Purchase Books

Purchases book also known as Bought Day Book is used to record all credit purchases of goods which are meant for resale in the business. Cash purchases of goods, cash and credit purchases of assets are not entered in this book.

Date Column – shows the date on which the transaction took place.
Particulars Column – This column includes the name of the seller and the particulars of goods purchased.
Inward Invoice No. Column – Reveals the serial number of the inward invoice.
LF. Column – This column shows the page number of the suppliers account in the ledger accounts.
Details Column – Reveals the amount of goods purchased and the amount of trade discount.
Total Column – This column represents the net price of the goods, i.e., the amount which is payable to the creditors after adjusting discount and expenses if any.
Remarks Column – Contains any extra information.
At the end of each month, the purchase book is totaled. The total shows the total amount of goods or materials purchased on credit.

Now Let us understand the Purchases Day book and post it in ledger with the help of the following illustration
Given below are the transactions of a firm

Date		Amount
January 5,2014	Purchased goods from Ravi & Co.	3400
" 15	Purchased goods from Ishan Bros.	7000
" 25	Purchased goods from More & Co.	2500
" 30	Purchased goods from Madhu & Co.	4000

Purchase Day Book
Date	Particulars	Inv.No.	L.F.	Amount $
January 5,2014	Ravi & Co.			3400
January 15,2014	Ishan Bros			7000
January 25,2014	More & Co.			2500
January 30,2014	Madhu & Co.			4000
				Total : 16900

Now the individual entries are posted in their respective Ledgers as shown below:

Dr		Purchases Account					Cr
Date	Particulars	J.F	Amount	Date	Particulars	J.F	Amount
Jan 5,2014	To Sundry as per Purchase Book		16900

Dr		Ravi &Co. Account					Cr
Date	Particulars	J.F	Amount	Date	Particulars	J.F	Amount
				Jan 5,2014	By Purchases		3400

Dr		Ishan Bros Account					Cr
Date	Particulars	J.F	Amount	Date	Particulars	J.F	Amount
				Jan 15,2014	By Purchases		7000

Dr		More & Co's Account					Cr
Date	Particulars	J.F	Amount	Date	Particulars	J.F	Amount
				Jan 25,2014	By Purchases		2500

Dr		Madhu & Co's Account					Cr
Date	Particulars	J.F	Amount	Date	Particulars	J.F	Amount
				Jan 5,2014	By Purchases		4000

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Subsidiary Books : Accounting Basics Day 4

Businesses do not record a their transactions in one journal. The reason is that, journal can not give periodical data about some important business transactions viz. monthly sales, or purchases. Moreover having only one journal does not facilitate internal check system, since only one person handles journal.
Transactions can be classified and grouped according to their nature when they are repetitive in nature. Transactions are of two types: Cash and Credit. These can be grouped in two different categories viz. cash and credit. Thus journal is divided into separate sub-books for each category of transaction, which are repetitive and sufficiently large in number. Following are the subsidiary books which are special journals.

• Day Books- Purchase book, sales book, purchase return book, sales return book
• Bill books- Bills receivable and bills payable book
• Cash book
• Journal paper

Purpose

1. Purchases Book records only credit purchases of goods by the trader.
2. Sales Book is meant for entering only credit sales of goods by the trader.
3. Purchases Return Book records the goods returned by the trader to suppliers.
4. Sales Return Book deals with goods returned (out of previous sales) by the customers.
5. Bills Receivable Book records the receipts of bills (Bills Receivable).
6. Bills Payable Book records the issue of bills (Bills Payable).
7. Cash Book is used for recording only cash transactions i.e., receipts and payments of cash.
8. Journal Proper is the journal which records the entries which cannot be entered in any of the above listed subsidiary books.

Kinds of Subsidiary Books
The number of subsidiary books may vary according to the requirements of each business. The following are the special purpose subsidiary books.

