect to the two fold aspects of each and every transaction.As such single entry system of book-keeping is not perfect and fraud and mistakes can easily be detected.Meaning of AccountingAccounting is defined as “the art of recording classifying and summarizing in term of money
13 transaction and event of a financial characters and interpreting the result there-of. Branches of AccountingAccounting has three main forms of branchesFinancial AccountingCost AccountingManagement Accounting1) Financial Accounting:- It is the original form of accounting. It is mainly confined to the preparation of financial statement for the use of outsiders likecreditor , banks and financial institution etc.
14 3) Management accounting:- It is the accounting for the management i.e the chief purpose of financial accounting is to calculate profit or loss made by the business.2) Cost Accounting:-Function of cost accounting is to ascertain the cost of product and help the management in the control of cost.3) Management accounting:-It is the accounting for the management i.eaccounting which provides necessary informationto the management for discharging its information.It is the reproduction of financial accounting insuch a way as will enable the management totake decision and to control activities.
15 lecture # 05 Parties interested in Accounting information (1) Owner (2) Management(3) Creditor (4) Employees(5) Investors (6) Government(7) ConsumersThe above portion was given as assignmentAccounting Cycle:-It refers to a complete sequence of an accounting procedures which are required to be repeated in same order during each accounting period.Accounting cycle include(a) Recording (b) Classifying(c) summarizing
16 Recording:-All transaction should be recorded in the journal or books of original entry known assubsidiary books as and when they take place .Classifying:-All the entries in journal or book of original Entry should be posted to the appropriate ledger accounts to find at a glance the total effect of all such transaction in a particular account.Summarizing:-Last stage is to prepare the trial balance and final accounts with a view to ascertaining the profit or
17 loss made during a trading period and the financial position of the business on a particular date.
18 Lecture # JournalThe word journal has been derived from the French word "jour " means day .so journal means daily. Transaction are recorded daily in journal and hence it has been name so. Its is a book of original entry to record chronologically ( I.e. on order of date and in detail the various transaction of a traders. Characteristics of Journal1) journal is the first successful step of double entry system. A transaction is recorded first of all in journal .so the journal is called the " book of original Entry" .2) A transaction is recorded on the same day it takes place so the journal is called day book.
19 3) Transaction are recorded chronologically so journal is called chronological book. 4) For each transaction the name of two concerned accounts indicating which is debited and which is credited are clearly written in two consecutive lines.5) Narration is written below each entry.The amount is written in the last two column debited amount in debit column and credit amount in credit column.
20 3) proprietorship 4) Revenue 5) Expenses 1). Assets:- Lecture # 07 Rules of Debit & CreditIn order to understand the rules of debit and credit the accounts are classified into five(5) categories 1) assets liability3) proprietorship ) Revenue 5) Expenses1). Assets:- Assets means the resources of the business or commodities possessed by the business. e.g Land building , cash stock in trade etc. 2) liability:- Liability mean claim of the suppliers of cash or commodities on credit up to his balance due on the date .e.g.
21 e.g Suppliers of goods3) Proprietorship:-It means the claim of the owner of the business for his interest up to his investment after finalizing the expanses and revenue up to the date of capital4) Revenue:- It means any type of income directly or indirectly of the business .e.g interest received, sale of goods, dividend received etc.5) Expenses:-Expenses means any type of expenses directly or indirectly of the business. e.g.
22 Increase in expenses is debit. Decrease in expenses is credit. HOW TO USE THESE RULESHOW TO DEBIT & HOW TO CREDITASSETS:- Increase in assets is debit. Decrease in assets is credit. LIABILITIES:- Decrease in liability account is debit. Increase in liability account is credit. PROPRIETORSHIP:- Decrease in proprietorshiip account is debit. Increase in proprietorship account is credit. REVENUE:- Decrease in revenue account is debit. Increase in revenue account is credit. EXPENSES:- Increase in expenses is debit. Decrease in expenses is credit.
