ACCOUNTS

1. FINANCIAL ACCOUNTING Accounts is a language of business……. WARREN BUFFETT Plan Budget Action Do Book keeping Check Financial Reports P&L BS CF Management Accounting

9. M/S ARYAN TRADERS LIMITED S.N. Transection Assets Amt ( ` ) Liabilities Amt ( ` ) Capital Amt ( ` ) 1 Owner brings in equity share capital ` 10 lacs Cash 10 Equity share capital 10 2 Preference share capital of ` 2 lacs is raised Cash 2 Preference share capital 2 Total Assets 12 Total Liabilites 0 Owners Fund 12 3 M/s Aryan Traders Ltd borrowed on a long term basis from ICICI ` 4 lacs @ 12% per annum. Cash 4 Long term borrowings ( ICICI) 4 Equity share capital Preference share capital 10 2 Total Assets 16 Total Liabilites 4 Owners Fund 12 4 Purchased land, builing , plant machinery for cash for ` 10 lacs Fixed Assets Cash 10 6 Long term borrowings ( ICICI) 4 Equity share capital Preference share capital 10 2 Total Assets 16 Total Liabilites 4 Owners Fund 12

10. 5 Purchased furniture and fixtures ` 2 lac on credit from M/s Z Fixed Assets Current Assets Cash 12 6 Long term borrowings ( ICICI) Other Creditors ( M/s Z ) 4 2 Equity share capital Preference share capital 10 2 Total Assets 18 Total Liabilites 6 Owners Fund 12 6 Purchased stock of 10,000 bottles of tables @ ` 10 per bottle on credit M/s P Fixed Assets Current Assets Cash Stock 12 6 1 Long term borrowings ( ICICI) Other Creditors ( M/s Z ) Current liabilities Accounts Payable (M/s P) 4 2 1 Equity share capital Preference share capital 10 2 Total Assets 19 Total Liabilites 7 Owners Fund 12 7 Purchased 5000 bottles of tablets @ ` 10 per bottle for cash Fixed Assets Current Assets Cash ( 6 - 0.50) Stock (1 + 0.50) 12 5.50 1.50 Long term borrowings ( ICICI) Other Creditors ( M/s Z ) Current liabilities Accounts Payable (M/s P) 4 2 1 Equity share capital Preference share capital 10 2 Total Assets 19 Total Liabilites 7 Owners Fund 12

11. 8 Return to M/s P 1000 bottle @ ` 10 per bottle Fixed Assets Current Assets Cash ( 6 - 0.50) Stock (1.50 - 0.10) 12 5.50 1.40 Long term borrowings ( ICICI) Other Creditors ( M/s Z ) Current liabilities Accounts Payable (M/s P) ( 1- 0.10) 4 2 0.90 Equity share capital Preference share capital 10 2 Total Assets 18.90 Total Liabilites 6.90 Owners Fund 12.00 9 Sold for credit 6,000 bottles @ ` 20 per bottle Fixed Assets Current Assets Cash ( 6 - 0.50) Stock (1.40 - 0.60) Debtors 12 5.50 0.80 1.20 Long term borrowings ( ICICI) Other Creditors ( M/s Z ) Current liabilities Accounts Payable (M/s P) ( 1- 0.10) 4 2 0.90 Equity share capital Preference share capital Reserves (Profit) 10 2 0.60 Total Assets 19.50 Total Liabilites 6.90 Owners Fund 12.60

12. 10 Sold for Cash 4,000 bottles @ ` 20 per bottle Fixed Assets Current Assets Cash ( 5.50 + 0.80) Stock (0.80 -0.40) Debtors 12 6.30 0.40 1.20 Long term borrowings ( ICICI) Other Creditors ( M/s Z ) Current liabilities Accounts Payable (M/s P) ( 1- 0.10) 4 2 0.90 Equity share capital Preference share capital Reserves (Profit) (0.60 + 0.40) 10 2 1 Total Assets 19.90 Total Liabilites 6.90 Owners Fund 13.00 11 Rent expences incurred and paid ` 50,000 Fixed Assets Current Assets Cash ( 6.30- 0.50) Stock (0.80 -0.40) Debtors 12 5.80 0.40 1.20 Long term borrowings ( ICICI) Other Creditors ( M/s Z ) Current liabilities Accounts Payable (M/s P) ( 1- 0.10) 4 2 0.90 Equity share capital Preference share capital Reserves (Profit) (1 - 0.50) 10 2 .50