• Purchases Book records only credit purchases of goods by the trader.
• Sales Book is meant for entering only credit sales of goods by the trader.
• Purchases Return Book records the goods returned by the trader to suppliers.
• Sales Return Book deals with goods returned (out of previous sales) by the Customers.
• Bills Receivable Book records the receipts of bills (Bills Receivable).
• Bills Payable Book records the issue of bills (Bills Payable).
• Cash Book is used for recording only cash transactions i.e., receipts and payments of cash.
• Journal Proper is the journal which records the entries which cannot be entered in any of the above listed subsidiary books

Go Back to Accounting Basics Day 3
Go To Accounting Basics Day 5

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Balancing General Ledger Accounts

Balancing an Account

The difference between total debits and the total credits of an account is balance. As shown above many accounts have entries on their debit as well as credit side. The net result of such debits and credits in an account is the balance.
The writing of the difference between the amount columns of the two sides in the lighter (smaller total) side, so that the grand totals of the two sides become equal is called balancing.
While balancing an account three things may happen depending upon the debit total and the credit total.

• It may be a debit balance or
• A credit balance or
• A nil balance

Debit balance results, when debit total is in excess of credit total. It is first recorded on credit side above the total and then entered on the debit side below the total as first item for next period. It is first recorded on the credit side, above the total. Then it is entered on the debit side, below the total, as the first item for the next period.

Dr		Cash Account					Cr
Date	Particulars	J.F	Amount	Date	Particulars	J.F	Amount
Mar 1,2009	To Sales A/c		10000	Mar 5, 2009	By Purchase A/c		5000
Mar 10,2009	To Kumar's A/c		4000	Mar 19, 2009	By Salary A/c		4000
			Total : 14000	April 1, 2010	By Balance c/d		5000
	To Balance b/d		5000				Total : 14000

Conversely excess of credit total over the debit total is called the credit balance. It is first written in the debit side, as the last item, above the total. Then it is recorded on the credit side, below the total, as the first item for the next period.

Dr		Capital Account					Cr
Date	Particulars	J.F	Amount	Date	Particulars	J.F	Amount
Mar 31,2009	To Balance c/d		100000	Apr 5, 2008	By Cash		100000
			Total : 100000				Total : 100000
				April 1, 2009	By Balance c/d		100000

Balancing is done periodically, i.e., weekly, monthly, quarterly, half-yearly, or yearly. i. Personal accounts are generally balanced regularly to know the amounts due to the persons (creditors) or due from the persons (debtors). Real accounts are balanced at the end of the financial year, when final accounts are being prepared. Cash account however is frequently balanced to know the cash on hand. Assets accounts always show debit balances and it is the value of the asset owned by business.

Nominal Accounts, not to be balanced as they are to be closed by transfer to final accounts. A debit balance in a nominal account indicates that it is an expense or loss. A credit balance in a nominal account indicates that it is an income or gain. Balances in personal and real accounts are shown in the Balance Sheet and the balances in nominal accounts are taken to the Profit and Loss Account.

Lets understand procedure to balance the accounts.

• Find difference between total amount of debit column and credit column.
• If the debit exceeds credit, enter this difference in the amount column of the credit side, alongwith date of balancing and words “By Balance c/d” (c/d means carried down) in the particulars column. If the credit exceeds the debit , enter this difference in the amount column of the debit side, alongwith date of balancing and words “To Balance c/d” in the particulars column.
• Sum up both the amount columns, and put the total on both the sides
• Enter the date of the beginning of the next period and bring down the debit balance on the debit side along with the words “To Balance b/d” (b/d means brought down) in the particulars column and the credit balance on the credit side along with the words “By balance b/d” in the particulars column.

In place of c/d and b/d, the words c/f or c/o (carried forward or carried over) and b/f or b/o (brought forward or brought over) may also be used.

When the balance is carried down in the same page, the words c/d and b/d are used, while balance is carried over to the next page, the term c/o and b/o are used. When balance is carried forward to some other page either in same book or some other book, the abbreviations c/f (carried forward) and b/f (brought forward) are used.

How would you balance following account in the ledger on March 31,2009?

