I Year B.B.A., LL. B (Div.

- B) – Semester-I (2022)

1st -Internal Assessment – Business Accounting-I

Assignment Submission Date- 13/10/2022

Topic-Book keeping & Accountancy, Terminologies, Principles –Concepts

& Conventions & Double Entry Aspect

NAME: Aadi Jain

DIVISION: B
PRN: 22010126148
COURSE: BBA LL.B. (H)
BATCH: 2022-2027
QUESTION-1

SECTION-A

1. The Double entry is based on DUAL ASPECT concept.

2. CONSERVATISM follow play safe.
3. SOLVENT is a person whose assets are more than liabilities.
4. Amount invested by proprietor CAPITAL; amount withdrawn by the proprietor
from the business for personal use is DRAWINGS.
5. Bookkeeping is SCIENCE & ART.
6. Expenditure incurred on purchase of fixed asset is CAPITAL EXPENDITURE,
DEFERRED REVENUE expenditure not exhausted within one year.
7. Different Branches of Accounting FINANCIAL, MANAGERIAL& COST.
8. ASSET = Capital + LIABILITY
9. Classification of Accounts on both approaches TRADITIONAL: Real, Nominal,
Personal, MODERN: Asset, Liability, Capital, Revenue & Profits, Expenses &
Losses

SECTION-B

1. Dual Aspect: According to the dual aspect concept, every business transaction requires
entries in two different accounts which is expressed in the form of “Debit” and “Credit”.
Every transaction has a dual effect and the accounts should reflect the same. It forms the
basis of the double entry bookkeeping that we follow. For example, purchase of assets for
cash involves two aspects- (i)Increase in Assets (ii) Decrease in cash.

2. Conservatism- It states that all probable and future losses are recorded the moment they
are discovered whereas all profits can only be recorded when they are fully realized.
Uncertain liabilities are to be recognized as soon as they are discovered. In contrast, revenues
can only be recorded when they are assured of being received. For example, if a company
sues someone for patent infringement, and is expecting substantial settlement, they won’t
record it in their accounts as it’s not a surety.

3. Solvent: A business/person is said to be solvent when the value of its Assets are more than
its debt obligations or Liabilities. Solvency measures a company's ability to meet its financial
obligations. For example, if I have assets worth rupees 50,000 and liabilities worth rupees
30,000, I would be considered solvent.

4.Capital: It is the amount invested in the business by the owner. It is a residual claim against
the assets of the business after the total liabilities are deducted. Business capital may derive
from the operations of the business or be raised from debt or equity financing.

Drawings: It is the amount withdrawn from business for individual or personal use by the
proprietor.

5. Science & Art: Science is a systemised body of knowledge based on certain basic
principles and rules and bookkeeping fits the above criteria however it is not an exact science.
Accounting can also be considered an art as it requires skills and creative judgement and has
certain theory and principles.

6. Capital Expenditure: It is the money spent by the business to acquire, upgrade, and
maintain physical assets such as property, plants, buildings, technology, or equipment. For
example, purchase of machinery for rupees 20,000 is a capital expenditure.

Deferred Revenue Expenditure: An expenditure or liability for which payment has been
made or incurred but which is carried forward on the presumption that it will be of benefit
over a subsequent period. For example, the cost of an advertising campaign is deferred
revenue expenditure.

7. Financial Accounting: It is the branch of accounting that involves a process of recording,

summarizing and reporting myriad of transactions resulting from business operations over a
period of time. For example: Income statements, balance sheet.

Cost Accounting: It is s a business practice in which we record, examine, summarize and

study the company’s cost spent on any process, service, product or anything else in the
organization. This helps the organization in cost controlling and making strategic planning
and decision on improving cost efficiency. For example- Marginal costing.

Management Accounting: is concerned with the supply of information which is useful to

management in decision making for the efficient running of the business and maximizing its
profit. Management accountant presents the final accounts in such a way as to enable the top
management to take important policy decisions.
8. Assets: Those valuable items which are owned by the business and have monetary value
are called Assets. There are 3 types of assets- Fixed, Current and Fictitious assets. For
example-Machinery, cash etc.

Liability: Any amount payable to an outsider is called a liability. Types of liability are: fixed
and current liabilities. For example- Loans, bills payable etc.

9. Classification of Accounts –
Modern: Asset account- Increase in asset is debited and decrease in asset is credited
Expense & losses account- Increase is debited and decrease is credited

Capital account- Increase is credited and decrease is debited

Liability account- Increase is credited and decrease is debited.

