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1. Accounting and Financial Management

2. Introduction to Accounting Accounting & Financial Management

4. Accounting... is the language of business.

5. Accounting.. is an information system that... measures business activities, processes information, and... communicates financial information.

6. Accounting – The Language of Business Accounting is the information system that... measures business activities, processes data into reports, and communicates results to decision makers.

12. Accounting — An Information Process Identification of Users

13. User Information Needs Accounting — An Information Process Identification of Users

14. Identification of Users User Information Needs Accounting System Accounting — An Information Process

15. Identification of Users User Information Needs Accounting System Economic Data and Activities Accounting — An Information Process

16. Identification of Users User Information Needs Accounting System Economic Data and Activities Reports Accounting — An Information Process

17. Identification of Users User Information Needs Accounting System Reports Economic Data and Activities Accounting — An Information Process User Decisions

18. The Flow of Accounting Information 1. Business transactions occur 3. People make decisions. 2. Businesses prepare reports to Show the results of their operations

20. Users of Accounting Information Individuals Businesses Investors and creditors Government regulatory agencies Taxing authorities Nonprofit organizations

23. Users of Accounting Information External users make decisions about the entity. Internal users make decisions for the entity. Users of Accounting Information

24. Financial Accounting Its focus is on reporting to external parties. It provides financial statements based on generally accepted accounting principles . It measures and records business transactions.

25. Management Accounting It measures and reports financial and nonfinancial information that helps managers make decisions to fulfill the goals of an organization.

26. Cost Accounting It provides information for both management accounting and financial accounting. It measures and reports financial and nonfinancial data.

33. Transactions that Affect Owner’s Equity OWNER’S EQUITY INCREASES OWNER’S EQUITY DECREASES Owner Investments in the Business Revenues Expenses Owner Withdrawals from the Business Owner’s Equity

34. Effects of Transactions on Owner’s Equity OWNER’S EQUITY

35. Effects of Transactions on Owner’s Equity decreased by OWNER’S EQUITY

36. Effects of Transactions on Owner’s Equity Owner’s withdrawals Expenses decreased by OWNER’S EQUITY

37. Effects of Transactions on Owner’s Equity increased by OWNER’S EQUITY

38. Effects of Transactions on Owner’s Equity Owner’s investments Revenues increased by OWNER’S EQUITY

39. Effects of Transactions on Owner’s Equity Owner’s withdrawals Expenses Owner’s investments Revenues decreased by increased by OWNER’S EQUITY

40. The Accounting Equation

41. The Accounting Equation Economic Resources Claims to Economic Resources Assets = Liabilities + Owner’s Equity

42. Resources The Accounting Equation What are an organization’s resources called?

43. Assets Resources = Sources The Accounting Equation What are the sources of the assets? Resources used in the business

44. Assets Liabilities Owner’s Equity Resources = Sources Resources used in the business Resources supplied by creditors and owners The Accounting Equation

46. a. Sachin deposits RS 25,000 in a bank account for ABC Ltd ASSETS = Business Transactions OWNER’S EQUITY LIABILITIES

47. a. Sachin deposits RS 25,000 in a bank account for ABC Ltd. ASSETS = Business Transactions OWNER’S EQUITY Cash 25,000 LIABILITIES

48. a. Sachin deposits RS 25,000 in a bank account for ABC Ltd. ASSETS = Business Transactions OWNER’S EQUITY Cash 25,000 LIABILITIES Sachin, Capital 25,000

49. Business Transactions b. ABC Ltd. buys land for Rs 20,000. ASSETS = OWNER’S EQUITY LIABILITIES

50. Business Transactions b. ABC Ltd. buys land for Rs 20,000. ASSETS = OWNER’S EQUITY LIABILITIES Cash (20,000)

51. Business Transactions b. ABC Ltd buys land for RS 20,000. ASSETS = OWNER’S EQUITY LIABILITIES Cash (20,000) Land 20,000

52. Business Transactions ASSETS = OWNER’S EQUITY LIABILITIES c. ABC Ltd buys goods for RS1,350, agreeing to pay the supplier in the near future.

