TERM REPORT

“INTRODUCTION TO FINANCIAL
ACCOUNTING”

BY:
ABDUS SALAM BIN SAEED (18634)
PASHAM PARI ()
 ACKNOWLEDGEMENT

This is to hereby acknowledge that this project was made as a

result of equal and sincere efforts by both group members.
Also we would like to thank Sir Kamran Rabbani for all the
assistance provided as this report would not have been possible
had it not been for his assistance.
 BACKGROUND
Bismillah Property is a Real Estate Advisor and Builder that was
established in 1993, and deals in properties all over Karachi
with Gulshan as their forte. According to the owners, they did
not maintain accounts properly at first, but later, they realized
the need for accounting and they started maintaining proper
accounts from 2002.
 ACCOUNTING PROCEDURE AND OTHER DETAILS

The company’s accounting procedure is as follows:

 The sales, purchases, expenses, other income, and fixed assets are
at first recorded in the general journal. Later on, they are
transferred to the ledgers monthly.
 All balances are closed and brought forward at the end of three
months. Also, The balance sheet and the trading and profit and
loss accounts are made every three months.
 Depreciation is charged yearly basis using the straight line
method.
 COMPANY’S ACCOUNTING CYCLE
.
 STEP 1: SALES

The sales day book is a manually-maintained ledger in which is

recorded the key detailed information for each individual credit sale to
a customer.

The total of the sales book is credited to sales account. Customers

whose names appear in the sales book are debited with the amount
appearing against their names. Double entry is thus completed.

Agent
Date Name Inv. No. Amount
ID.
xxxxxxx
1st Jan Kamran Rabbani 11111 10,000

1st Jan Kamran Rabbani 11111 xxxxxxx 10,000

st
1 Jan Kamran Rabbani 11111 xxxxxxx 10,000
st
1 Jan Kamran Rabbani 11111 xxxxxxx 10,000

1st Jan Kamran Rabbani 11111 xxxxxxx 10,000

st
1 Jan Kamran Rabbani 11111 xxxxxxx 10,000

1st Jan Kamran Rabbani 11111 xxxxxxx 10,000

1st Jan Kamran Rabbani 11111 xxxxxxx 10,000

st
1 Jan Kamran Rabbani 11111 xxxxxxx 10,000

1st Jan Kamran Rabbani 11111 xxxxxxx 10,000

 STEP 2: THE JOURNAL AND DOUBLE ENTRY

In accounting and bookkeeping, a journal is a record of financial

transactions in order by date. A journal is often defined as the book of
original entry.

Double entry accounting is a record keeping system under which every

transaction is recorded in at least two accounts. There is no limit on the
number of accounts that may be used in a transaction, but the
minimum is two accounts

Accounts Receivable

2010 Rs. 2010

Rs.

Balance b/d XXX Bank XXXX

C/d XXX

XXX XXXX
 STEP 3: TRIAL BALANCE & ADJUSTED TRIAL BALANCE
Trial Balance is a list of closing balances of ledger accounts on a certain
date and is the first step towards the preparation of financial
statements. It is usually prepared at the end of an accounting period to
assist in the drafting of financial statements. Ledger balances are
segregated into debit balances and credit balances. Asset and expense
accounts appear on the debit side of the trial balance whereas
liabilities, capital and income accounts appear on the credit side. If all
accounting entries are recorded correctly and all the ledger balances
are accurately extracted, the total of all debit balances appearing in the
trial balance must equal to the sum of all credit balances.
 STEP 4: BALANCE SHEET, TRADING ACCOUNT & PROFIT AND
LOSS ACCOUNT
The purpose of the profit and loss account is to:

 Show whether a business has made a PROFIT or LOSS over a

financial year.
 Describe how the profit or loss arose – e.g. categorizing costs
between "cost of sales" and operating costs.

A profit and loss account starts with the TRADING ACCOUNT and then

takes into account all the other expenses associated with the business.

Trading account

The trading account shows the income from sales and the direct costs
of making those sales. It includes the balance of stocks at the start and
end of the year.
Balance sheet is a statement of the assets, liabilities, and capital of a
business or other organization at a particular point in time, detailing the
balance of income and expenditure over the preceding period.
RECOMMENDATION