MODULE -I BASIC ACCOUNTING

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Rs.36000 18Cash received from Sunil Traders Rs.29500 Discount given Rs.500 20Cash paid to M/s Meena Traders on A/c Rs.16000 25Rent paid Rs.4000 29Salary paid Rs.2000 30Cash sales Rs.12000 31Cash purchase Rs.7000 8.Make journal entries of the following transactions : (a)Paid by cheque to Shah, a creditor Rs.2750 discount allowed Rs.150 (b)Paid for charity to Blind Relief Fund Rs.500 (c)Provide depreciation on machine of the book value of Rs.20000 @10% p.a. (d)Rakesh who owed to us Rs.5000 becomes insolvent 50 paisa in the rupee is received from his official assignee as first and final dividend. (e)Goods of Rs.1200 are taken away by the proprietor for domestic use 9.Prepare Bank Column Cash Book from the following transactions : 2006 January 1Cash balance Rs.1500 bank Balance Rs.4600 January 3Cash received form Mohni Rs.3700 January 6Paid cash to Roshni Rs 2000 January 7Purchased goods for cash Rs.3200 January 10Cash sales Rs.12000 January 20Paid into bank Rs.6000 January 27Paid electricity bill by cheque Rs.2300 January 31Withdrew cash from bank for domestic use Rs.1000. 10.Enter the following transaction in Special Purchase Books of M/s Bansal Furniture Mart for the month of October 2005. DateDetails 2005 October3Sold on credit to M/s T.R. Woodcraft as per invoice No. 07234 10 chairs @300 each 2 double bed @ 9000 each Trade discount @10% October12Sold on credit to M/s Woodland as per Invoice No. 7264 20 fancy chairs @ 600 each 10 tables @ 2000 each Trade discount 10% October16Purchase from M/s Wood Furniture Mart as per Invoice No. 472 20 glass tables @3000 each Trade discount 10% October20Bought from M/s Steel Furniture as per Invoice No. 1072 5 sofa set @ 14000 each Trade discount 5% October22Goods returned to M/s Wood furniture Mart as per debit note No. 22/06 3 glass table @ 3000 each Trade discount 10% October25Goods Returned from M/s T.R. Wood craft is per credit note No. 14/06 2 chairs @ 300 each Trade discount @ 10% October29Sold on creidt to M/s King Furniture as per Invoice No. 7294 10 Fancy show case @ 5000 each 11.What is meant by Bank Reconciliation statement? Why is it prepared? 12.Explain the following with two examples each : (a)Error of omission (b)Error of principle 13.What are one sided errors and two sided errors? Explain with examples. 14.What can be the possible reasons of difference between the bank balance of a businessman shown by Cash Book and bank pass book on a particular date? Enlist any four such reasons. 15.How does computer help in preparing accounts? Explain. 16.What is Trial Balance? What purpose does it serve? Explain in brief the various methods of preparing Trial Balance. 17. cTrial Balance if tallied is not the conclusive proof of the correctness of the ledger posting d Do you agree? What are those errors that do not affect the Trial Balance? 18.Asha a trader has the bank balance as per cash book Rs.17600 on 31st December, 2005. While comparing with the bank pass book it was found that following discrepencies appeeard : (a)Cheques of Rs.18700 were deposited in the bank but of Rs.14000 were credited by the bank. (b)Cheques of Rs.8400 were issued by a cheque of Rs.1200 was presented in the first week of January 2006. (c)Bank paid Rs.1200 for insurance premium as per the instructions of the trader. (d)A cheque of Rs.600 was paid in the bank but was returned and dishonoured. (e)Bank has allowed an interest of Rs.140 on the balance Prepare Bank Reconcilliation Statement as on 31st December, 2006. 19.Make journal entries to rectify the following accounting errors : (a)The total of Sale Return Book was undercost by Rs.1000 (b)A motor cycle was purchased for Rs.12500 for proprietors 9 son was debited to Motor Vehicle Account. (c)Purchase of furniture of Rs.4000 was entered in the Purchases Book. (d)Cash of Rs.2170 was paid to Jeet Singh was entered correctly in the cash Book but was credited to ParamJeet Singh 9s Account as Rs.1270. (e)Salary of Rs.2500 paid to Accounts clerk Jai Dev was debited to his account. 