What is Accounting Cycle?

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Accounting cycle is a step-by-step process of recording, classification and summarization of economic transactions of a business. It generates useful financial information in the form of financial statements including income statement, balance sheet, cash flow statement and statement of changes in equity.

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Give one example of each of the following transactions:

Increase in an asset and a liability.
Decrease in an asset and a liability.
Increase in assets and capital.
Decrease in assets and capital.

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Do you agree that a Sales Book is used to record invoices issued to customers in respect of goods sold on credit and not cash? Give reasons.

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Journalise the following transactions:

Goods for ₹ 50,000 were destroyed by fire.
Goods worth ₹ 18,000 were distributed as free samples and ₹ 20,000 were given away as charity in cash.
Goods worth ₹ 25,000 and cash ₹ 40,000 were taken away by the proprietor for his personal use.
Goods worth ₹ 20,000 and cash ₹ 5,000 were given away as charity.
Cash ₹ 1,00,000 were stolen from the Iron Safe of the trader.

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Pass journal entries for the following:

Jan. 5	Purchased goods for Cash ₹ 10,000 and spent ₹ 200 for their carriage.
Jan. 10	Purchased machinery for Cash ₹ 50,000 and spent ₹ 500 for its carriage.
Jan. 15	Paid ₹ 20,000 for cement, ₹ 10,000 for timber and ₹ 5,000 as wages for the construction of building.
Jan. 17	Purchased an old machinery for ₹ 20,000 and spent ₹ 2,500 on its immediate repairs.
Jan. 20	Paid ₹ 500 for repairing some other machinery.