13. 12 Paid insurance for 2 years ` 50,000 (` 26,000 relates to 2001) Fixed Assets Current Assets Cash ( 5.80- 0.50) Stock (0.80 -0.40) Debtors prepaid insurance 12 5.30 .40 1.20 .26 Long term borrowings ( ICICI) Other Creditors ( M/s Z ) Current liabilities Accounts Payable (M/s P) ( 1- 0.10) 4 2 0.90 Equity share capital Preference share capital Reserves (Profit) (.50 - .24) 10 2 .26 Total Assets 19.16 Total Liabilites 6.90 Owners Fund 12.26 13 Commission income received in cash ` 25,000 Fixed Assets Current Assets Cash ( 5.30 + 0.25) Stock (0.80 -0.40) Debtors prepaid insurance 12 5.55 .40 1.20 .26 Long term borrowings ( ICICI) Other Creditors ( M/s Z ) Current liabilities Accounts Payable (M/s P) ( 1- 0.10) 4 2 0.90 Equity share capital Preference share capital Reserves (Profit) (.26 + .25) 10 2 .51 Total Assets 19.41 Total Liabilites 6.90 Owners Fund 12.51

14. 14 Advance received from customers ` 1 lac Fixed Assets Current Assets Cash ( 5.55 + 1) Stock (0.80 -0.40) Debtors prepaid insurance 12 6.55 .40 1.20 .26 Long term borrowings ( ICICI) Other Creditors ( M/s Z ) Current liabilities Accounts Payable (M/s P) ( 1- 0.10) Income received in advance 4 2 .90 1 Equity share capital Preference share capital Reserves (Profit) (.26 + .25) 10 2 .51 Total Assets 20.41 Total Liabilites 7.90 Owners Fund 12.51 15 Tax paid in advance ` 25,000 Fixed Assets Current Assets Cash ( 6.55 - .25) Stock (0.80 -0.40) Debtors prepaid insurance Advance Tax 12 6.30 .40 1.20 .26 .25 Long term borrowings ( ICICI) Other Creditors ( M/s Z ) Current liabilities Accounts Payable (M/s P) ( 1- 0.10) Income received in advance 4 2 .90 1 Equity share capital Preference share capital Reserves (Profit) (.26 + .25) 10 2 .51 Total Assets 20.41 Total Liabilites 7.90 Owners Fund 12.51

15. 16 Rent expenses incurred but not paid for ` 1 lac Fixed Assets Current Assets Cash ( 6.55 - .25) Stock (0.80 -0.40) Debtors prepaid insurance Advance Tax Miscellaneous assets loss 12 6.30 .40 1.20 .26 .25 .49 Long term borrowings ( ICICI) Other Creditors ( M/s Z ) Current liabilities Accounts Payable (M/s P) ( 1- 0.10) Income received in advance Outstanding rent expenses 4 2 .90 1 1 Equity share capital Preference share capital Reserves (Profit) (.51 - 1) 10 2 NIL Total Assets 20.90 Total Liabilities 8.90 Owners Fund 12.00 17 Sold 3,000 bottles for cash `1 lac Fixed Assets Current Assets Cash ( 6.30 + 1) Stock (0.40 -0.30) Debtors prepaid insurance Advance Tax 12 7.30 .10 1.20 .26 .25 Long term borrowings ( ICICI) Other Creditors ( M/s Z ) Current liabilities Accounts Payable (M/s P) ( 1- 0.10) Income received in advance Outstanding rent expenses 4 2 .90 1 1 Equity share capital Preference share capital Reserves (Profit) (-.49 + .7) 10 2 .21 Total Assets 21.11 Total Liabilities 8.90 Owners Fund 12.21

16. 18 Depreciation on fixed assets @20% p.a. Fixed Assets Less: Dep Net fixed assets Current Assets Cash ( 6.30 + 1) Stock (0.40 -0.30) Debtors prepaid insurance Advance Tax Micellaneous Assets loss 12 2.40 9.60 7.30 .10 1.20 .26 .25 2.19 Long term borrowings ( ICICI) Other Creditors ( M/s Z ) Current liabilities Accounts Payable (M/s P) ( 1- 0.10) Income received in advance Outstanding rent expences 4 2 .90 1 1 Equity share capital Preference share capital Reserves (Profit) (.21 - 2.4) 10 2 NIL Total Assets 20.90 Total Liabilites 8.90 Owners Fund 12.00

17. 19 Commission income earned ` 5 lac Fixed Assets Less: Dep Net fixed assets Current Assets Cash ( 6.30 + 1) Stock (0.40 -0.30) Debtors prepaid insurance Advance Tax Accrued Income 12 2.40 9.60 7.30 .10 1.20 .26 .25 5 Long term borrowings ( ICICI) Other Creditors ( M/s Z ) Current liabilities Accounts Payable (M/s P) ( 1- 0.10) Income received in advance Outstanding rent expences 4 2 .90 1 1 Equity share capital Preference share capital Reserves (Profit) (5 - 2.19) 10 2 2.81 Total Assets 23.71 Total Liabilites 8.90 Owners Fund 14.81 20 Interest expenses incurred @12% per annum on ICICI loan ` 4 lac Fixed Assets Less: Dep Net fixed assets Current Assets Cash ( 6.30 + 1) Stock (0.40 -0.30) Debtors prepaid insurance Advance Tax Accrued Income 12 2.40 9.60 7.30 .10 1.20 .26 .25 5 Long term borrowings ( ICICI) Other Creditors ( M/s Z ) Current liabilities Accounts Payable (M/s P) ( 1- 0.10) Income received in advance Outstanding rent expences outstanding interest expenses 4 2 .90 1 1 .48 Equity share capital Preference share capital Reserves (Profit) (2.81 - .48) 10 2 2.33 Total Assets 23.71 Total Liabilites 9.38 Owners Fund 14.33