20.Following are the balances of accounts taken from the ledger of Bhagawat Gupta; a trader prepare Trial Balalnce as on 31st December, 2006 Rs Cash in hand2800 Cash at bank16200 Bills Receivable14500 Bills Payable12700 Sundery creditors25300 Sundry debtors28600 Capital50000 Drawings18000 Salaries6000 Carriage Inward400 Opening stock16200 Sales60800 Discount Received600 Depreciation800 Bad debts700 Insurances900 Purchases42000 Office Rent2000 Stationery300 CURRICULUM IN ACCOUNTANCY (320) RATIONALE The last decade has witnessed tremendous changes in business education. The liberalisation and globalisation have been the primary cause for such changes. With the fast changing economic scenario, the elementary business education along with Accountancy 8as a language of business 9 is gaining its importance. The curriculum in Accountancy provides a firm foundation in basic accounting concepts and also keeps them informed of changes in its methodology concerning particular aspects of the subject. The thrust of the course follows new trends in accounting practices and developing a basic understanding of the nature and purpose of the accounting information and reporting. Further, information technology has occupied a vital place in business activities. Therefore, a lesson designed on computer and computerised accounting shall expose the learners to the basic knowledge about the utility of computers in the business world. The course in Accountancy will prepare learners to logically analyse, evaluate and respond to changes which affect business operations. It opens the doors for higher education as well as sharpens the skills for those who are going for self-employment. COURSE OBJECTIVES This course aims at enabling the learners to: familiarise towards the usage of basic accounting terminology; develop the skills of recording of business transactions and preparation of the financial statements and their analysis thereof; provide firm base for higher education; inculcate values and ethics of accounting system; make aware about the utility of computers in the business world; join professional courses in Accounting. COURSE STRUCTURE S.No.ModulesStudy hoursMarks Core Modules 1.Basic Accounting5520 2.Trial Balance and Computers3013 3.Financial Statements of Profit and4518 Not for profit Organisations 4.Partnership Accounts4017 5.Accounting for Shares and Debentures4017 Sub total21085 Optional Module 6.Analysis of financial statements30 each15 each oror Elementary cost accounting15 each Grand total 240100 APPENDIX-B COURSE DESCRIPTION Module 1 : Basic Accounting20 Marks Approach This module has been designed to introduce Accounting to the learners. This familiarises the learners with some important basic accounting terms, accounting standards, accounting concepts, etc. This enables them toshow the effect of transactions on accounting equation, Journal, Special Purpose Books and posting of transactions from Books of Original entry to ledger. Unit 1.1 Introduction to Accounting 1.1.1 Accounting - An introduction Meaning of Book keeping Accounting - Meaning, objectives, need and scope, branches, limitation of accounting. Accounting as an information system Basic accounting terms - Assets, Liabilities, Capital, Drawings, Expenses, Income, Expenditure, Revenue, Debtors, Creditors, Goods, Cost, Gain, Stock, Purchases, Sales, Loss, Profit, Voucher, Discount, Transactions, Debit Note, Credit Note, 1.1.2 Accounting Concepts and Conventions Basic Accounting concepts : Business entity, Money measurement, going concern, accounting period, cost concept, realisation concept, Duality aspect concept, Accrual concept, Matching concept Accounting conventions : Materiality consistency, conservatism, full disclosure Generally Accepted Accounting Principles. Accounting standards : Introduction and list of Indian accounting standards Unit 1.2 Recording of Transactions 1.2.1 Accounting for Business Transactions Origin of Transactions Source documents and Accounting Vouchers Accounting equation-Meaning, effects of transactions on Accounting equation Rules of Accounting - Meaning and types of accounts: Assets. liabilities, Capital, Revenue and Expense, Double Entry Mechanism. 1.2.2Journal/Books of original entry Journal : Meaning, format and recording of transactions, classification of journal into special journals and journal proper. 