Dr		Shrikant's Account					Cr
Date	Particulars	J.F	Amount	Date	Particulars	J.F	Amount
Mar 10,2009	To Sales A/c		100000	Mar 5, 2009	By Sales Return A/c		10000
Mar 10,2009	To Sales A/c		50000	Mar 19, 2009	By Cash A/c		25000
			Total : 150000	April 1, 2010	By Bank A/C		50000
	To Balance b/d		65000		By Balance c/d		65000
							Total : 165000

Next Page :  Subsidiary Books
Go Back to : General Ledger Concepts

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General Ledger Concepts : Accounting Basics Day 3

All types of accounts we learnt in the last chapter viz. personal, real, and nominal are summarized in Ledger. Ledger is a book which contains a classified and permanent record of all the transactions of a business. Ledgers are bound book or loose leaf with each account starting on new page, and each page numbered. Loose-leaf ledger allows addition of pages, removal of completed accounts, and rearrangement of accounts.
Ledger is principal book containing all the accounts also called “Book of Final Entry” or “Book of secondary entry” because transactions are recorded here finally.
Ledger offers following benefits

• Ledger gives snapshot of an account, all at one place. For example all cash transactions at one place.
• Trial balance can be prepared to check arithmetical accuracy of the accounts in ledger.
• It facilitates preparation of final accounts for ascertaining operating result and financial position of the firm.

Ledger Book

Dr							Cr
Date	Particulars	J.F	Amount	Date	Particulars	J.F	Amount
Year Month Date	To (Name of Credit Account in Journal)			Year Month Date	By (Name of Debit account in Journal)

As shown above each ledger account is divided into two parts: left hand side is known as debit side and right hand side credit side. Debit and credit is abbreviated as ‘Dr.’ and ‘Cr.’ Account name is mentioned in the middle and at the top of the account. ‘To’ is used on the debit side in the particulars column. Similarly, the word ‘By’ is used on the credit side. The name of the account affected is written in debit or credit side in particulars column. Journal page number is entered in J.F column. For amount a separate column is also provided.
Posting of Transactions
Posting is the process of transferring entries from journal to the respective accounts in the ledger. All transactions relating to a particular account are grouped in ledger. It is necessary to know the net effect of various transactions during a given period on particular account.
Now we shall see the procedure of posting entries from journal to ledger. Let us assume a scenario of posting for an account which has been debited in the journal entry.

1. First locate account to be debited. Enter date of the transaction in date column.
2. Record the name of the account credited in the Journal in the particulars column on the debit side as “To..... (Name of the account credited)”.
3. Record the page number of the Journal in the J.F column on the debit side and in the Journal, write the page number of the ledger on which a particular account appears in the L.F. column.
4. Enter the relevant amount in the amount column on the debit side.For scenario of posting for an account which has been credited in the journal entry, procedure is same, except at step 1 and 2. These steps would be as follows
5. First locate account to be credited. Enter date of the transaction in date column.
6. Record the name of the account debited in the Journal in the particulars column on the credit side as “By..... (Name of the account debited)”.

For example
If you have started business with cash Rs. 5000 on 1st June 2009. The above transaction will appear in Journal and Ledger as under.

Date	Particulars	L.F	Debit Rs	Credit Rs
Jun 1,	Cash A/c Dr.	10	5000	-
2009	To Capital A/c	23	-	5000
	(Business started)

Here two accounts are involved, Cash Account and your capital account, so ledger shall have page for each account.

Dr		Cash Account					Cr
Date	Particulars	J.F	Amount	Date	Particulars	J.F	Amount
June 1, 2009	To Capital A/C		5000

Dr		Cash Account					Cr
Date	Particulars	J.F	Amount	Date	Particulars	J.F	Amount
				June 1, 2009	Cash A/c		5000

Posting of Opening Entries
We learnt about opening entries which are passed at the beginning of new financial year which is nothing but the debit or credit balance of an account at the end of accounting period. Let us see the procedure.
An account with debit balance is recorded with words “TO BALANCE B/D” on debit side and with credit balance “BY BALANCE B/D” on credit side. We can not say this process as “posting” but merely incorporating in the ledger.
Let us take one example of posting the opening entry into the ledger of PHPL as on 1st April 2010, cash in hand Rs. 10,000; Loan Rs. 1,00,000.