53. Business Transactions ASSETS = OWNER’S EQUITY LIABILITIES c. ABC Ltd buys goods for RS1,350, agreeing to pay the supplier in the near future. Accounts Payable 1,350 Purchases 1,350

54. Business Transactions ASSETS = OWNER’S EQUITY LIABILITIES e. ABC Ltd paid: wages Rs 2,125; rent, Rs 800; utilities, Rs 450; and miscellaneous, Rs 275.

55. Business Transactions ASSETS = OWNER’S EQUITY LIABILITIES Cash (3,650) e. ABC Ltd paid: wages Rs 2,125; rent, Rs 800; utilities, Rs 450; and miscellaneous, Rs 275.

56. Business Transactions ASSETS = OWNER’S EQUITY LIABILITIES Cash (3,650) Expenses (3,650) e. ABC Ltd paid: wages Rs 2,125; rent, Rs 800; utilities, Rs 450; and miscellaneous, Rs 275.

57. Business Transactions ASSETS = OWNER’S EQUITY LIABILITIES f. ABC Ltd pays Rs 950 to creditors on account.

58. Business Transactions ASSETS = OWNER’S EQUITY LIABILITIES Cash (950) f. ABC Ltd pays Rs 950 to creditors on account.

59. Business Transactions ASSETS = OWNER’S EQUITY LIABILITIES Cash (950) Accounts Payable (950) f. ABC Ltd pays Rs 950 to creditors on account.

60. Business Transactions ASSETS = OWNER’S EQUITY LIABILITIES h. Sachin withdraws Rs 2,000 in cash.

61. Business Transactions ASSETS = OWNER’S EQUITY LIABILITIES Cash (2,000) h. Sachin withdraws Rs 2,000 in cash.

62. Business Transactions ASSETS = OWNER’S EQUITY LIABILITIES Cash (2,000) Sachin’s, Drawing (2,000) h. Sachin withdraws Rs 2,000 in cash.

63. Transaction Summary ASSETS = OWNER’S EQUITY LIABILITIES Cash 6,700 Purchases 550 Land 20,000

64. Transaction Summary ASSETS = OWNER’S EQUITY LIABILITIES Cash 6,700 Purchases 550 Land 20,000 Accts. Payable 400

65. Transaction Summary ASSETS = OWNER’S EQUITY LIABILITIES Cash 6,700 Purchases 550 Land 20,000 Accts. Payable 400 Sachin, Capital 25,000 Sachin, Drawing (2,000) Fees Earned 7,500 Wages Expense (2,125) Rent Expense (800) Commission (450) Misc. Expense (275)

66. Role of Accounting Good managers plan for the future. They develop a budget . A budget is a formal plan stated in monetary terms.

67. Role of Accounting Accounting helps banks decide to whom they will lend money. Accounting provides information that helps investors pick stocks.

68. Role of Accounting Budgeting Information systems design Cost accounting Internal auditing

69. Role of Accounting Consulting Assurance services including auditing Tax accounting

72. Generally Accepted Accounting Principles

73. Financial Accounting Its focus is on reporting to external parties. It provides financial statements based on generally accepted accounting principles. It measures and records business transactions.

76. Accounting: Principles and Concepts The rules that govern accounting are called GAAP (generally accepted accounting principles) . Accountants follow professional guidelines.

87. The Entity Concept An accounting entity is an organization that stands apart as a separate economic unit.

90. Generally Accepted Accounting Principles and Basic Concepts The Going Concern Concept The entity will continue to operate in the future.

98. Generally Accepted Accounting Principles and Basic Concepts The Stable-Monetary-Unit Concept The purchasing power is stable.

100. Generally Accepted Accounting Principles and Basic Concepts The Cost Principle Assets and services acquired should be recorded at their actual cost.

106. Illustration 1-14 Full Disclosure Principle

108. Revenue Principle The revenue principle governs two things: When to record revenue and… the amount of revenue to record.

