Page 72 - DMGT104_FINANCIAL_ACCOUNTING

Financial Accounting

Notes Solution:
Opening Journal Entries
Dr. Cr.
Date Particulars L.F. ( ) ( )
1.1.2006 Cash in hand A/c Dr. 3,000
Cash at Bank A/c Dr. 16,000
Stock in trade A/c Dr. 30,000
Furniture’s Fittings A/c Dr. 5,000
Sundry debtors A/c Dr. 21,000
To Sundry creditors A/c 18,000
To Ganesh & Co. A/c 9000
To Capital A/c 48,000
(Opening entry in respect of assets and liabilities.
Difference between Assets and liabilities is equal to capital)

Subsidiary Books of Original Records

If all the transactions of the business are recorded in Journal it will be too bulky to manage.
Therefore, nowadays original records are maintained in the subsidiary books. These subsidiary
books are also called sub-division of Journal. They are classified as follows:

Cash Book or Journal

When it is the part of ledger it is called cash account. In the cash book all the cash transactions are
directly recorded. As per Carter, “Cash book is a book of original entry, the object of which is to
record all receipts and payments of money”. In the cash book all the cash receipts are recorded
in the left hand sides and all the cash payments are recorded in the right hand side. And the
difference of these two sides is called the closing balance of cash. Generally, four types of cash
book are prepared. These are:
1. Simple Cash Book or One Column Cash Book
2. Cash and Discount Cash Book or Double Column Cash Book
3. Cash, Bank and Discount Cash Book or Three Column Cash Book
4. Petty Cash Book

The pro forma of the simple cash book is given below:
Pro Forma of a Simple Cash Book
Date Particulars L.F. Amount Date Particulars L.F. Amount
( ) ( )

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