Dr		Cash Account					Cr
Date	Particulars	J.F	Amount	Date	Particulars	J.F	Amount
April 1, 2010	To Balance A/c		100000

Dr		Loan Account					Cr
Date	Particulars	J.F	Amount	Date	Particulars	J.F	Amount
				April 1, 2010	By Balance b/d		1000000

Next Page:

• Balancing General Ledger Accounts
• Subsidiary Books

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Special Cases of Journalling

A business concern has bank relationship and takes up bank transactions such as cash paid into bank, payment of cheques for expenses and cheques issued to suppliers or creditors, cheques and bills received from customers paid into bank for collection. Any cheque received is treated as cash.
Consider a sample transaction,
July 18, 2009 – Opened a current account with Indian Bank Rs.10,000.

Step 1	Determine the two accounts involved in the transaction	Bank Account	Cash Account
Step 2	Classify the account under Real, Personal, Nominal	Personal Account	Real Account
Step 3	Find out the rules of debit credit	Debit the receiver	Credit what goes out
Step 4	Identify which account is to be debited and credited	Bank A/C is to be debited	Cash Account is to be credited

Date	Particulars	L.F	Debit Rs	Credit Rs
July 18,	Indian Bank A/c Dr.	34	10000	-
2009	To Cash A/c	10	-	10000
	(Opened Cash Account)

September 3, 2009 – Rent paid by cheque Rs. 5,000.

Step 1	Determine the two accounts involved in the transaction	Real Account	Bank Account
Step 2	Classify the account under Real, Personal, Nominal	Nominal Account	Personal Account
Step 3	Find out the rules of debit credit	Debit all expenses and loses	Credit the giver
Step 4	Identify which account is to be debited and credited	Rent A/C is to be debited	Bank Account is to be credited

Date	Particulars	L.F	Debit Rs	Credit Rs
Sep 3,	Rent A/c Dr.	56	5000	-
2009	To Bank A/c	34	-	5000
	(Rent Paid by Cheque No.)

As per principles of accounting business is a separate entity from business owners. Hence all transactions have to be analysed from business point of view and not from proprietor’s point of view. The initial amount with which a business is started is known as Capital. The owner may withdraw certain amounts from the business to meet personal expense or goods for personal use. It is called Drawings. Following table shows treatment of this transaction.

Drawing from business	Goods	Value of purchases decreases	Debit drawings A/c
			Credit Purchases a/c
	Cheque	Bank-the giver	Debit drawings A/c
			Credit Bank a/c
	Cash	Cash goes out	Debit drawings A/c
			Credit bank a/c

Lets consider one such transaction.

 July 31, 2009 – Shrikant withdrew for personal use Rs. 20,000.

Step 1	Determine the two accounts involved in the transaction	Drawings Account	Cash Account
Step 2	Classify the account under Real, Personal, Nominal	Personal Account	Real Account
Step 3	Find out the rules of debit credit	Debit the receiver	Credit what goes out
Step 4	Identify which account is to be debited and credited	Debit Drawing Account	Credit Cash Account

Date	Particulars	L.F	Debit Rs	Credit Rs
Jul 31,	Drawing A/c Dr.	99	20000	-
2009	To Cash A/c	10	-	20000
	(Cash withdrawn for personal use)

Compund journal entry is made when transactions of same nature occur on the same day. Similar transactions are entered as combined journal entry. The total debit should be equal to credit.