109. Revenue Principle Air & Sea Travel, Inc. Situation 1 No transaction has occurred. – Do Not Record Revenue March 12 I plan to have you make my travel arrangements. photos Disney World Situation 2 The client has taken a trip arranged by Air & Sea Travel. – Record Revenue Air & Sea Travel, Inc. April 2

112. The Matching Principle It is the basis for recording expenses and includes two steps: Identify all the expenses incurred during the accounting period. Measure the expenses and match expenses against revenues earned.

113. The Matching Principle Revenue – Expense = Net income

114. The Matching Principle Revenue – Expense = (Net loss)

115. Example Matching Expenses with Revenues Revenues Rs 15,000 Cost of goods sold 8,000 Net income Rs 7,000 May

116. Accounting Period concept Managers adopt an artificial period of time to evaluate performance.

118. Accounting Period concept The Time-Period Concept Businesses need regular progress reports, so accountants prepare financial statements for specific periods and at regular intervals . Monthly Quarterly

120. The Accounting Equation Assets are the economic resources of a business that are expected to produce a benefit in the future. Liabilities are “outsider claims,” or economic obligations payable to outsiders. Owners’ equity represents the “ insider claims” of a business.

122. The Reliability (Objectivity) concept Information must be reasonably accurate. Information must be free from bias. Information must report what actually happened. Individuals would arrive at similar conclusions using same data.

123. The Double Entry System

124. Double-Entry Accounting “ Double-entry accounting is based on a simple concept: each party in a business transaction will receive something and give something in return. In bookkeeping terms, what is received is a debit and what is given is a credit. The T account is a representation of a scale or balance.” Scale or Balance Receive DEBIT Give CREDIT T account Left Side Receive DEBIT Right Side Give CREDIT Luca Pacioli Developer of Double-Entry Accounting

125. The Double-Entry System One debit One credit Each transaction is recorded with at least: Total debits must equal total credits. The Double Entry System

132. The Double-Entry system The system records the two-sided effect of transactions The Double Entry System Transaction Two-sided effect Bought furniture for cash Decrease in one asset Increase in another asset Took a loan in cash Increase in an asset Increase in a liability

133. The Double Entry System Note that the accounting equation equality is maintained after recording each transaction.

134. XYZ Ltd. A Sole Proprietorship “ On November 1, 2002, A started a sole proprietorship called XYZ Ltd. The following double-entry transactions show how amounts received (debits) always equal amounts given (credits).”

135. Amit deposits Rs25,000 in a bank account for XYZ Ltd.. Business Transactions Journal give Credit XYZ Ltd (investee) Amit (investor) give Credit Entry A. Date Description Debit Credit 11/1 receive Debit

136. Amit deposits Rs25,000 in a bank account for XYZ Ltd.. Business Transactions l Journal give Credit XYZ Ltd.(investee) Cash Amit (investor) give Credit Entry A. Date Description Debit Credit 11/1 Cash 25,000 receive Debit

137. Amit deposits Rs 25,000 in a bank account for XYZ Ltd.. Business Transactions Journal Date Description Debit Credit 11/1 Cash 25,000 Amit, Capital 25,000 give Credit XYZ Ltd.(investee) Cash A promise to the owner Amit (investor) give Credit Entry A. receive Debit

138. XYZ Ltd. buys land for Rs20,000. Business Transactions give Credit XYZ Ltd(buyer) Land Owner (seller) give Credit Entry B. Journal Date Description Debit Credit 11/5 receive Debit

139. XYZ Ltd. buys land for Rs20,000. Business Transactions give Credit XYZ Ltd(buyer) Land Land Owner (seller) give Credit Entry B. General Journal Date Description Debit Credit 11/5 Land 20,000 receive Debit

140. XYZ Ltd. buys land for Rs 20,000. Business Transactions give Credit XYZ Ltd(buyer) Land Cash Land Owner (seller) give Credit Entry B. Journal Date Description Debit Credit 11/5 Land 20,000 Cash 20,000 receive Debit