1.2.3 Ledger Meaning, features and importance, types, posting from journal and special purpose books, balancing of an account. 1.2.4 Special Purpose Books Cash Book-Simple, Cash Book with bank Column, Petty Cash Book, Purchase returns Book, Sales Book, Sales Returns Book, Purchases returns book, Journal proper. Module 2 Trial Balance and Computers 13 marks Approach This has been designed to prepare Bank Reconciliation Statement and to know preparation of Trial Balance and detection of errors. This will expose the learners to the utility of computers in the accounting. Unit 2.1 Bank Reconciliation Statement 2.1.1 Bank Reconciliation Statement Meaning, need and its preparation Unit 2.2 Trial Balance and Errors 2.2.1 Trial Balance Meaning objectives and its preparation 2.2.2 Errors and their Rectifications Meaning, classification of errors, methods of rectification of errors, Suspense Account Unit 2.3 Computer Awareness 2.3.1Computer and Computerised Accounting system Characteristics and components of a computer, limitations, role of computer in accounting, need and requirements of computerised accounting. Module 3Financial Statements for Profit and Not-for-Profit Organisations 18 Marks Approach This module has been designed to prepare Income Statement and Position Statement of Profit Organisations and Receipts and Payments Account and Income and Expenditure Account and Balance Sheet of Not-for-Profit organisations. Unit 3.1Profit organisations 3.1.1 An introduction to Financial Statements Meaning, need and objectives, distinction between capital expenditure and Revenue expenditure, capital receipts and revenue receipts : Types of financial Statements: Trading Account, Profit and Loss Account and Balance Sheet meaning, need, objectives. 3.1.2 Financial Statements-I Preparation of Trading Account. Profit and Loss Account. Balance Sheet, Marshalling of Balance Sheet. 3.1.3 Financial Statements-II Adjustments : Closing Stock. Outstanding Expenses, Prepaid Expenses. Accrued Income. Income earned in advance depreciation, provision for bad and doubtful debts, interest on capital, interest on drawings, preparation (with adjustments) Unit 3.2 Not-for-Profit Organisations 3.2.1An Introduction to Not-for-profit organisations (NPO) Meaning, Characteristics, Receipts and Payments A/c : Meaning, need and preparation, distinction between Receipts and Payments A/c and Cash Book. 3.2.2 Financial statements Meaning, need and items, preparation, Income and Expenditure A/c, adjustments : Subscription, donation, etc. preparation (with adjustments), preparation of Balance sheet. Module 4 Partnership Accounts17 Marks Approach This module has been designed to explain to the learners the fundamentals of Partnership, accounting procedure regarding admission, retirement and Death of a Partner and Dissolution of partnership firm. Unit 4.1 Fundamentals of Partnership 4.1.1 Partnership - An Introduction Meaning, Characteristics of Partnership, Meaning of Partnership Deed, Accounting Treatment in the absence of Partnership Deed - distribution of Profits, interest on capital, Interest on Drawings, Interest on Partner 9s Loan, Salaries and commission, capitals-fixed and fluctuating, Drawings. Profit and Loss Appropriation A/c - Meaning, Purpose and its Preparation, Preparation of Capital accounts. Unit 4.2 Admission of a partner 4.2.1 Admission of a Partner Meaning, new profit ratio, sacrificing ratio, Treatment of undistributed profits and reserves and accounting treatment of goodwill. Goodwill : Nature, factors affecting goodwill and methods of valuation Revaluation of assets and reassessment of liabilities, Adjustment of capitals of partners. Preparation of Accounts : Revaluation A/c, Partners capital Account and Balance Sheet. Unit 4.3 Retirement and Death of partner 4.3.1 Retirement of a partner Meaning, new profit sharing ratio, gaining ratio Treatment of goodwill, treatment of undistributed profits and reserves, Revaluation of assets and reassessment of liabilities. Settlement of dues, adjustment of capital, preparation of accounts - Revaluation Account, Partner 9s Capital Account and Balance Sheet 4.3.2 Death of a partner Ascertainment of profit and