Lets try to understand this by an example.
July 23, 2009 – Shrikant contributed capital Rs. 50,000
                          Arun contributed capital Rs. 50,000

Date	Particulars	L.F	Debit Rs	Credit Rs
Jul 23,	Cash A/c Dr.	10	100000	-
2009	To Shrikant's A/c	91	-	50000
	To Arun's A/c	92	-	50000
	(Cash withdrawn for personal use)

Sometime the goods are sold to a customer on credit and if the amount becomes irrecoverable due to buyer’s insolvency or for some other reason, then that amount becomes bad debts. For recording this transaction, the bad debts account is debited because the unrealised amount is a loss to the business and the customer’s account is credited.

Let’s see this transaction in the journal.
Camlin Ltd which owed us Rs.10,000 is declared insolvent and 25 paise in a rupee is received from her on 15th July, 2009.

Date	Particulars	L.F	Debit Rs	Credit Rs
Jul 15,	Cash A/c Dr.	10	2500	-
2009	Bad Debt's A/c	100	7500	-
	To Camlin Ltd's A/c	92	-	10000
	(25 paise in a rupee received)

If bad debt written off previously is recovered then cash account is debited and bad debts recovered account is credited because the amount so received is a gain to the business.
Received cash for a Bad debt written off on July15, 2009, Rs.7,500 on 15th decemeber, 2009.

Date	Particulars	L.F	Debit Rs	Credit Rs
Dec 15,	Cash A/c Dr.	10	7500	-
2009	Bad Debt's Recovered A/c Dr	45	-	7500
	(Bad Debt Recovered)

In the beginning of each year “opening entry” is passed to record closing balance of assets and liabilities of the previous year. While doing this, asset account is debited and ‘capital and liabilities” account is credited. (Capital=Assets-liability)
Lets see an example. Following balances appeared in the books of Tata motors ltd
1st January 2009 – Cash Rs. 7,000, Bank Rs.70,000, Stock Rs.80,000, Furniture Rs.10,000, Computer Rs.50,000, Debtors Rs.33,000 and Creditors Rs.90,000.

Date	Particulars	L.F	Debit Rs	Credit Rs
Jan1,	Cash A/c Dr.	10	7000	-
	Bank A/c Dr	45	70000	-
	Stock A/c Dr		80000	-
	Debtor A/c Dr		33000	-
	Furniture A/c Dr		10000	-
	Computer A/c Dr		50000	-
	To Creditors A/c		-	90000
	To Capital's A/C		-	160000
	(assets and liabilities brought forward)

Recap

In this section, we shall review what we learnt in paragraphs above and some new concepts. We learnt that every business transaction affects at least two accounts, and hence our accounting system is known as a double entry system.

• For example, when a your company borrows Rs1,000 crores from a bank, the transaction affects the company's Cash account and Notes Payable account. When the company repays bank loan, the Cash account and the Notes Payable account are also involved.
• If a company buys supplies in exchange for cash, its Supplies account and Cash account will be affected. If supplies are bought on credit, the accounts involved are Supplies and Accounts Payable.
• If a company pays rent for the current month, Rent Expense and Cash are the two accounts involved.
• If a company provides service on credit and gives client 30 days for payment, the company's Service Revenues account and Accounts Receivable are affected.

Though the system is referred to as double entry, a transaction may involve more than two accounts. In case of loan payment by company to the bank, three accounts are involved: Cash, Notes Payable, and Interest Expense.
Generally following types of accounts are increased with a debit:

1. Dividends (Draws)
2. Expenses
3. Assets
4. Losses 

Remember D – E – A – L

Generally following types of accounts are increased with a credit:

1. Gains 
2. Income 
3. Revenues 
4. Liabilities 
5. Stockholders' (Owner's)

Equity Remember G – I – R – L – S.

To decrease an account we shall do the opposite of what was done to increase the account.
We also learnt about real and nominal account. Asset, liability, and most owner/stockholder equity accounts (capital) are referred to as " real accounts " (or " permanent accounts"). These accounts are not closed at the end of the accounting year; their balances are automatically carried forward to the next accounting year.