141. XYZ Ltd. buys supplies for Rs1,350, agreeing to pay in the near future. Business Transactions give Credit XYZ Ltd (buyer) Supplier (seller) give Credit Entry C. Journal Date Description Debit Credit 11/10 receive Debit

142. XYZ Ltd. buys goods for Rs1,350, agreeing to pay in the near future. Business Transactions give Credit XYZ Ltd. (buyer) Supplies Supplier (seller) give Credit Entry C. General Journal Date Description Debit Credit 11/10 Purchases 1,350 receive Debit

143. XYZ Ltd. buys goods for Rs1,350, agreeing to pay in the near future. Business Transactions give Credit XYZ Ltd. (buyer) Supplies Supplier (seller) give Credit Entry C. A promise to pay later Journal Date Description Debit Credit 11/10 purchases 1,350 Accounts Payable 1,350 receive Debit

144. XYZ Ltd. earns fees of Rs7,500, receiving cash. Business Transactions give Credit XYZ Ltd. (seller) Customer (buyer) give Credit Entry D. Journal Date Description Debit Credit 11/18 receive Debit

145. XYZ Ltd. earns fees of Rs7,500, receiving cash. Business Transactions give Credit XYZ Ltd. (seller) Cash Customer (buyer) give Credit Entry D. Journal Date Description Debit Credit 11/18 Cash 7,500 receive Debit

146. XYZ Ltd. earns fees of Rs7,500, receiving cash. Business Transactions give Credit XYZ Ltd. (seller) Cash Customer (buyer) give Credit Entry D. Services Journal Date Description Debit Credit 11/18 Cash 7,500 Fees Earned 7,500 receive Debit

147. Date Description Debit Credit XYZ Ltd. paid: wages, Rs 2,125; rent, Rs 800; commissions, Rs450; and misc, Rs275. Business Transactions Journal give Credit XYZ Ltd. (buyer) Various suppliers give Credit Entry E. receive Debit

148. Date Description Debit Credit 11/18 Wages Expense 2,125 Rent Expense 800 Commission 450 Misc. Expense 275 XYZ Ltd. paid: wages, Rs 2,125; rent, Rs 800; commissions, Rs450; and miscellaneous, Rs275. Business Transactions Journal give Credit XYZ Ltd. (buyer) Services, benefits Various suppliers give Credit Entry E. receive Debit

149. Date Description Debit Credit 11/18 Wages Expense 2,125 Rent Expense 800 Commission 450 Misc. Expense 275 Cash 3,650 XYZ Ltd. paid: wages, Rs 2,125; rent, Rs 800; commissions, Rs 450; and misc Rs 275. Business Transactions Journal give Credit XYZ Ltd. (buyer) Services, benefits Various suppliers give Credit Entry E. Cash receive Debit

150. XYZ Ltd. pays Rs950 to creditors on account. Business Transactions give Credit XYZ Ltd. (payor) Supplier (payee) give Credit Entry F. Journal Date Description Debit Credit 11/30 receive Debit

151. XYZ Ltd. pays Rs950 to creditors on account. Business Transactions give Credit XYZ Ltd. (payor) Reduction in obligation Supplier (payee) give Credit Entry F. Journal Date Description Debit Credit 11/30 Accounts Payable 950 receive Debit

152. XYZ Ltd. pays Rs950 to creditors on account. Business Transactions give Credit XYZ Ltd. (payor) Reduction in obligation Supplier (payee) give Credit Entry F. Cash Journal Date Description Debit Credit 11/30 Accounts Payable 950 Cash 950 receive Debit

153. Amit withdraws Rs 2,000 in cash. Business Transactions give Credit XYZ Ltd. (payor) Amit (payee) give Credit Entry H. Journal Date Description Debit Credit 11/30 receive Debit

154. Amit withdraws Rs 2,000 in cash. Business Transactions give Credit XYZ Ltd. (payor) Reduction in obligation Amit (payee) give Credit Entry H. Journal Date Description Debit Credit 11/30 Amit, Drawing 2,000 receive Debit

