What is the definition for sundry debtor?

SUNDRY - Miscellaneous small or infrequent customers that are not assigned individual ledger accounts but are classified as a group. SUNDRY CREDITORS - refers to companies or individuals to which money is owed. SUNDRY DEBTOR - is an entity from who amounts are due for goods sold or services rendered or in respect of contractual obligations. Also termed: debtor, trade debtor, and account receivable.
Tally 9.0 - What is Debit / Credit? Somebody asked a basic question in Tally. In fact it is question in financial accounting. What is debit or credit in Tally? In accounting practice a single transaction is done by making two entries. One party is giving the amount and another is receiving. The giver's account is credited and receiver's account is debited. The basic rule is Debit the receiver and credit the giver, debit what comes in and credit what goes out. For example if a customers buy goods/service and paying his bill. His account will be credited and cash / bank account will be debited

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How to prepared the credit note and debit note in Tally

Debit note: When goods are returned by the customer to the supplier due to wrong quantity or quality of product, rate difference, discount, commission, etc is known as debit note. it is also known as purchased return. Credit note: It is a official or commercial document which is provided by supplier to the customer.

How to activate the debit note and credit note?

Press F11 -->accounting features accounting features --> activate use debit and credit note activate use debit and credit note --> yes-->Activate use invoice mode for credit note Activate use invoice mode for credit note --> yes --> Activate use invoice mode for debit note --> yes Then accept it.

After accepted, go to Accounts info. --> Ledger Ledger --> create Following items are created in ledger creation: Sales return --> when double vat impose then different sale return are created in ledger creation. E.g. sale return 12.5%, sale return 4% separately etc. it is under the sale account. When it is under the list of tally then activate used in vat return and select the sale return. Otherwise not activate the vat return.

Credit note: It means when items or stock are destroyed then it will be returned by the customer. So, for this purpose credit note is prepared. And balance amount shown in profit and loss. It is under the sale account.

After the ledger creation then go to accounting voucher. Then CTRL +F9 . for single vat press F12 and deactivate common ledger account for item allocation. For double vat press F12 and activate common ledger account for item allocation.

Following procedure is followed to fill the credit note:

Cost center class: sale return or prior period is written. Date: when stock is purchased then date is written according to purchased stock. And voucher date press F2. For change the period ALT + F2.

First of all party name: when stock are borrowed from party then party name. But when purchased in cash then cash is written.

Sale ledger: In sale ledger is written sale return 12.5%. In other words we can say that when you have prepared the sale vat then press any key then list of ledger creation is opened. Name of items: press any key then list is opened and select those items which are returned by the customer. All the items which are shown in stock items are recorded with quantity, rate, and amount. Narration is being also very necessary. Rate is being selected which are shown in standard rate of stock item. After vat imposed accept it.

After that, amount is automatically deducted from the profit and loss account.

How to see the purchase amount? Gateway of tally --> profit and loss Profit and loss --> press ALT F1 to see the further detail. For advance or more detail press f12.

Trading account

This account is prepared to know the trading results of the business. i.e. how much gross profit the business has earned from buying and selling during a particular period. The difference between the sales and cost of goods sold is gross profit.

Profit and loss account

This account is prepared to calculate the net profit or net loss of the business. There are certain items of incomes and expenses of the business which must be taken into consideration for calculating net profit of the business.

Balance sheet

A balance sheet is a statement prepared with a view to measure the financial position of a business on a certain fixed date. The financial position of the concern is indicated by its assets on a given date and its liabilities on that date. A Balance sheet is also described as a statement showing the sources

and application of capital. It is a statement and not an account. The liabilities are shown on the left hand side. The assets appear on the right hand side. On the liabilities side, capital and other liabilities to third parties are shown. Since business is different from the businessman, capital is the amount payable to the businessman by the business. So, capital is shown on the liabilities side. On the asset side, cash and anything which is convertible into cash are shown as assets. The totals of the liabilities side and asset side must agree. Labels: Accounting Basics

Rectification of errors
Error is a mistake done in book keeping. The mistake may be done while entering the transactions in the subsidiary books or while posting in the ledger accounts. It becomes of utmost important for the book-keeper and the accountant to locate such errors and rectify them. So that correct profit and financial position of the concern may be ascertained. Types of errors 1. Errors of principle

An error of principle is an error committed disregarding the fundamentals of book-keeping. An error of principle take place in the following cases. Treating and expense as an asset Amount paid for repairing the machinery may be debited to Machinery A/c instead of Repairs A/c Treating as asset as an expense: Purchase of furniture for office use may be debited to office expenses A/c instead of Furniture A/c Treating an income as liability: For instance, commission Rs. 10000 received from ABC & Co. may be credited to ABC & Co. A/c instead of commission A/c.