Nominal accounts (or "Temporary accounts ") include all of the revenue accounts, expense accounts, the owner drawing account, and the income summary account. The balances in temporary accounts increase throughout the accounting year and are "zeroed out" and closed at the end of the accounting year. “Zeroing out” in case of revenue and expense account is done by closing/transferring/clearing balances to the income summary account. The net amount is then closed/transferred/cleared to owner’s equity account (capital) or Retained earnings (in case of corporations). The Drawing A/c of the owner is also temporary account which is closed directly without going through an income summary account. This is means new accounting year starts with no revenue or expense or drawing amount.

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Journalling

The accounting books in which transaction is recorded for first time from any of above source document are known as books of prime entry or journal because “journal” is one such book where business transactions are recorded in chronological order by following double entry system. It is shown below.

Date	Particulars	Ledger folio	Debit Rs	Credit Rs

Date: Year and month written first and only once till it changes followed by dates in that month. Sequence matters.
Particulars: For each transaction two accounts are affected, one account is debited and the other is credited. Account to be debited is written first followed by word “Dr”. Account to be credited is written in the next line which starts with word ‘To’, a few spaces away from the margin.
Narration: The transaction is explained briefly in brackets after entering particulars.
Ledger Folio (L.F): Entries from this journal are posted to the ledger account sometime later in the day. The folio (page) number of the ledger, where the posting has been made from the Journal is recorded in the L.F column of the Journal. Till such time, this column remains blank.
Debit Amount: In this column, the amount of the account being debited is written.
Credit Amount: In this column, the amount of the account being credited is written. If you are given a task of making entry (journal entry) into the journal to you, how will you do it? Follow following steps for ‘journalling”.

• First analyse business transaction 
• Determine which two accounts are involved in the transaction. 
• Classify the above two accounts under Personal, Real or Nominal or asset, capital, liability, income, expenses etc 
• Determine which rules are applicable for debit and credit for the above two accounts. 
• Identify which account is to be debited and which account is to be credited. 
• Record the transaction as per convention for date, particular, narration etc.

Illustrations for Journalling
Consider following transactions to be recorded in the journal.
1. August 1, 2009 – Shrikant started business with Rs. 1,00,000.
2. August 3, 2009 : Received cash from Vijay Rs. 25,000
3. September 7, 2009 – Paid cash to Tushar Rs.37,000.
4. October 7, 2009 – Bought goods for cash Rs. 80,000.
5. december10, 2004 – Cash sales Rs.90,000.
6. January 15, 2004 – Sold goods to Sudeep on credit Rs.1,00,000.
7. January 18, 2009 – Purchased goods from Simrat on credit Rs.1,50,000.
8. February 20, 2009 – Returned goods from Sudeep Rs.5,000.
9. February 25, 2009 – Goods returned to Simrat Rs.7,000.
10. February 27, 2009 – Paid salaries in cash Rs.6,000.
11. March 14, 2009 – Commission received Rs.5,000.

Journal Entry for first Transaction

Step 1	Determine the two accounts involved in the transaction	Cash Account	Capital Account
Step 2	Classify the account under Real, Personal, Nominal	Real Account	Personal Account
Step 3	Find out the rules of debit credit	Debit what comes in	Credit the giver
Step 4	Identify which account is to be debited and credited	Cash A/C is to be debited	Capital Account is to be credited

Date	Particulars	L.F	Debit Rs	Credit Rs
August 1,	Cash A/c Dr.	10	1000000	0
2009	To Capital A/c	23	0	1000000
	(Initial capital for business)

Journal Entry for Second Transaction

Step 1	Determine the two accounts involved in the transaction	Cash Account	Vijay's Account
Step 2	Classify the account under Real, Personal, Nominal	Real Account	Personal Account
Step 3	Find out the rules of debit credit	Debit what comes in	Credit the giver
Step 4	Identify which account is to be debited and credited	Cash A/C is to be debited	Vijay's Account is to be credited

Date	Particulars	L.F	Debit Rs	Credit Rs
August 1,	Cash A/c Dr.	10	25000	-
2009	To Vijay's A/c	30	-	25000
	(Cash received from Vijay)

The Ledger Folio column indicates 10 against Cash Account which means that Cash Account is found in page 10 in the ledger and this debit of Rs.1, 00,000 to Cash A/c can be seen on that page. Similarly 23 and 24 against Capital A/c and Vijay’s a/c respectively indicates the page number in which these accounts may be found.