18. 21 Advertising expenditure incurred ` .5 lac and ` .25 lac has to be deferred.(assume credit transaction) Fixed Assets Less: Dep Net fixed assets Current Assets Cash ( 6.30 + 1) Stock (0.40 -0.30) Debtors prepaid insurance Advance Tax Accrued Income Miscellaneous Assets (deferred Ad exp.) 12 2.40 9.60 7.30 .10 1.20 .26 .25 5 .25 Long term borrowings ( ICICI) Other Creditors ( M/s Z ) Current liabilities Accounts Payable (M/s P) ( 1- 0.10) Accounts Payable (advertising) Income received in advance Outstanding rent expences outstanding interest expenses 4 2 .90 .50 1 1 .48 Equity share capital Preference share capital Reserves (Profit) (2.33 - .25) 10 2 2.08 Total Assets 23.96 Total Liabilites 9.88 Owners Fund 14.08

19. 22 One customer Mr. X will not be able to pay ` 20,000 and management want a prvision for doubtful debt @10% Fixed Assets Less: Dep Net fixed assets Current Assets Cash ( 6.30 + 1) Stock (0.40 -0.30) Debtors1.20-.30 less : baddebt less : prov. prepaid insurance Advance Tax Accrued Income Miscellaneous Assets (deferred Ad exp.) 12 2.40 9.60 7.30 .10 .90 (.20) (.10) .26 .25 5 .25 Long term borrowings ( ICICI) Other Creditors ( M/s Z ) Current liabilities Accounts Payable (M/s P) ( 1- 0.10) Accounts Payable (advertising) Income received in advance Outstanding rent expences outstanding interest expenses 4 2 .90 .50 1 1 .48 Equity share capital Preference share capital Reserves (Profit) (2.08 - .30) 10 2 1.78 Total Assets 23.66 Total Liabilites 9.88 Owners Fund 13.78

20. 23 Purchsed 10,000 bottles for ` 1 lac and earned a cash discount of 10% Fixed Assets Less: Dep Net fixed assets Current Assets Cash (7.30 +.90) Stock (0.10 + 1) Debtors1.20-.30 less : baddebt less : prov. prepaid insurance Advance Tax Accrued Income Miscellaneous Assets (deferred Ad exp.) 12 2.40 9.60 6.40 1.10 .90 (.20) (.10) .26 .25 5 .25 Long term borrowings ( ICICI) Other Creditors ( M/s Z ) Current liabilities Accounts Payable (M/s P) ( 1- 0.10) Accounts Payable (advertising) Income received in advance Outstanding rent expences outstanding interest expenses 4 2 .90 .50 1 1 .48 Equity share capital Preference share capital Reserves (Profit) (1.78 + .10) 10 2 1.88 Total Assets 23.76 Total Liabilites 9.88 Owners Fund 13.88

21. 24 Sold 10,000 bottles for ` 2 lac and received ` 1.8 lac in full satisfaction Fixed Assets Less: Dep Net fixed assets Current Assets Cash (6.40 +1.80) Stock (1.10 - 1) Debtors1.20-.30 less : baddebt less : prov. prepaid insurance Advance Tax Accrued Income Miscellaneous Assets (deferred Ad exp.) 12 2.40 9.60 8.20 .10 .90 (.20) (.10) .26 .25 5 .25 Long term borrowings ( ICICI) Other Creditors ( M/s Z ) Current liabilities Accounts Payable (M/s P) ( 1- 0.10) Accounts Payable (advertising) Income received in advance Outstanding rent expences outstanding interest expenses 4 2 .90 .50 1 1 .48 Equity share capital Preference share capital Reserves (Profit) (1.88 + .8) 10 2 2.68 Total Assets 24.56 Total Liabilites 9.88 Owners Fund 14.68

22. 25 Provision for income tax @30% Fixed Assets Less: Dep Net fixed assets Current Assets Cash (6.40 +1.80) Stock (1.10 - 1) Debtors1.20-.30 less : baddebt less : prov. prepaid insurance Advance Tax Accrued Income Miscellaneous Assets (deferred Ad exp.) 12 2.40 9.60 8.20 .10 .90 (.20) (.10) .26 .25 5 .25 Long term borrowings ( ICICI) Other Creditors ( M/s Z ) Current liabilities Accounts Payable (M/s P) ( 1- 0.10) Accounts Payable (advertising) Income received in advance Outstanding rent expences outstanding interest expenses Provision for income tax 4 2 .90 .50 1 1 .48 .80 Equity share capital Preference share capital Reserves (Profit) (2.68 - .8) 10 2 1.88 Total Assets 24.56 Total Liabilites 10.68 Owners Fund 13.88