वित्तीय लेखांकन Financial Accounting

थोडक्यात सारांश

Accounting is the language of business. To make the accounts of every business easy to read and compare, accountants follow common rules called accounting concepts (assumptions), conventions (customs) and standards (official written rules). This topic explains what accounting is, its branches and objectives, the basic concepts and conventions, and why Accounting Standards (AS) and Ind AS exist.

महत्त्वाचे मुद्दे

• Book-keeping is recording transactions. Accounting (लेखांकन) is wider: recording, classifying, summarising, analysing and interpreting financial information.
• Objectives: keep a systematic record, find profit or loss, show the financial position, control assets, give information to users (owners, banks, government, investors).
• Branches: financial accounting, cost accounting, management accounting, tax accounting, social/human resource accounting.
• Accounting concepts are the basic assumptions on which accounts are prepared.
• Accounting conventions are customs that grew from practice and guide judgement.
• GAAP (Generally Accepted Accounting Principles) is the common name for these concepts and conventions.
• Accounting Standards in India are framed by the ICAI's Accounting Standards Board (ASB) and notified by the Central Government.
• Ind AS are converged with IFRS and apply to listed and large companies; other entities follow AS.
• Users of accounts: internal (owners, managers, employees) and external (creditors, banks, tax authorities, investors, public).

महत्त्वाच्या संज्ञा

• Business entity concept – the business is separate from its owner; capital is a liability of the business to the owner.
• Money measurement concept – only transactions measurable in money are recorded.
• Going concern concept – the business is assumed to continue for a long time; so fixed assets are shown at cost less depreciation.
• Accounting period concept – life of the business is divided into periods, usually one year (1 April to 31 March in India).
• Cost concept – assets are recorded at the price paid for them, not market value.
• Dual aspect concept – every transaction has two sides; Assets = Liabilities + Capital.
• Matching concept – expenses of a period are matched with the revenue of the same period.
• Accrual concept – income and expenses are recorded when earned or incurred, not when cash is received or paid.
• Realisation concept – revenue is recognised when goods are delivered or service is given.
• Conservatism (prudence) – "anticipate no profit, provide for all possible losses"; e.g. stock at cost or market price, whichever is lower.
• Consistency – the same method is used year after year.
• Full disclosure – all material facts are shown in the accounts or notes.
• Materiality – only items significant enough to affect a user's decision need separate treatment.

महत्त्वाची माहिती

५ महत्त्वाचे प्रश्न

Q1. What is the dual aspect concept? Give an example.

Every transaction affects two accounts in equal amount. Example: Ram starts business with cash ₹50,000. Cash (asset) increases by ₹50,000 and Capital increases by ₹50,000, so Assets = Liabilities + Capital still holds.

Q2. Distinguish between accounting concepts and accounting conventions.

Concepts are basic assumptions that form the foundation of accounting (e.g. entity, going concern). Conventions are customs or traditions developed by practice to guide accountants (e.g. conservatism, consistency). Concepts are more theoretical; conventions are practical and allow some judgement.

Q3. Explain any five accounting concepts with examples.

Outline: define concept → explain business entity (owner's drawings recorded separately), money measurement (staff skill not recorded), going concern (fixed assets at cost less depreciation), cost (land bought at ₹5 lakh stays ₹5 lakh), matching (December salary charged to December even if paid in January). Conclude: they give uniformity and reliability.

Q4. What are Accounting Standards? State their objectives and benefits.

Outline: meaning (written policy documents by ASB of ICAI, notified by government) → objectives: uniformity, comparability, reduce alternative methods, full disclosure → benefits: reliable statements, easy audit, protection of investors → mention AS 1, AS 2, AS 9, AS 10 → Ind AS and convergence with IFRS.

Q5. Explain the convention of conservatism. Is it still useful?