Clerical Errors Error of omission Error of omission may be either complete omission or partial omission. A partial omission is making entry in the subsidiary book but not posting in the ledger. When a transaction is completely omitted from the books, it is called complete omission. Error of commission It is another type of clerical error. This type of error take place in the following ways; Errors relating to subsidiary books, they are

Entering wrong amount in the subsidiary books Entering the transaction in a wrong subsidiary book Wrong totaling of subsidiary books (Tally wont do this mistake!) Errors relating to postings they are

Posting wrong amount on the correct side of an account Posting the same amount twice to an account Posting the correct amount tot the wrong side of the correct account Posting the wrong amount to the wrong side of the correct account Posting the correct amount to the wrong account but on the correct side. Posting correct amount to the wrong account and on wrong side. Posting wrong amount to the wrong account and on the wrong side. Error in Balancing.

Note: Most of these errors are avoided when using Tally software. Compensating Errors These are errors which make up for one another. This means one error canceling the other. For example, a wrong debit may get cancelled by wrong credit.

Rectifying the Errors

Errors are always corrected in the books of accounts by means of suitable journal entries. If the correction involves transfer of an amount from one account to another, a journal entry is given. If it is not so, the concerned account may be corrected by debiting or crediting the amount to be corrected. Suspense Account There are errors which affect the agreement of the debit balances and credit balances. When such errors are committed, the trial balance does not agree. In such cases, the suspense account is opened. If the debit balances are short, then suspense account will have debit balance and vice versa. 0 comments Labels: Accounting Basics

Subsidiary books

In small business firms, the volume of transactions is also small and hence, all of them can be recorded in one subsidiary book namely, the journal. But in large business houses since the number of transactions if large, it is impossible to enter them in one subsidiary book. Therefore, it is desirable to sub-divide the transactions according to their nature. And it is customary to keep each division of transactions in one book. The book in which the transactions are entered at first time are known as subsidiary books. Kinds of subsidiary books:

Cash book to record cash receipts and payments. Purchase book for recording credit purchase of goods. Sales book or day book for recording all goods sold on credit Purchases Returns book for recording all goods sold on credit. Purchsess Returns book or Returns outwards book for recording all purchses returned to the creditors. Sales returns book or Returns Inwards book for recording all sales returned by the custoemers. Bills receivables book to keep record of bills received from customers. Bills payable book to keep record of bills payable to creditors. Journal proper to keep a record of those transactions for which there is no separate book.

0 comments Labels: Accounting Basics

Journal, Ledger and Trial Balance

The stages in book-keeping are,

Recording the transactions in subsidiary books or books of prime entry Posting the entries into the appropriate accounts in the main book called ledger. Preparing the Trial balance, thereby profit and loss account and Balance sheet.

Journal

Journal is derived from the French word Jour which means a day. Journal, therefore, means daily record of business transactions. Journal is a book of original entry because transactions is first written in the journal from which it is posted to ledger at any convenient time.

Ledger

The ledger is the main book of account. The Journal is a subsidiary book. The word subsidiary means giving additional help to. The journal helps a businessman to take the various transactions to the

right place. i.e. to the appropriate accounts. The journal is the base, the ledger is the middle. The Balance sheet and Profit and loss account can be prepared from the main book of account, namely Ledger. The entries are posted under appropriate accounts. All similar transactions must be brought together. Transactions relating to cash are grouped under cash account. Similarly the transactions with customers and suppliers (debtors and creditors) are grouped under appropriate personal accounts. Ledger is the main book of the business containing personal, Real and Nominal accounts of the business.

Trial Balance
The balances standing in the various accounts in the ledger at the end of a period are listed down in the form of a statement, showing debit balances in one column and credit balances in the other, known as a Trial balance. The Trial Balance is nothing but a summary of the various transactions entered in the books of accounts and its preparation is based on the rule that for every debit there is a corresponding and equal credit. Trial balance is automatically Calculated in Tally! 0 comments Labels: Accounting Basics

Financial Accounting
Financial accounting is concerned with recording and processing all transactions with outsiders and events affecting the financial position of the firm. This leads to the preparation of the annual profit and loss account and the balance sheet. Double Entry System of Accounting Accounting records can be prepared under any on of the following systems a) single entry system Under this system only the personal aspects of the transactions are recorded in the books and the impersonal aspects are ignored. It is not based on the dual aspect concept and is incomplete, inaccurate and unscientific. b) Double entry system

