Question
Explain the factors which necessitated systematic accounting.
✓
Answer
The factors that necessitated systematic accounting are given below.
- Only financial transactions are recorded− Those events that are financial in nature are only recorded in the books of accounts. For example, salary of an employee is recorded in the books but his/ her educational qualification is not recorded.
- Transactions are recorded in monetary terms− Only those transactions which can be expressed in monetary terms are recorded in the books. For example, if a business has two buildings and four machines, then their monetary values is recorded in the books, i.e. two buildings costing ₹ 2,00,000, four machines costing ₹ 8,00,000. Thus the total value of assets is ₹ 10,00,000.
- Art of recording− Transactions are recorded in the order of their occurrence.
- Classification of transaction− Business transactions of similar nature are classified and posted under their respective accounts. For example, all the transactions relating to machinery will be posted in the Machinery Account.
- Summarising of data− All business transactions are summarised in the form of Trial Balance, Trading Account, Profit and Loss Account and Balance Sheet that provides necessary information to various users.
- Analysing and interpreting data− Systematic accounting records enable users to analyse and interpret the accounting data in a proper and appropriate manner. These accounting data and information are presented in form of graphs, statements, charts that leads to easy communication and understandability by various users. Moreover, these facilitates in decision making and future predictions.
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Similar questions
Complete the following Accounting Equation by filling the missing amounts:
Enter the following transactions in a Single Column Cash Book of M/s Suchitra Sen & Co.:
|
2017
|
|
(₹)
|
|
March 1
|
Cash in Hand
|
1,20,000
|
|
March 2
|
Bought machinery for ₹ 60,000 and paid carriage
|
2,000
|
|
March 4
|
Bought goods for ₹ 25,000 and paid carriage
|
1,000
|
|
March 5
|
Bought goods from Ravi Das
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15,000
|
|
March 6
|
Cash received from sale of Motor bike
|
5,000
|
|
March 8
|
Sold goods for cash less 5% cash discount
|
20,000
|
|
March 10
|
Sold goods
|
40,000
|
|
March 12
|
Paid to Ravi Das on account
|
10,000
|
|
March 15
|
Bought goods from Suresh for cash less 4% cash discount
|
30,000
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|
March 20
|
Paid to Ravi Das
|
4,500
|
|
Discount received
|
500
|
|
|
March 25
|
Cash collected from Ashok (Debtor)
|
10,000
|
|
March 28
|
Purchased postal stamps
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500
|
|
March 28
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Salary paid to accountant
|
15,000
|
Record the following transactions of M/s Mahipal Bros. in Proper Subsidiary Books, post them into the Ledger and take out a Trial Balance:
|
2017
|
|
|
Jan. 1
|
Commenced business with Cash ₹ 2,00,000 |
| Jan. 2 | Deposited into U.T.I Bank ₹ 1,75,000 |
|
Jan. 4
|
Purchased goods from Dilip for ₹ 40,000. Trade Discount 20% |
|
Jan. 6
|
Gave a cheque to Dilip for ₹ 16,800 and discount allowed by him ₹ 200 |
| Jan. 8 | Goods bought from Nilesh for Cash ₹ 14,000 |
| Jan. 10 | Accepted a bill at 2 months for ₹ 15,000 drawn by Dilip |
| Jan. 11 | Bought goods from Suresh ₹ 75,000 |
| Jan. 13 | Paid to Suresh a Cheque for ₹ 58,800 after receiving discount of 2% |
| Jan. 15 | Cash sales made to Jyoti Parshad ₹ 8,000 |
| Jan. 16 | Sold goods to Mohinder for ₹ 20,000 |
| Jan. 17 | Goods returned by Mohinder for ₹ 1,500 |
| Jan. 18 | Received from Mohinder ₹ 7,900 after allowing a discount of 1.25% |
| Jan. 20 | Goods sold to Banerjee ₹ 50,000 |
| Jan. 21 | Deposited into Bank ₹ 20,000 |
| Jan. 25 | Goods taken for personal use ₹ 2,000 |
| Jan. 25 | Purchased furniture ₹ 40,000 and Typewriter ₹ 10,000 for office use |
| Payment for both the items is made by Cheque | |
| Jan. 25 | Sold goods to Anubhav ₹ 30,000 |
| Jan. 27 | Goods returned by Anubhav ₹ 5,000 |
| Jan. 27 | Received full payment from Banerjee by Cheque, sent it to Bank, Discount allowed 2% |
| Jan. 28 | Acceptance received from Anubhav at 30 days for the amount due from him |
| Jan. 28 | Paid for stationery ₹ 400 and for Postage ₹ 200 |
| Jan. 31 | Rent of proprietor's house paid by Cheque ₹ 2,500 |
Explain the nature of Accounting Standards.
Show the effect of the following transactions and also prepare a Balance Sheet:
- Started business with cash ₹ 60,000.
- Rent received ₹ 2,000.
- Accrued interest ₹ 500.
- Commission received in advance ₹ 1,000.
- Amount withdrawn ₹ 5,000.
Prepare Sales Book from the following transactions of Hema Traders, Kolkata dealing in furniture. Open the Ledger Accounts also:
Briefly state the rules of debiting and crediting accounts classified on the basis of Accounting Equation.
“Is Trial Balance merely a proof of Arithmetical accuracy”? Explain the errors which are not disclosed by a Trial Balance.
What are types of Accounting?
Prepare Accounting Equation from the following:
- Started business with cash ₹ 75,000 and goods ₹ 25,000.
- Paid for Rent ₹ 2,000.
- Bought goods for cash ₹ 30,000 and on credit for ₹ 44,000.
- Goods costing ₹ 50,000 sold at a profit of 25%, out of which ₹ 27,500 received in Cash.
- Purchased a Motor-cycle for personal use ₹ 20,000.