Outline: meaning and rule → examples: stock valued at lower of cost or market value, provision for doubtful debts, no provision for discount on creditors → advantages: protects creditors, avoids over-statement → criticism: creates secret reserves, may hide true profit → modern view: prudence is used with care and balanced against fair presentation.

परीक्षेसाठी टीप

Learn concepts with one example each; examiners give 2–3 mark short questions directly on them. Always write the accounting equation when asked about dual aspect.

थोडक्यात सारांश

Every business transaction is first written in the journal (book of original entry), then posted to individual accounts in the ledger (main book), and finally the balances of all ledger accounts are listed in a trial balance to check arithmetic accuracy. This journal → ledger → trial balance chain is the base of the accounting cycle.

महत्त्वाचे मुद्दे

• Journal (रोजकीर्द) records transactions date-wise, with the account debited, the account credited and a short narration.
• Ledger (खातेवही) groups all transactions of one account in one place; it shows the final position of each account.
• Trial balance (तेरीज) is a statement of all ledger balances on a date; total debits must equal total credits.
• Accounting cycle: transaction → journal → ledger → trial balance → final accounts.
• Classification of accounts (traditional): Personal, Real, Nominal.
• Modern approach: assets, liabilities, capital, revenue and expenses.
• A trial balance that agrees does not prove the books are error-free (errors of omission, principle and compensating errors do not disturb it).
• Balancing an account: total both sides, put the difference on the smaller side as "By/To Balance c/d", bring it down as "Balance b/d".

महत्त्वाच्या संज्ञा

• Debit (Dr) – left side of an account.
• Credit (Cr) – right side of an account.
• Narration – short explanation below a journal entry.
• Posting – transferring entries from journal to ledger.
• LF (Ledger Folio) – page number of the ledger account; shows posting is done.
• Compound entry – one entry with more than one debit or credit.

नमुने व सूत्रे

Golden rules (traditional):

Modern rules: increase in assets and expenses → debit; increase in liabilities, capital and income → credit.

Worked problem. Ramesh's transactions (April):

1. Started business with cash ₹50,000.
2. Bought goods for cash ₹20,000.
3. Sold goods on credit to Suresh ₹15,000.
4. Paid rent ₹2,000.
5. Received ₹10,000 from Suresh.

Journal:

Cash A/c: Dr side 50,000 + 10,000 = 60,000; Cr side 20,000 + 2,000 = 22,000; debit balance ₹38,000. Suresh A/c: 15,000 − 10,000 = ₹5,000 debit balance.

Trial balance as on 30 April:

५ महत्त्वाचे प्रश्न

Q1. What is a trial balance? State two objectives.

A trial balance is a list of debit and credit balances of all ledger accounts on a particular date. Objectives: (1) to check the arithmetical accuracy of posting; (2) to provide a summary for preparing final accounts.

Q2. Distinguish between journal and ledger.

Journal is the book of original entry, records transactions date-wise and is the basis of posting. Ledger is the book of final entry, records transactions account-wise and shows the balance of each account. The trial balance is prepared from the ledger, not the journal.

Q3. Explain the golden rules of debit and credit with examples.

Outline: three types of accounts with definitions → rule for each with one entry (Paid salary: Salary A/c Dr To Cash A/c; Bought furniture: Furniture A/c Dr To Cash A/c; Goods sold to Ravi: Ravi A/c Dr To Sales A/c) → modern rules table.

Q4. Journalise, post and prepare a trial balance (numerical).

Steps: write each journal entry with narration → open ledger accounts and post with "To/By" → balance each account → list debit balances (assets, expenses, drawings, purchases) and credit balances (capital, liabilities, incomes, sales) → check totals agree (see the worked problem above).

Q5. Which errors are not disclosed by a trial balance?

Outline: errors of omission (transaction not recorded at all), errors of principle (capital item treated as revenue), compensating errors, wrong account but correct side, wrong amount in the journal itself → so an agreed trial balance is not conclusive proof of accuracy.

