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Presentation
Topics covered:
Accounting Equation
Journal
Ledger
Trial Balance
Presented By: Bhawana and Esha
PGDM st
!e"
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A##$%&T'&G E(%AT'$&
$)
D%AL #$EPT
Each Business transaction has a two *old e**ect and it is re*erred to
as dual aspect or duality o* a transaction+The dual aspect states
that *or each de,it there is a credit i+e -*or every de,it there is a
credit.+
An acconting equation is a state"ent o* equality ,etween the
assets and the sources through which the assets have ,een
*inanced and this can ,e e/pressed as
Assets0!ources
Assets0Lia,ilities1 #apital
Assets0Lia,ilities1$wner2s equity
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#LA!!'3'#AT'$&
$3
A##$%&T!:
Personal Account:4 &atural Personal Account i+e+ account o* natural or physical persons
e+g )a"2s A5c6
!ita2s A5c etc+
Arti*icial Personal Accounts i+e accounts o* arti*icial or legal persone+g+accounts o* *ir"s6co"panies6,an7s6govern"ent6schools andcolleges etc+
)epresentative personal accounts 8these accounts are calledrepresentative personal account as they represent certain person,ehind the" e+g outstanding e/penses account6inco"e receivedaccount
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Impersonal Account:-
)eal Account: )eal accounts are accounts o* properties6assets or things owned ,y a
concern and with which the ,usiness is carried on+)eal or assets accounts "ay ,e4
9Tangi,le Assets4assets such as goods account6cashaccount6*urniture account etc+
9'ntangi,le Assets4 such as goodwill account6patentaccount6copyrights etc+
&o"inal Account: &o"inal or *ictitious accounts are accounts o* the e/penses and
loses and inco"e and gains which a concern earn in the course o* its ,usiness4
9inco"e account4accounts o* revenue6inco"e6gains etc
9E/penses account4accounts o* loses such as ,ad de,ts 6discount
allowed+
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)%LE! $3 DEB'T A&D #)ED'T
Personal Accounts:
De,it the receiver
and
credit the giver
)eal Accounts:
De,it what co"es in
and
#redit what goes out
&o"inal Account:
De,it e/penses and loses
and
#redit inco"es and gains
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J$%)&AL
; Acc to #ropper -A
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&E#E!!'T= $3 J$%)&AL
#onvenient recording o* transaction
Maintaining and preserving the identity o*
transaction
Ascertaining the true nature o* transaction
Maintaining per"anent record o*
in*or"ation
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3%T'$&! $3 J$%)&AL
To analyse each transaction into de,it and
credit so as to ena,le their posting in the
ledger
To arrange transaction 6chronological i+e
in order o* date+
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AD>A&TAGE! $3 J$%)&AL
; !how all necessary in*or"ation relating to
a transaction
; Provide the e/planation o* the transaction
; Date wise record o* all the transaction can
,e o,tained
; ?elp in locating and preventing the errors
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L'M'TAT'$&! $3 J$%)&AL
; )ecording all the transaction in a
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LEDGE)
; 't is the principal ,oo7 o* accounts where
si"ilar transactions relating to particular
person or thing are recorded
; Acc to cooper -ledger epito"i@es the
general operations o* principles o* ,oo7
7eeping.
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3EAT%)E! $3 LEDGE)
; Boo7 o* principal entry
; #lassi*ied and su""ari@ed record
; Posting
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ADVANTAGES
; Transactions relating to a particular person6 ite" or heading o*e/penditure or inco"e are grouped in the concerned account at
one place+
; hen each account is periodically ,alanced it re*lects the net
position o* that account+
; Ledger is the stepping stone *or preparing Trial Balance 4 whichtests the arith"etical accuracy o* the accounting ,oo7s+
; !ince the entries recorded in the
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It is a statement of all the balancesIt is a statement of all the balancesfrom the ledger and cash book on afrom the ledger and cash book on a
particular date.particular date.
Total debits should be equal to totalTotal debits should be equal to total
credits.credits.
Acc to carterAcc to carter trial balance is the list ofdebit and credit balances ,taken out fromledger it also includes the balances ofcash and bank taken from cash book
TRIAL BALANCE
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3eatureso* trial ,alance
; Particular date
; Agree"ent
; Arith"etical accuracy; Errors
; &ot conclusive
; Journalising and Ledger ,alancesrequired
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o,
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Adantages
;correct ledger balance
;!elps in preparation of final accounts
;Arithmetical accurac"
;errors are reealed
If the total debit is not equal to the credit#it reeals the presence of some errors during
the process of $ournalising or posting.
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Limitations of Trial Balance%
A Trial Balance does notnecessaril" proe that all the transactions
hae been recorded.
It also does not sho&s the profit n loss of thebusiness
It does not gie the information about eachaccount
There are some kinds of error that can still
cause the Trial Balance to balance and not
eas" to detect.
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Errors that can affect the Trial Balance'
Errors of calculation
Errors of omission of one entr"
(osting to the &rong side of an account
Errors in amount
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Errors not reealed b" the Trial Balance'
Errors of Commission
Errors of )mission
Errors of (rinciple
Compensating errors
Errors of )riginal entr"
Complete Reersal of entries
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Methods *or preparation o* trial
,alance; Total "ethod
Trail ,alance is
prepared ,y ta7ing
into account the totalso* de,it and credit
,alances o* each
account recorded in
the ledger+
; Balances "ethod
; Trail ,alance is "ade
on the ,asis o* the
,alances o* theaccounts+ it is also
7nown as net trial
,alance+
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