It is the most common system of keeping records whereby the two aspects of every transaction the giving aspect and the receiving aspect are recorded in the books of accounts. Each aspect will be recorded in one account and this method of writing every transaction in two accounts is known as Double entry system of book keeping. This is the most scientific, complete and accurate system of accounting. Advantages of double entry system

It provides a complete record of every transaction whether it relates to the personal or impersonal accounts. It provides an arithmetical check on the records as the total of debit entries must be equal to the total credit of all entries. The amount owing to outsiders and the amount due to the business can be ascertained with the help of personal accounts. The profit and loss account can be prepared with the help of nominal accounts which is helpful to the business to ascertain the operating results of the business. It helps to prepare the balance sheet of the business which is helpful to ascertain the financial position of the business on a particular day. It helps to reduce the occurrence of the errors and frauds and when occurred can be deducted easily. It can work with the help of internal check system.

Disadvantages of double entry system

This system requires the maintenance of a number of books of accounts which is not practical in small concerns. The system is costly because a number of records are to be maintained. There is no guarantee of absolute accuracy of the books of account in spite of agreement of the trial balance.

Accounting Terms

Assets are the properties owned by a trader, kept for using them for business purposes. Liabilities are debts owing to others by the trader. Capital is a liability of a business due to the proprietor. It represents the owners fund employed in the business. Transaction refers to the transfer money or moneys worth from one account to another account. Goods refers to the commodities bought by the trader for the purpose of resale Fixed assets are the properties kept by the owners of a business firm for use in business and not for resale. For example land, building, plant, fixtures, equipments and so on. Current assets are the assets meant for conversion into cash. For example stock in hand, debtors, cash in hand and at bank and so on. Account is a summary of transactions affecting a person, an asset, profit or loss etc.,

Debtor and Creditor

Debtor is a person who owes money to the business Creditor is a person to whom the business owes money. Debit and Credit: Every transaction, at least affects two accounts in the opposite directions. The account which receives the benefit is debited and the account which gives the benefit is credited. Journal is a book of first entry. Business transaction are recorded first in the journal as and when they take place. Then, they are recorded in the ledger accounts. Journalizing is the act of entering the transactions in the journal. Ledger is the main book of account. It contains all the accounts of business in well arranged form. Posting refers to the entering the transactions in appropriate ledger accounts. Trial balance is a list of ledger balances as on the last date of accounting period. If the total of debit balances and that of credit balances are equal, then it is understood that recording are done in all the books correctly and accurately. Rules for Debit and Credit: Personal accounts: Debit the receiver, Credit the giver Real accounts: Debit what comes in, Credit what goes out Nominal accounts: Debit all expenses and losses, Credit all incomes and gains Personal Accounts: These accounts record a business dealing with persons or firms. The person receiving something is given debit and the person giving something is given cedit. Real Accounts: These are the accounts of assets. Assets entering the business is given debit and asset leaving the business is given credit. Nominal Accounts: These account deal with expenses, incomes, profits and losses. Accounts of expenses and losses are debited and accounts of incomes and gains are credited.

Journal & Rules of Journal Posting

By abid anwar Posted in: Account Notes, Financial A/C

Journal Journal is simply defined as the primary book of entry wherein all the financial transaction of a business organization are recorded in the form of debit and credit. It is prepared daily in order to keep the chronological records of financial transaction. While learning accountancy, it is very rewarding to know how the various transaction can be recorded in journal. if one can record all the transaction in journal correctly we can say that one has own more than half the battle. The process of expressing the two fold effects of debit and credit of financial transaction in the journal book is called journalizing. Journal entry in the book of.. Date a) Particular b) L.F. C) Debit Rs. d) Credit Rs. e)

a) Date:- the date on which the transaction has taken place is recorded here. The year is written at the top of the date column of each page of the journal. Therefore, on the next line of the date column, the month and date of the first entry are written. Unless the month or year changes or until a new page is begun, neither the month nor the year is repeated on the page. b) Particulars :- the two aspects of a transaction are recorded in this column i.e. the details regarding the accounts which have to be debited and credited . the name of the accounts to be debited is entered at the extreme left of the particulars column next to the date column. The abbreviation DR. is written at the right end of the particulars column on the same line of account debited. The name of the account to be credited is entered on the next line with a prefix TO. And is intended to the right date column. A brief explanation of the transaction known as narration is written below the account title of he transaction finally a thin line is drawn all trough the particulars column to indicate that the entry of the transaction has been completed

c) L.F.(ledger folio number):- every account is to be posted into the ledger book after they have passed the process of recording in the journal, so the page number of the book in which a particular account has been posted is written in this column. d) Debit account (DR.):- this column records the amount debited against the particular account. e) Credit amount (CR.):- this column records the amount under the credited account.