 TRY IT OUT : Record remaining transactions in the above format.

Next Page: Special Cases of Journalling

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Debit and Credit Rules : Accounting Basics Day 2

Debit and Credit
In the preceding session we learnt about “Account”. Account is a place to record transactions of similar nature where all debit and credit happen which is an account. All transactions relating to any asset or liability or expense or income are recorded in an account.

An account is a record of all business transactions relating to a particular person or asset or liability or expense or income. The place where such a record is maintained is termed as an ‘Account’.

Visually an account has two sides viz. the left hand side is for Debit and the right hand side for Credit. Debit is abbreviated as Dr. and Credit Cr.

Now let’s see when to fill debit column and when credit column. There are two ways as we have seen in the previous session. 1) Accounting Equation Approach, 2) Traditional Approach.

As per accounting equation approach rules for debit and credit depend on the nature of an account. Account may be classified as follows
1. Assets Accounts
2. Liabilities Accounts
3. Capital Account
4. Incomes (Revenues) Accounts
5. Expenses (Losses)

Accounts Whenever there is increase or decrease in one account, there will be equal decrease or increase in another account.

Rules for Debit and Credit

Nature of Account	Increase	Decrease
Asset	Debit	Credit
Liability	Credit	Debit
Capital	Credit	Debit
Income	Credit	Debit
Expenses	Debit	Credit

According to traditional approach, accounts are classified as
1.Personal
2. Real
3.Nominal.
As per this approach rules for debit and credit are

Nature of Account	Debit	Credit
Personal Accounts	Receiver	Giver
Real Accounts	What comes in	What goes out
Nominal Accounts	All expenses and losses	All incomes and gains

Read More : Illustration of Accounting Equations

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FNDLOAD Commands for Migration

The Generic Loader (FNDLOAD) is a concurrent program that can transfer Oracle Application entity data between database and text file.The loader reads a configuration file to determine which entity to access.

1 - Printer Styles
FNDLOAD apps/apps O Y DOWNLOAD $FND_TOP/patch/115/import/afcppstl.lct file_name.ldt STYLE PRINTER_STYLE_NAME="printer style name"

2 - Lookups
FNDLOAD apps/apps O Y DOWNLOAD $FND_TOP/patch/115/import/aflvmlu.lct file_name.ldt FND_LOOKUP_TYPE APPLICATION_SHORT_NAME="FND"
LOOKUP_TYPE="lookup name"

3 - Descriptive Flexfield with all of specific Contexts
FNDLOAD apps/apps O Y DOWNLOAD $FND_TOP/patch/115/import/afffload.lct file_name.ldt DESC_FLEX P_LEVEL=’COL_ALL:REF_ALL:CTX_ONE:SEG_ALL’ APPLICATION_SHORT_NAME="FND" DESCRIPTIVE_FLEXFIELD_NAME="desc flex name" P_CONTEXT_CODE="context name"

Examples:
Note <274528.1> - Note How To Download Single Context Using FNDLOAD For Descriptive Flexfield.
Note <256573.1> - How To Download/Upload Descriptive Flexfield With Name $SRS$.

4 - Key Flexfield Structures
FNDLOAD apps/apps O Y DOWNLOAD $FND_TOP/patch/115/import/afffload.lct file_name.ldt KEY_FLEX P_LEVEL=’COL_ALL:FQL_ALL:SQL_ALL:STR_ONE:WFP_ALL:SHA_ALL:CVR_ALL:SEG_ALL’ APPLICATION_SHORT_NAME="FND" ID_FLEX_CODE="key flex code" P_STRUCTURE_CODE="structure name"

5 - Concurrent Programs
FNDLOAD apps/apps O Y DOWNLOAD $FND_TOP/patch/115/import/afcpprog.lct file_name.ldt PROGRAM APPLICATION_SHORT_NAME="FND" CONCURRENT_PROGRAM_NAME="concurrent name"