loss upto the date of death of a partner, settlement of dues, new profit sharing ratio gaining ratio. treatment of goodwill. Treatment of undistributed profits and reserves. revaluation of assets and reassessment of liabilities, Preparation: Revaluation Account. Partner 9s capital Account. Executor 9s Account, Balance Sheet. Unit 4.4 Dissolution 4.4.1 Dissolution of partnership firm Meaning, difference between dissolution of partnership and dissolution of partnership firm, realisation of assets and settlement of liabilities. Treatment of unrecorded assets and liabilities. Preparation of Accounts - Realisation Account. Partners Capital Account, Bank or Cash Account. Module 5Accounting for Shares and Debentures17 marks Approach This module has been designed to impart to the learners the knowledge of shares and debentures as a source of finance and their accounting treatment. Unit 5.1 Shares 5.1.1 An introduction to Company Meaning, Characteristics, kinds of companies differences between public and private company, types of shares, kinds of share capital 5.1.2Issue of Shares Issued at par, premium and at discount: for cash and consideration other than cash; minimum subscription, over subscription and under subscription, calls in advance, calls in arrears. Recording of issue of shares in the books of company. Preparation of relevant accounts and Balance Sheet. 5.1.3 Forfeiture and Reissue of shares Meaning of forfeiture of shares, Accounting treatment of forfeiture of shares, Meaning of reissue of Shares. Accounting Treatment for reissue of shares. Unit 5.2 Debentures 5.2.1 Issue of Debenture, Meaning, kinds of Debentures. issue of Debentures at par, at premium and at discount (with reference to terms of issue) Issue of debentures in consideration other than cash, Issue of debentures as collateral security. Interest on Debentures, writing off Discount and loss on issue of Debentures, accounting treatment. Module 6 Analysis of Financial Statements 15 marks Approach This module will give exposure to the learners about the tools of financial analysis. This will enable the learners to calculate various ratios in addition to preparation of cash flow statement as per AS-3 (Revised). Unit 6.1 Financial Analysis 6.1.1 An introduction to financial analysis Meaning, need and purpose, types of analysis interfirm, intrafirm and time series analysis tools for financial analysis, comparative statements, common size statement, trend analysis, ratio analysis, cash flow statement, limitation. 6.1.2 Ratio analysis Meaning and objective of accounting ratios, classification of ratios, liquidity ratios (current ratio, quick ratio) activity ratios (stock turnover ratio, debtors turnover ratio, creditor turnover ratio and working capital turnover ratio; solvency ratio (debt-equity ratio, proprietary ratio, profitability ratio (gross profit ratio, Net profit ratio, operating profit ratio and return on investment ratio. 6.1.3 Statement of Cash Flow Meaning and objectives and preparation of cash flow statement by using direct and indirect method (AS-3 revised) limitations of cash flow statement. OR Module 6 Elementary Cost Accounting 15 marks Approach The module will give exposure to the learners about basic cost concepts, cost sheet, methods of stock valuation, economic order quantity etc. Unit 6.1 Cost Accounting - An Introduction 6.1.1 An Introduction to cost accounting Meaning, need and operatives; advantages, limitations, difference between cost accounting and financial accounting 6.1.2 Basic Cost concepts Meaning of cost, classification of cost, elements of cost; material, expenses, etc. 6.1.3 Cost sheet Meaning, objectives, preparation of cost sheet, Items to be excluded from cost sheet. Unit 6.2 Stock and Materials 6.2.1 Stock and materials Meaning of spares, material Bin/rock, classification of stock levels, economic order quantity, pricing of issues : LIFO, FIFO. Scheme of Evaluation The learners will be evaluated through public examination and through continuous and comprehensive evaluation in the form of Tutor Marked Assignments (TMA). The awards/grades of TMA will be reflected in the mark sheets separately.

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