Golden Rules of debit and credit 1. Personal account :- the account related to persons or organization are termed as personal accounts such as hari a/c, capital a/c, debtors a/c, creditors a/c, bank a/c, Rule- debit the receiver and credit the give , i.e. debit the account of the person who receives something and credit the account of the person who gives something . for exampal, if you purchase goods from amir, on credit, the two account involved are goods (purchase) account and amirs account. The latter account is a personal a/c. since, amir is the giver in this transaction his account will be credited. Similarly, if cash is paid to amir, amirs account will be debited since he is the receiver. 1. Real account :- the account related to assets and properties are called real accounts such as cash a/c, furniture a/c, building a/c, land a/c Rule-debit what comes in, and credit what goes out , i.e. debit the account of the thing which comes in and credit the account of the thing which goes out. For example, where a building is purchased for cash, building account is debited while cash account should be credited. 1. Nominal account :- the account of incomes and expenditures are called nominal account such as salary a/c, rent received a/c, interest a/c, electricity a/c Rule- debit all expenses and losses and credit all incomes and gains for example, if you pay salary to your clerk, the two accounts involved are salary account and cash account. Salary account is a nominal account. Salary paid is an expense of the business and therefore this account, will be debited. Simple journal transaction The transaction involving two accounts are called simple transaction.

Started business with cash when the proprietor commences or begins his business, he himself stands as a giver and the business house stands as are receiver.

Cash A/c .Dr. To capital A/c (Being business started with cash )

Drawing some time proprietor may take out cash or other form of assets from the business for his personal or domestic use, in this situation, the proprietor is a receiver and the business is the giver .

Drawings A/c Dr. To cash/ goods/ fixed assets A/c (Being cash withdrawn for personal use )

Purchase goods for cash when goods are purchased for cash, goods are hat come in and cash is what goes out.

Purchase A/c Dr. To cash A/c (Being goods purchase with cash)

Purchase goods on credit when there is no mention of cash in the transaction and the name of the parties are only clear, the particular transaction is said to be on credit, sometime the phrase on credit is only mentioned but the name of the party is absent in such a transaction. Goods are what comes in and the party from they are bought on credit is the giver.

Purchase A/c. Dr. To partys name/ creditor A/c ( Being goods purchase on credit from xyz. )

Return of goods to the supplier the goods purchase on credit basis may be return to the supplier due some specific reasons, in this event, the supplier is the receiving person and the goods are what go out

Suppliers A/c . Dr. To purchase return A/c ( Being goods returned to supplier )

Sale of goods for cash when goods are sold for cash, goods are what go out and cash is what comes in.

Cash A/c .. Dr. To sales A/c

( Being goods sold on cash )

Sale of goods on credit when goods are sold on credit basis, the receiving party stands as the debtor of the business and goods are what go out.

Partys name/ debtor A/c .Dr. To sales A/c ( Being goods sold on credit to xyz.)

Return of goods from customer return of goods from the customers is called sale return, in this case, goods are what come back and the customers are the givers

Sales return A/c .. Dr. To the name of the customer A/c ( Being goods return by xyz. )

Purchase of business assets for cash the articles or things which are bought for the use in the business for a long period of time i.e. for more than one fiscal or accounting year are called assets. If assets are purchased for cash.

Assets A/c . Dr. To Bank/cash A/c ( being assets purchase for cash )

Purchase of business assets on credit if assets are bought on credit basis, the party from which the specific asset is the giver, and the is what comes in.

Assets A/c. Dr. To creditors /partys name A/c (Being a plant purchase on credit )

Payment to the creditor the creditors may be paid though cash or cheque for the goods or services received him/her, in this case the creditor is the receiver and cash or bank balance is what goes out.

Partys name/creditors A/c.Dr. TO Cash/bank A/c ( Being cash paid to creditor )

Receipt from the debtor when the amount on account of credit sales or loan provided is received from the debtor, the party from which the amount is received is the giver and cash/cheque is what comes in.

Cash/bank A/c..Dr. To debtors A/c ( Being cash/cheque received from xyz. )

Payment of expenses expanses are the amounts forgone for service in the business organization, all expanses are the sources into which money is spent and the cash/cheque is what goes out.