155. Amit withdraws Rs 2,000 in cash. Business Transactions give Credit XYZ Ltd. (payor) Reduction in obligation Amit (payee) give Credit Entry H. Cash Journal Date Description Debit Credit 11/30 Amit, Drawing 2,000 Cash 2,000 receive Debit

156. The Accounting Cycle

164. 1. Transactions are analyzed and recorded in journal. Documents Journal Journal, Ledger, Trial Balance

165. 1. Transactions are analyzed and recorded in journal. Documents Journal 2. Transactions are posted from journal to ledger. Journal Ledger Journal, Ledger, Trial Balance

166. 1. Transactions are analyzed and recorded in journal. Documents Journal 2. Transactions are posted from journal to ledger. Journal Ledger 3. Trial balance is prepared. Journal, Ledger, Trial Balance Trial Balance

167. Manual Accounting Cycle 1. Transactions are analyzed and recorded in journal. Documents Journal

168. Manual Accounting Cycle 1. Transactions are analyzed and recorded in journal. Documents Journal 2. Transactions are posted from journal to ledger. Journal Ledger

169. Manual Accounting Cycle 1. Transactions are analyzed and recorded in journal. Documents Journal 2. Transactions are posted from journal to ledger. Journal Ledger 3. Trial balance is prepared, Trial balance

170. Manual Accounting Cycle 1. Transactions are analyzed and recorded in journal. Documents Journal 2. Transactions are posted from journal to ledger. Journal Ledger 3. Trial balance is prepared, 4. Financial statements are prepared and distributed. Financial Statements IS SOE BS

171. Computerized Accounting Cycle 1. Transactions are analyzed and entered in the computer. Documents Computer

172. Computerized Accounting Cycle 1. Transactions are analyzed and entered in the computer. Documents Computer 2. Preliminary reports are analyzed, adjustments are prepared and entered in the computer. Computer Reports Computer

173. Computerized Accounting Cycle 1. Transactions are analyzed and entered in the computer. Documents Computer 2. Preliminary reports are analyzed, adjustments are prepared and entered in the computer. Computer Reports 3. Financial statements are printed and distributed. Computer

174. Computerized Accounting Cycle 1. Transactions are analyzed and entered in the computer. Documents Computer 2. Preliminary reports are analyzed, adjustments are prepared and entered in the computer. Computer Reports 3. Financial statements are printed and distributed. Computer 4. Reports are analyzed and interpreted for decision- making purposes. Financial Statements IS SOE BS SCF ?

175. JOURNAL

184. Ledger

187. Accts. Payable Ledger Accts. Receivable Supplies Ledger Cash

188. Accts. Payable Ledger A B C D Customer Accounts Supplies Ledger Cash Accts. Receivable

189. Ledger Supplies Accts. Payable Ledger A B C D Customer Accounts A B C D Creditor Accounts Cash Accts. Receivable

195. Debit Credit Proforma for Account Amt. L.f Particulars Date Amt. L.f Particulars Date

196. The Account Account Title Debit Credit LEFT SIDE

197. The Account Account Title Debit Credit RIGHT SIDE

199. Details of Journals and Ledgers Date Particulars Debit Credit April 2 Cash 30,000 Garge Capital 30,000 (Received initial investment from owner) Journal Page 1

200. Date Ref. Particulars Amount Date Ref Particulars Amount April 2 1 To G. Cap 30,000 Debit Cash Account Credit Insert the number of the journal page. Posting

201. L.F . Date Description Debit Credit 12/1 Prepaid Insurance 2,400 Cash 2,400 Journal Page 1 Recording and Posting an Entry 1. Analyze and record the transaction as shown. 2. Post the debit side of the transaction. 3. Post the credit side of the transaction.

