Accounting for Professional

Person
A person who is competent or skilled in a particular activity as well
as formally certified by a professional body is called Professional
person.

•Doctors, Lawyers, Architects, engineers, consultants etc. are

professional persons.
Accounts of a profession include:
1. Receipts and Payments Account
2. Income and Expenditure Account
3. Profit and Loss Account
4. Balance Sheet
Receipts and Payments Account
It is summary of cash receipts and cash payments.
It is a real account.
It is like a cash book , All receipts Dr side and All
payments Cr side.
It includes all capital receipts and payments.
It does not include non cash expenses like
depreciations, provison for bad debts etc.
The balancing figure on credit side represents closing
balance of cash.
 Receipts and Payments Accounts
for the period ending…………

Receipts Amount Payments Amount

Opening balance of cash Xxx Purchase of goods or services XXX
Fees receipts Xxx Purchase of fixed assets XXX
Income from Consultancy Xxx Telephone XXX
Sales of goods or service Xxx Rent XXX
Sales of fixed assets Xxx Journal XXX
Interest received XXX Drawing XXX
Other receipts XXX Stationery XXX
Closing balance of cash XXX

Total XXX Total XXX

 Income and Expenditure Account
A professional person can prepare Income and Expenditure of his profession including all
his professional income and expenditures.

Feature of Income and Expenditure account

•It is a nominal account.
•It is just like PL account.
•It include only current year income and expenditure.
•It does not include capital income and expenditure.
•It shows surplus or deficit.
 Income and Expenditure Accounts
for the period ending…………
Expenditure Amount Income Amount
To opening stock of By sales of medicine XXX
medicine Xxx By closing stock of medicine XXX
To purchase of medicine By Fees received xxx
To salary to staff xxx Add: current year due xxx
Less: prepaid xxx Less: Last year fee received
Add: outstanding xxx XXX in current year xxx
To Rent XXX Less: Advance fee xxx XXX
To provision for accrued fees XXX By professional gift received XXX
To Depreciation on Fixed By sundry Income XXX
assets XXX By deficit (b/f) XXX
To journals XXX
To surplus(b/f) XXX

Total XXX
Total XXX
Profit and Loss Account
This account shows all revenue income/ gains and
expenses/losses of profession.
It is substitute of Income and expenditure Account.
The main feature of P/L Account
•It is a nominal account.
•It records all revenue in Cr side and all expenses Dr side.
•It is prepared on accrual basis.
•All non cash items are considered .
•All items of income and expenditure related with last
year/future years are not recorded in it.
 Profit and Loss Accounts
for the period ending…………
Expenditure Amount Income Amount
To opening stock of By sales of medicine XXX
medicine Xxx By closing stock of medicine XXX
To purchase of medicine By Fees received xxx
To salary to staff xxx Add: current year due xxx
Less: prepaid xxx Less: Last year fee received
Add: outstanding xxx XXX in current year xxx
To Rent XXX Less: Advance fee xxx XXX
To provision for accrued fees XXX By professional gift received XXX
To Depreciation on Fixed By sundry Income XXX
assets XXX By Net loss XXX
To journals XXX
To Net profit XXX

Total XXX
Total XXX