Expenses heading A/c.. Dr. To cash/bank A/c ( being rent(expenses) paid )

Receipt of income when amount are received from the provision of services, they are termed as incomes, the incomes here are the sources of providing cash or cheque.

Cash/bank A/c Dr. To head of income A/c ( being commission received by cheque )

Exchange of assets some time an assets may be exchanged for another assets with a party in this situation the assets forgone is what goes out and the assets received is what comes in.

Coming assets A/c .. Dr. To Going assets A/c ( Being a furniture exchanged for machinery )

Take a loan A loan may be received by the business from either a bank or a money lender, in this case, cash or cheque is what comes in and the loan provider is the person who is the giver.

Cash/bank A/c Dr. To the partys name A/c ( being a loan received )

Repayment of loan if the loan is repaid, the loan provider is the receiver and cash or bank balance is what goes out.

The name of the party A/c. Dr. To cash/bank A/c (Being the loan of xyz. Repaid by cash )

Deposit into bank when money is deposited into a bank , cash is what goes out and the bank is the party who receives it.

Bank A/c. Dr. To cash A/c ( being cash deposited into bank )

Cash withdrawn from bank for office use cash may be withdrawn from the bank for different business purposes, the specific bank is the party who stand as the giver and cash is what comes in.

Cash A/c.. Dr. To bank A/c ( being cash withdraw from bank ) Compound journal transaction Compound transactions are those transactions which involve more than two accounts such as while starting a business, a proprietor may invest more than one assets like cash, goods, machinery etc. which are transferred into the aggregate capital of the business . goods are sometime sold or purchased for both cash and on credit at a same time; in this case there are two debits and two credits to be recorded in combination.

Commencement of business when a business is started with more than one assets such as cash, bank balance, furniture, machinery, goods or other assets, all the assets from the capital of the business, so the entry will be..

Cash A/c Dr. Bank A/c.Dr. Furniture A/c .Dr. Machinery A/c .Dr. To Capital A/c

(Being business started with cash, bank, furniture, machinery )

Discount allowed and received discount are the rebates offered by the seller to the buyer in order to encourage the volume of sales or prompt the payment of the due amount by the customers or debtors, there are two kind of discount namely trade discount and cash discount, the former is allowed by the seller to the buyer on the list price of goods in order to increase the amount of sales which has no specific account but it simply deducted from the price, and the later is the discount which is give or received at the time of paying or receiving due amount Bad debt it is amount forgone in lieu of the insolvency of the debtor, it is an unforeseen loss to be debited. It may be full or partial, in case, it is a compound entry. The entry for the partial recovery from the debtor will be.

Cash/bank A/c Dr. Bed debt A/c. Dr. To Debtor/ Persons name A/c (Being xyz. Insolvent and bad debt written off except .. of the debt ) Abnormal journal transaction

Loss by fire/ theft/ accident sometimes goods or business assets may be exposed to fire, accident and theft, which brings about an abnormal loss to the business, the losses may or may not be compensated to the full extent by the concerned insurance company on lodging the claims, if they are completely recovered through indemnity, there is no loss, but if not a certain portion is only compensated, the business has to suffer a loss. The journal entries with respect to such a transaction will be (if no acceptance by the insurance company )

Loss by theft/fire/accident A/c . Dr. To purchase/ assets A/c (Being goods destroyed by.. and no claim accepted by the insurance company ) If it is partially compensated by the insurance company, the entry will be Loss by theft/accident/fire A/c Dr. Cash/ bank/ insurance company A/c Dr. To purchase/ assets A/c (Being goods lost by. And partial claim accepted by the insurance company) if the claim is fully admitted by the insurance company, the entry will be Insurance companys A/c.. Dr.

To purchase A/c ( being goods destroyed by accident and full claim admitted by the insurance company )

Gain and loss on sale of assets if here is a gain on the deposal or sale a fixed assets the gain is credited, cash or bank or debtor is debited and the value of the assets is credited , on the contrary, if there is any loss on the sale of an assets, the amount of loss is to be debited, the sales proceed is debited, and the value of the assets is credited

In case of gain: Cash/ bank/ debtors A/c . Dr. To gain on sale A/c (being assets sold on profit ) In case of loss: Cash/ bank/ debtors A/c ..Dr. To loss on sale A/c ( being assets sold on loss )

Depreciation A depreciation is defined as the reduction in the value of fixed assets due to obsolescence, destructions, accidents etc. calculated on annual basic and charged to the profit and loss account, it is a kind of loss, there fore it is debited and