FINANCIAL ACCOUNTING

IMPORTANT POINTS TO BE REMEMBERED

1. Trading & Profit & Loss a/c is an account hence we should write ‘To’ &
‘By’ and Dr and Cr
2. Balance sheet is a Statement should not write ‘To’ & ‘By’ and Dr and Cr
3. All the Entries in the Trading account is Related to the Factory
(Factory Incomes and Expenses)
4. All the Entries in the P & L account is Related to the Office
(Office Incomes and Expenses)
5. All the Entries in the Balance Sheet is Related to Assets & Liabilities
6. Assets: Which is Owns by the Person /Company
(All Current & Fixed Assets)
7. Liabilities: Which is Owes by the Person /Company
(All Current & Fixed Liabilities)
8. All the Entries in the Adjustments will always have Two impacts one in
Trading and P&L A/c and Second impact in Balance Sheet.
9. Start the Problem with Opening Stock and End with Closing Stock
10.Appreciations should always Added.
11.Depreciations Should always be deducted.
12.Outstanding should always Added.
13.Prepaid Should always be deducted.
14.Bad Debts, Doubtful Debts, Reserve for Doubtful Debts, Provision for
Doubtful debts any such entry is there should always deduct from Debtors in
assets side and once again the deducted amount should be written in P&L
A/c
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15.Bas Debts, Doubtful Debts, Reserve for Doubtful Debts, Provision for
Doubtful debts any such entry is their Trial Balance (Question) directly enter
in P&L A/c should not deduct from Debtors.
16.Any depreciation which is done for Fixed assets should be deducted from
respective asset in Assets side, and deducted amount should appear in P& L
a/c Dr side.
17.Any Appreciation (addition) which is done for Fixed assets should be added
to respective asset in Assets side and added amount should appear in P& L
a/c Cr side.
18.Always Remember Incomes will be written on Cr Side.
19.Always Remember Expenses will be written on Dr Side.
20.Always subtract Purchases Returns from Purchases in Trading A/c Dr side.
21.Always subtract Sales Returns from Sales in Trading A/c Cr side.
22.Creditors -----Liability
23.Debtors--------Assets
24.Depreciations --------- P&L Dr side
25.Appreciation------------- P&L Cr Side
26.Any Prepaid Expenses are there write in Assets side.
27.Any outstanding is there writing in liabilities side
28.Closing Stock---- Assets
29.Opening Stock ----- trading A/c
30.Bills Receivable -------Assets.
31.Bills Payable --------Liabilities.
32.Add net profit to Capital and Deduct net loss from Capital.
33.Always deduct Drawings from Capital
34.Closing Stock will always have to appearance once in Trading A/c Cr side
and one in Balance Sheet Assets side.
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