23 PRACTICALLYDEBIT NAME OF Financial ACCOUNT CREDIT Increase Assets Decrease Increase Expenses Decrease Decrease Liability Increase Decrease Proprietor Increase Decrease Revenue IncreaseNumerical on next page
24 On 1st January 1991 , salman started business with a capital of at R On 1st January 1991 , salman started business with a capital of at R.S 20'000 and his transection of the month were as followsJan 02 Purchased build for cash R.s 8000 Jan 08 Purchased goods from C R.s 1000 Jan 15 Sold goods for cash R.s 500 Jan 20 Goods returned to C R.s. 100 Jan 22 Sold goods to rehman R.s. 400 Jan 25 Rehman returned goods R.s. 25 Jan 31 Salaries paid for month R.s. 200 Jan 31 Rent paid for month R.s. 150Rescored these transaction in journal
25 Date Particular L.F Dr Cr Cash 1st jan Cash account to 20,000 Capital acc 1991 Started business 20,000 Or Cap. into 2nd Jan. Building acc to 8000 Cash acc 1991. Purchased build 8000 For cash 8th Jan. Purchased acc 1000 To C acc Purchased goods From C 15th Jan. Cash acc. 500 To sale acc 1991. Sold goods for cash 500
26 20th Jan. C to purchase 100 Return Goods return to C 100 22nd Jan Rehman to 400 Sale acc Sold goods to rehman 400 25th Jan. Sales return 25 To rehman Rehman return goods 25 31st Jan. Salaries to 200 Cash Salaries paid 200 31st Jan. Rent to 150 Cash 1991. Rent paid 150_____________________________________________________________ Total. ,375 10, 375
27 On 1st April 1991 a merchant started business with a capital of R On 1st April 1991 a merchant started business with a capital of R.s and his transactions of the month were as followsApril 2nd Purchase machinery For R.s 700 April 3rd Bought furniture from salman R.s 300 April 07 Purcgase goods for cash R.s 2500 April 08 Sold goods to rehman &sons R.s. 1500 April 10 Bought goods from b R.s. 1000 & Bought goods from. C R.s. 2000April 12 Received cash from rehman R.s & sonsAllowed him discount Of Rupee R.s. 50
28 April 15 Paid " B " cash R. s. 975 Discount receive R. s April 15 Paid " B " cash R.s. 975 Discount receive R.s. 25 April 16 Returned goods to "C" R.s. 500 April 17 Sold goods to aslam. R.s April 20 Goods return by aslam. R.s. 200 APRIL 21 Purchase from kareem goods Of RS 600 of the list price subject to a 10% trade discount April 22 paid "c" cash RS 1500 April 25 Gave away a charity RS 50 cash & goods worth RS 30 April 27 Distributed goods RS 200 worth as free sample & Goods taken away RS 100 by the proprietor for personal use April 28 Amount withdraw RS 200 By the proprietor for private use April 30 Salaries paid for month RS 500 Date Particular L.F Dr Cr 1st april Cash account to 15,000 Capital acc Cash to capital ,000
29 we are sorry and its now up-to-date completely. nd April Machinery acc to Cash acc Purchased Machinery for cash 7000 3rd april Furniture acc 300 To salman Bought furniture to salman 300 April 07 Purchase acc. To cash acc Purchase goods for cash April 08. rehman & sons to 1500 Sold acc Sold goods to rehman and sons April 10 Purchase acc 3000 To "B" , " C " Bought goods from B & C. 2000 April 12 Cash discount to 1450 cash rehman & sons. 50 discount Received cash from rehman & sons some little bit transaction left from 15 to 30 in abovewe are sorry and its now up-to-date completely.
30 Designed By: JAMAL SHAH This isIntroduction to financial accountingFor BSCS studentswaiting for next lecture…….COME BACK soonwww. Hubhoob. comDesigned By: JAMAL SHAH