Accounting notes:

According to Partnership Act, 1932, “Partnership is the relation between persons who have agreed to
share the profits of a business carried on by all or any of them acting for all.”

3. Joint Stock Company According to S. E. Thomas, “A company is an incorporated association of persons

formed usually for the pursuit of some commercial purposes”

What are Transactions?

In accounting or business terms, any dealing between two persons involving money or a valuable thing
is called transaction.

What is a Budget?

Budget is a plan of income, expenses & other financial operation for a future period.

On the other hand, if the payment is delayed to a future date, the transaction is termed as a credit
transaction.

Capital:

No business can run without money or resources being invested therein. Whatever money or resources
from ones’ own pocket are put in a business is referred to as CAPITAL. Capital is the investment of the
Owner in the business.

01 Jan 01 Mr. Rizwan invests Rs. 100,000 to commence his business.

02 Jan 03 He opened an account with bank & deposited Rs. 30,000.

03 Jan 05 He borrows Rs. 50,000 from Mr. Saleem at 12% per annum.

04 Jan 07 He purchased furniture worth Rs. 20,000 for cash.

05 Jan 09 He purchased goods (for resale) worth of Rs. 10,000 from Mr. Afzal on credit.

06 Jan 10 He sold goods for cash Rs. 5,000

07 Jan 12 He sold goods for Rs. 5,000 to Mr. Naeem on credit basis.

08 Jan 15 Cash deposited in bank Rs. 5,000

09 Jan 16 He purchased stationery for Rs. 3,000.

10 Jan 18 He purchased office equipment for Rs. 10,000 and paid by cheque.
11 Jan 19 He returned defective goods to Mr. Afzal worth Rs. 1,000.

12 Jan 25 Goods are returned by Mr. Naeem Rs. 500 to the business.

13 Jan 30 Cash paid to Mr. Afzal Rs. 9,000 in full settlement of his claim. 14 Jan 31 Cash received from
Mr. Naeem Rs. 4,500 in full settlement of his account. 15 Jan 31 Cash withdrawn from the bank Rs. 500.

26: single entry approach it effect single transaction only cash register is maintained how much cash
received or paid. Single effect transaction no record no accounting skills are required maintaining books
accounts on cash based accounting.

Journalizing the transactions.

28: Journal the book of original entries: information taking from the voucher we follow the rules of
debit and credit.

Main heads nature increase decrease

Assets Dr Dr cr
Expenses Dr Dr cr
Owners’ cr Cr Dr
equity

liabilities cr Cr Dr
Income cr cr Dr

There are two books of account naturally primary secondary and secondary ledger.
 Journal accounts of head have cash transaction (petty cash , main cash book, ) cash for receive and
payments.

Frist book of accounting cycle where we record chronologically.

Prepared systematically.

We can enter here data without date. it is sufficient for small business or entity recording of
information is entry accounting entry.

Entry meaning full concept of journal date particular.

6 parts of entry post reference debit credit amount narration.

Date Particulars Post Debit Credit amount Narration

 reference amount 000
/page 000
number on
ledger
Jan.1 Salaries are
Cash account 10 expenses.
expenses are
Salaries account 39 debit in nature so
salaries are debit
(Staff salaries paid in cash) cash are asset are
credit in nature so
cash are credited
in the account

Dec.1 Cash account ? 10 135 Cash and

Furniture account ? 35 furniture
introduce capital
in bossiness
Dec.2 Machinery account ? 200 Machinery
Creditor (Jordan) ? 200 purchased from
Jordan on credit