202. L.f Date Description Debit Credit 12/1 Prepaid Insurance 15 2,400 Cash 2,400 Journal Ledger Prepaid Insurance Account Dr. Cr. Page 1 Recording and Posting an Entry 2400 1 To Cash 12/1 Amt. Fol. Particulars Date Amt. Fol. Particulars Date

203. Recording and Posting an Entry Date Description L.f. Debit Credit 12/1 Prepaid Insurance 15 2,400 Cash 11 2,400 Journal Ledger Page No.15 Prepaid insurance Account Dr. Cr. Page 1 1 3 2 4 2400 1 To Cash 12/1 Amt. Fol. Particulars Date Amt. Fol. Particulars Date

204. TRIAL BALANCE

211. Correcting Errors Three Types of Errors Journal Entry Ledger Posting 1. incorrect not posted

212. Correcting Errors Three Types of Errors Journal Entry Ledger Posting 1. incorrect not posted 2. correct incorrectly posted

213. Correcting Errors Three Types of Errors Journal Entry Ledger Posting 1. incorrect not posted 2. correct incorrectly posted incorrect

216. Subsidiary Books Cash Accounts Payable Purchase Book Ledger All subsidiary books combined make up the ledger. Cash transactions liability accounts Credit purchases

217. SELLING BUYING Special Journals

218. Rendering of services on account SELLING Sales Book BUYING Special Journals recorded in

219. Rendering of services on account SELLING Sales Book Cash Book Receipt of cash from any source BUYING Special Journals recorded in recorded in

220. Rendering of services on account SELLING Sales Book Cash Book Purchases Book Receipt of cash from any source Purchase of items on account BUYING Special Journals recorded in recorded in recorded in

221. Special Journals Rendering of services or selling of product on account SELLING Sales Book Cash Book Purchases Book Cash Book Receipt of cash from any source Purchase of items on account Payment of cash for any purpose BUYING recorded in recorded in recorded in recorded in

222. 3/2 615 MyMusicClub.com 2,200 3/6 616 RapZone.com 1,750 3/18 617 Web Cantina 2,650 3/27 618 MyMusicClub.com 3,000 Totals 9,600 Sales Journal Invoice Date No. Particulars Details Amount Page 35 The Sales Journal All sales on credit are recorded in this journal. Each sales invoice is listed in numerical order. This journal is often referred to as an invoice register.

223. 3/3 Howard Supplies 600 3/7 Donnelly Supplies 420 3/19 Donnelly Supplies 1,450 3/27 Howard Supplies 960 Totals 3,430 Purchases Journal Page 11 The Purchases Journal All purchases on account are recorded in this journal. Date Particulars Details Amount

225. The Financial Statements The financial statements are a picture of the company in financial terms. Each financial statement relates to a specific date or covers a particular period.

226. Information Reported on the Financial Statements 1. How well did the company perform (or operate) during the period? Revenues – Direct Expenses Gross income (Gross loss) Trading Account Question Answer Financial Statement 1. How well did the company perform (or operate) during the period? Gross Profit – Indirect Expenses Net income (Net loss) Profit and Loss Account

227. Information Reported on the Financial Statements 3. What is the company’s financial position at the end of the period? Assets = Liabilities + Owners’ equity Balance sheet Question Answer Financial Statement 4. How much cash did the company generate and spend during the period? Operating cash flows ± Investing cash flows ± Financing cash flows Increase or decrease in cash Statement of cash flows

228. Income Statement The income statement, reports the company’s revenues, expenses, and net income or net loss for the period.

229. Introduction to the Income Statement The income statement is a financial tool that provides information about a company’s past performance .

230. The Income Statement Revenues – Expenses = Net income (or Net loss)

231. Income Statement Format Sales revenues – Cost of goods sold Gross profit Operating income Selling and administrative expenses – = Add: Other revenues and gains Less: Other expenses and losses

232. Income Statement Revenue - the proceeds that come from sales to customers Cost of Goods Sold - an expense that reflects the cost of the product or good that generates revenue. . Gross Margin - also called gross profit, this is revenue minus COGS Operating Expenses - any expense that doesn't fit under COGS such as administration and marketing expenses. Net Income before Interest and Tax - net income before taking interest and income tax expenses into account. Interest Expense - the payments made on the company's outstanding debt. Income Tax Expense - the amount payable to government. Net Income - the final profit after deducting all expenses from revenue.

