Page 95 - DCOM302_MANAGEMENT_ACCOUNTING

Management Accounting

Notes Current liabilities:

Sundry creditors
Bills payable
Provision for doubtful debts
Provision for Taxation: It is nothing but non-current liability account which extends more
than a year in duration.
The first step is to prepare the statement of changes in the working capital.

Statement of changes in Working Capital
2008 ` 2009 ` Increase Decrease
in Working in Working
Capital Capital
Current Assets:
Stock 30,000 23,400 6,600
Bill receivable 2,000 3,200 1,200
Debtors 18,000 19,000 1,000
Cash 6,600 15,200 8,600
56,600 60,800
Current Liability:
Sundry creditors 8,000 5,400 2,600
Bills payable 1,200 800 400
Provision for doubtful debts 400 600 200
9,600 6,800
Working capital 47,000 54,000 13,800 6,800
Increase in working capital 7,000 7,000
54,000 54,000 13,800 13,800
The next step is to prepare the non-current accounts.
First, non-current asset account is to be prepared.
The first non-current asset account is the Building account.

Dr Building Account Cr
Particulars ` Particulars `

To Balance B/d 40,000 By (Depreciation)Adjusted profit & Loss A/c 4,000
By Balance c/d 36,000
40,000 40,000
The next non- current asset account is the Plant account

Dr Plant Account Cr
Particulars ` Particulars `
To Balance B/d 37,000 By (Depreciation) Adjusted profi t 4,000
& Loss A/c
To Cash (Purchase) balancing fig. 3,000 By Balance c/d 36,000

40,000 40,000
To cash balancing figure means that the firm has undergone a purchase of new plant which

amounted ` 3,000.

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