परीक्षेसाठी टीप

In trial balance problems, remember: Purchases, Sales returns, expenses and assets go to Dr; Sales, Purchase returns, incomes, capital and liabilities go to Cr. Write narrations — they carry marks.

थोडक्यात सारांश

In a big business, writing every transaction in one journal is slow. So the journal is divided into special books, called subsidiary books, each for one type of transaction. The cash book is the most important of them: it is both a book of original entry and a ledger account for cash (and bank).

महत्त्वाचे मुद्दे

• Subsidiary books (सहाय्यक पुस्तके): Purchase Book, Sales Book, Purchase Returns Book, Sales Returns Book, Bills Receivable Book, Bills Payable Book, Cash Book and Journal Proper.
• Purchase Book records only credit purchases of goods; Sales Book records only credit sales of goods.
• Cash purchases and cash sales go to the Cash Book, not to the Purchase/Sales Book.
• Purchase or sale of assets on credit goes to the Journal Proper.
• Journal Proper records opening entries, closing entries, adjustment entries, rectification entries and rare transactions.
• Cash Book (रोकड पुस्तक) types: simple (single column), double column (cash + bank, or cash + discount), three column (cash, bank, discount), and petty cash book.
• The cash column can never show a credit balance (you cannot pay more cash than you have). The bank column can show a credit balance (overdraft).
• Contra entry – a transaction affecting both cash and bank columns (cash deposited in bank, cash withdrawn from bank); marked "C" in the LF column.
• Petty cash book under the imprest system: the petty cashier gets a fixed amount and is reimbursed what he spends at the end of the period.

महत्त्वाच्या संज्ञा

• Trade discount – reduction in list price; not recorded in books.
• Cash discount – allowed for prompt payment; recorded in discount column.
• Discount allowed – given to customers (loss, debit side of cash book).
• Discount received – got from suppliers (gain, credit side).
• Invoice – document for a credit sale; debit note/credit note – documents for returns.

नमुने व सूत्रे

• Net purchases = Purchases − Purchase returns
• Net sales = Sales − Sales returns
• Imprest reimbursement = Amount spent by petty cashier in the period

Worked problem (double column cash book: cash and bank). Opening: cash ₹5,000, bank ₹20,000.
Jan 3 cash sales ₹3,000; Jan 5 deposited cash into bank ₹4,000; Jan 8 paid Mohan by cheque ₹6,000; Jan 10 cash purchases ₹1,500; Jan 15 received cheque from Shyam ₹5,000 and deposited it the same day.

Receipts (Dr) side:

Payments (Cr) side:

Closing balances: cash ₹2,500 and bank ₹23,000.

५ महत्त्वाचे प्रश्न

Q1. What is a contra entry?

An entry recorded on both sides of the cash book because it affects both the cash and bank columns, e.g. cash deposited into bank (Bank Dr, Cash Cr). "C" is written in the LF column and no ledger posting is needed.

Q2. Why is the cash book called both a journal and a ledger?

Cash transactions are recorded in it first, date-wise (journal function). It also works as the Cash Account and Bank Account, so no separate ledger account for cash is opened (ledger function).

Q3. Explain the different subsidiary books with their uses.

Outline: meaning and need → each book with what it records (credit purchases of goods, credit sales of goods, returns, bills, cash) → Journal Proper and its entries → advantages: division of work, saving time, easy reference, better control, fewer errors.

Q4. Prepare a three column cash book (numerical).

Steps: draw cash, bank and discount columns on both sides → record opening balances → contra entries on both sides → discount allowed on the Dr side next to the receipt, discount received on the Cr side → balance cash and bank (do not balance discount columns; total them and post to Discount A/c).

Q5. What is a petty cash book? Explain the imprest system.

Outline: meaning (small payments like postage, stationery, travelling) → analytical petty cash book with columns → imprest system with an example (imprest ₹2,000, spent ₹1,650, reimbursed ₹1,650 to restore ₹2,000) → advantages: control, saves the main cashier's time.

