Page 88 - DMGT104_FINANCIAL_ACCOUNTING

Financial Accounting

Notes July 27 Paid to Harish cash on account 16800
Discount allowed by him 200
July 31 Paid salary by cheque 1800
Paid cash for telephone bill 600

Self Assessment

Fill in the blanks:

9. Ledger contains various...................... in it.
10. The process of transfer of entries from Journal and special purpose books to ledger is
called......................

11. Ledger is also called......................
12. Ledger is a...................... book of accounting system.
13. Classification of transactions is being done only on the basis of preparing the......................

5.4 Summary

 Journal is the first book of the original entries in which all the business transactions of the
financial nature are recorded, then posted to ledger accounts.
 Accounts are of three types – Personal, Real and Nominal Account.
 Rules of Debiting and Crediting in Journal –
Personal A/c – Receiver – Debit and Giver-Credit

Real A/c – What comes in – Debit, What goes out – Credit
Nominal Account – Expenses and Losses are Debited and Income and Gains are credited
 Subsidiary Books of Original Entries are classified into – Cash Book, Special Journal,
Journal Proper and Others.

 Posting is the process of selecting of transactions from Journal on the basis of accounts and
writing them into ledger accounts.

 To test the arithmetical accuracy of the ledger accounts, the Trial Balance is prepared. Trial
Balance is the list of accounts taken from ledger.
 An expenditure done to get the advantages in the business for a long period is called
capital expenditure and if it is done for a short period and during the normal course of
business, it is called Revenue expenditure.

 Ledger is nothing but preliminary book of accounting transactions at which, each account
is separately maintained through the allotment of various pages for exclusive recording.
 Posting is the process of selecting of transactions from Journal on the basis of accounts and
writing them into ledger accounts.

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