Revenue & gain account- Increase is credited and decrease is debited.

Traditional: Personal account- Debit the receiver and credit the giver

Real account- Debit what comes in credit what goes out.

Nominal account- Debit all expenses and credit all gains

 QUESTION-2

Traditional Approach
S. Transactions Two aspects Accounts Categories Rules Account to Account to
No. involved applied be debited be credited

1. Computer of Rs. 1. Theft is loss 1. Loss by 1. Nominal 1. Debit all Loss by Computer
10,000 is stolen. Theft A/c A/c expenses and Theft A/c A/c
losses.

2. Computer is 2. 2. Real A/c 2. Credit

going out. Computer what goes
A/c out.
2. Sold goods to 1. Ram is the 1. Ram 1.Personal 1. Debit the Ram A/c Sales A/c
Ram on credit receiver. A/c A/c receiver.
Rs. 40,000
2. Sale of goods is 2. Sales 2.Nominal 2. Credit the
an income. A/c A/c incomes and
gains.
3. Paid Interest on 1. Interest on loan 1. Interest 1.Nominal 1. Debit all Interest on Cash A/c
loan Rs.10,000 is expenditure. on Loan A/c expenses and Loan A/c
A/c losses.

2. Cash is going 2. Cash 2. Real A/c 2. Credit

out. A/c what goes
out.
4. Purchased 1. Machinery 1. 1.Real A/c 1. Debit what Machinery Cash A/c
Machinery for comes in. Machinery comes in. A/c
Rs. 50,000 in A/c
cash from
Prakash Stores. 2. Cash is going 2. Cash 2.Real A/c 2. Credit
out. A/c what goes
out.
5. Withdrew cash 1. Cash is coming 1. Cash 1. Real A/c 1. Debit what Cash A/c Bank A/c
from bank for in. A/c comes in.
office use Rs.
20,000. 2. Bank is the 2. Bank 2.Personal 2. Credit the
giver. A/c A/c giver.
6. Wages due but 1.Wages is 1. Wages 1.Nominal 1. Debit all Wages A/c Outstanding
not paid Rs. expenditure. A/c A/c expenses and A/c
5,000 losses.

2.Expenditure is 2. 2.Personal 2. Credit the

outstanding. Outstandin A/c giver.
g Wages
A/c
 Modern Approach
S. Transactions Two aspects Accounts Categories Rules Account to Account to
No. involved applied be debited be credited

1. Computer of Rs. 1. Theft is loss 1. Loss by 1. Expenses 1. Increase in Loss by Computer

10,000 is stolen. Theft A/c A/c loss is Theft A/c A/c
debited.

2. Computer as an 2. 2. Asset 2. Decrease

asset is decreasing Computer A/c in asset is
A/c credited.
2. Sold goods to 1. Ram is 1. Ram 1.Asset A/c 1. Increase in Ram A/c Sales A/c
Ram on credit becoming a A/c asset is
Rs. 40,000 creditor debited.

2. Sale of goods is 2. Sales 2.Revenue 2. Increase in

a revenue. A/c A/c revenue is
credited.
3. Paid Interest on 1. Interest on loan 1. Interest 1.Expenses 1. Increase in Interest on Cash A/c
loan Rs.10,000 is expenditure. on Loan A/c expenditure Loan A/c
A/c is debited.

2. Cash is 2. Cash 2. Asset 2. Decrease

decreasing A/c A/c in asset is
credited.
4. Purchased 1. Machinery 1. 1.Asset A/c 1. Increase in Machinery Cash A/c
Machinery for increases Machinery asset is A/c
Rs. 50,000 in A/c debited.
cash from
Prakash Stores. 2. Cash decreases
2. Cash 2.Asset A/c 2. Decrease
A/c in asset is
credited.
5. Withdrew cash 1. Cash is 1. Cash 1. Asset 1. Increase in Cash A/c Bank A/c
from bank for increasing A/c A/c asset is
office use Rs. debited.
20,000. 2. Bank balance is
decreasing 2. Bank 2.Asset A/c 2. Decrease
A/c in asset is
credited.
6. Wages due but 1.Wages is 1. Wages 1.Expense 1. Increase in Wages A/c Outstanding
not paid Rs. expenditure. A/c A/c expenditure A/c
5,000 is debited.
2.
2.Expenditure is Outstandin 2.Liabilities 2. Increase in
outstanding. g Wages A/c liabilities is
A/c credited.