परीक्षेसाठी टीप

Before posting, decide the book: credit goods → Purchase/Sales Book; cash anything → Cash Book; assets on credit and adjustments → Journal Proper. This one step avoids most mistakes.

थोडक्यात सारांश

The bank balance shown in the business's cash book and the balance shown in the bank's pass book (bank statement) are often different on the same date. A Bank Reconciliation Statement (BRS) (बँक मेळ पत्रक) lists the reasons and proves that the difference is explained. It is prepared periodically, usually at the end of every month.

महत्त्वाचे मुद्दे

• Cash book (bank column) is kept by the business; the pass book is kept by the bank.
• A deposit is a debit in the cash book but a credit in the pass book; the two books are mirror images.
• Favourable balance: debit balance in cash book = credit balance in pass book.
• Overdraft: credit balance in cash book = debit balance in pass book.
• Main causes of difference: (1) timing differences, (2) entries made by the bank but not yet by the business, (3) errors by either side.
• BRS is a statement, not an account; it is not part of the double entry.
• After preparing BRS, the business should correct its own cash book for items like bank charges, interest and direct deposits.

महत्त्वाच्या संज्ञा

• Cheque issued but not presented – business has recorded the payment, the payee has not yet cashed it.
• Cheque deposited but not credited (not cleared) – recorded in cash book, bank has not yet collected it.
• Bank charges – deducted by the bank, often unknown to business until the pass book arrives.
• Interest allowed by bank – credited in pass book first.
• Direct deposit – a customer pays straight into the bank account.
• Dishonoured cheque – a deposited cheque that the bank could not collect.

नमुने व सूत्रे

Rule when starting from the cash book debit (favourable) balance:

Starting from an overdraft, reverse every sign. Starting from the pass book, reverse every sign.

Worked problem. On 31 March, cash book of Meena shows a debit (bank) balance of ₹25,000. Find the pass book balance:

1. Cheques issued ₹4,000 not yet presented.
2. Cheques deposited ₹3,000 not yet credited.
3. Bank charges ₹200 not entered in cash book.
4. Interest ₹500 credited by bank only in pass book.
5. A customer paid ₹1,200 directly into the bank.

BRS as on 31 March:

Check: 30,700 − 3,200 = 27,500.

५ महत्त्वाचे प्रश्न

Q1. What is a Bank Reconciliation Statement?

A statement prepared on a given date to reconcile (explain the difference between) the bank balance as per the cash book and the balance as per the pass book, by listing the items causing the difference.

Q2. Give any four causes of difference between cash book and pass book.

(1) Cheques issued but not presented for payment. (2) Cheques deposited but not yet collected. (3) Bank charges or interest recorded only by the bank. (4) Direct deposits or direct payments (insurance premium, EMI) by the bank on standing instructions. Errors in either book are another cause.

Q3. Explain the need and importance of a BRS.

Outline: detects errors and frauds in cash book or pass book → shows the true bank balance → brings delayed cheques to notice → acts as moral check on staff → helps update the cash book → useful for audit.

Q4. Prepare a BRS when the cash book shows an overdraft (numerical).

Steps: start with "Overdraft as per cash book" in the minus column (or as a negative) → cheques issued not presented: less (reduces overdraft) → cheques deposited not credited: add → bank charges/interest on overdraft: add → direct deposits: less → result = overdraft as per pass book. Show the final figure clearly labelled Dr.

Q5. What is an amended cash book? When is it prepared?

Outline: when many items are recorded only by the bank, the cash book is first corrected (bank charges, interest, direct deposits, dishonour, errors) → the corrected (amended) balance is then reconciled with the pass book using only timing items (unpresented and uncleared cheques).

परीक्षेसाठी टीप

Always write which balance you start from and whether it is Dr or Cr. Half the mistakes in BRS come from starting at the wrong side.