P2 C8 Introduction of Deshi Nama System — Account STD 11 Commerce — Question

In order to ascertain profit or loss of the business, Kacha Khata is to be closed, net profit or loss can be found out by giving accounting effects for closing stock, unpaid expenses. depreciation, bad debts, rectification of errors etc. Besides, at the end of the year, GharkharchKhata is closed and transferred to Bhandol Khate. Similarly, profit or loss arrived at in Kharid-Vakra Khata or Vatav Khata is also transferred to Bhandol Khate. The entries to be passed to give necessary accounting effects for such aspects in the books of accounts are known as Havala or Havala Nondh.