234. The Accounting Terms Revenues are inflows or other enhancements of assets to an entity. Revenues They result from delivering or producing goods, rendering services, or other activities that constitute the entity’s major or central operations.

235. The Accounting Terms Expenses are outflows or other using up of assets. Expenses They result from delivering or producing goods, rendering services, or other activities that constitute the entity’s major or central operations.

239. Proforma for the Trading Account for the year ending on 31.12.2005

241. Proforma for the Profit and Loss Account for the year ending on 31.12.2005

243. Introduction to the Balance Sheet The balance sheet is the financial tool that focuses on the present condition of a business.

245. The Accounting Elements Probable future economic benefits obtained or controlled by a particular entity as a result of past transactions events. Assets

246. The Accounting Elements Probable future sacrifices of economic benefits arising from present obligations of a particular entity to transfer assets or provide services to other entities in the future as a result of past transactions or events. Liabilities

247. The Accounting Elements The residual interest in the assets of an entity that remains after deducting its liabilities. Equity Investment by owners Earned equity

252. PROFORMA BALANCE SHEET LIABILITIES ASSETS SHARE CAPITAL Authorised Issued Subscribed Less:- Calls unpaid Add:- Forfeited shares RESERVES AND SURPLUS SECURED LOANS UNSECURED LOANS: CURRENT LIABILITIES AND PROVISIONS: A. CURRENT LIABILITIES: a) Acceptances. b) Sundry Creditors c) Subsidiary companies. d) Advance Payments e) Unclaimed dividends f) Other liabilities (if any) g) Interest accrued but not due on loans. B. PROVISIONS a) Provision for taxation. b) Proposed dividends. c) For contingencies. FIXED ASSETS a) Land , b) Buildings, c) Goodwill, d) Plant and Machinery e) Furniture and fittings f) Patents, trade marks and designs. INVESTMENTS: a) Investments in Government or Trust Securities, in shares, debentures or bonds, b) Immovable Properties. CURRENT ASSETS, LOANS AND ADVANCES: (A) Current Assets: a) Interest accrued on Investments. b) Stores and Spare Parts,c) Loose Tools d) Stock in trade, e) Works in progress. f) Sundry Debtors, g) Cash balance on hand h) Bank balances (B) LOANS AND ADVANCES: a) Advances and loans to subsidiaries. b) Bills of Exchange. c) Advances recoverable in cash or in kind MISCELLANEOUS EXPENDITURE: a) Preliminary expenses. b) Expenses including commission or brokerage on underwriting or subscription of shares or debentures. c) Discount allowed on the issue of shares or debentures.

254. Classifying Assets and Liabilities Current assets Long-term assets Current liabilities Long-term liabilities

255. XYZ Ltd. Trial Balance November 30, 2002 Cash 5,900 Purchases 550 Land 20,000 Accounts Payable 400 Amit, Capital 25,000 Amit, Drawing 2,000 Fees Earned 7,500 Wages Expense 2,125 Rent Expense 800 Commission 450 Supplies Expense 800 Miscellaneous Expense 275 32,900 32,900

256. XYZ Ltd. Trial Balance November 30, 2002 Cash 5,900 Purchases 550 Land 20,000 Accounts Payable 400 Amit, Capital 25,000 Amit, Drawing 2,000 Fees Earned 7,500 Wages Expense 2,125 Rent Expense 800 Commission 450 Supplies Expense 800 Miscellaneous Expense 275 32,900 32,900 Balance Sheet

257. Income Statement XYZ Ltd. Trial Balance November 30, 2002 Cash 5,900 Purchases 550 Land 20,000 Accounts Payable 400 Amit, Capital 25,000 Amit, Drawing 2,000 Fees Earned 7,500 Wages Expense 2,125 Rent Expense 800 Commission 450 Supplies Expense 800 Miscellaneous Expense 275 32,900 32,900

259. Summary Original evidence records Accounting records Financial Statements Source documents Journals Ledger Trial Balance Statement of cash flows Balance Sheet Profit and Loss Statement Closing Entries