6 - Value Sets
FNDLOAD apps/apps O Y DOWNLOAD $FND_TOP/patch/115/import/afffload.lct file_name.ldt VALUE_SET_VALUE FLEX_VALUE_SET_NAME="value set name"

7 - Value Sets with values
FNDLOAD apps/apps O Y DOWNLOAD $FND_TOP/patch/115/import/afffload.lct file_name.ldt VALUE_SET FLEX_VALUE_SET_NAME="value set name"

8 - Profile Options
FNDLOAD apps/apps O Y DOWNLOAD $FND_TOP/patch/115/import/afscprof.lct file_name.ldt PROFILE PROFILE_NAME="profile option" APPLICATION_SHORT_NAME="FND"

8 - Request Groups
FNDLOAD apps/apps O Y DOWNLOAD $FND_TOP/patch/115/import/afcpreqg.lct file_name.ldt REQUEST_GROUP REQUEST_GROUP_NAME="request group" APPLICATION_SHORT_NAME="FND"

10 - Request Sets
FNDLOAD apps/apps O Y DOWNLOAD $FND_TOP/patch/115/import/afcprset.lct file_name.ldt REQ_SET
APPLICATION_SHORT_NAME="FND" REQUEST_SET_NAME="request set"

Examples:
Note <247126.1> - How To Download Request Set Definition From One Instance And Upload On Another Instance

11 - Responsibilities
FNDLOAD apps/apps O Y DOWNLOAD $FND_TOP/patch/115/import/afscursp.lct file_name.ldt FND_RESPONSIBILITY RESP_KEY="responsibility"

12 - Menus
FNDLOAD apps/apps O Y DOWNLOAD $FND_TOP/patch/115/import/af
sload.lct file_name.ldt MENU MENU_NAME="menu_name"

13 - Request Group program name
FNDLOAD apps/xxx123 O Y DOWNLOAD $FND_TOP/patch/115/import/afcpreqg.lct XX_supplier_ConcProg_REQ.ldt REQUEST_GROUP REQUEST_GROUP_NAME='All Reports' APPLICATION_SHORT_NAME='SQLAP' REQUEST_GROUP_UNIT UNIT_APP='XXXXX' UNIT_TYPE='P' UNIT_NAME='XX_AP_supplier_conv_program'

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Illustrations of Accounting Equation with Examples

The starting point for accounting process is accounting equation. We have seen before that accounting equation is based on dual aspect concept (debit and credit) that each transaction has Two effects, one on asset and another on claims on the assets (liability).
Total claims i.e. of the owners and outsiders are equal to the total assets of the firm. These claims on asset are also known as equities 1. Owner’s equity (capital) 2.Outsider’s equity (liability).
Assets = Capital + Liabilities (A = C+L)
where asset=equity

Now it is time to learn effect of transaction on accounting equation. If you started a business with Rs. 10,000 as capital and the firm received Rs. 10,000 in the form of cash, then transaction equation can be written as
Assets = Capital + Liabilities
Cash = Capital + Liabilities  Rs. 10,000 = Rs. 10,000 + 0

Now if you buy some basic furniture for Rs. 1000 then your “cash” asset decreases and “furniture” asset increases by same amount. Total asset remain same.

Assets = Capital + Liabilities
Cash + Furniture = Capital + Liabilities
First transaction 10,000 + 0 = 10,000 + 0
Second transaction (–) 1,000 + 1,000 = 0 + 0
----------------------------------------------
Equation 9,000 + 1,000 = 10,000 + 0

Now suppose you buy goods worth Rs. 1500, then cash will be utilized at the same time, leaving asset unchanged. The equation will look like as given

Cash + Furniture + Stock = Capital +Liabilities
1st and 2nd transaction 9000 + 1000 + 0 = 10,000 + 0
3rd (–) 1500 + 0 + 1500 = 0 + 0
----------------------------------------------
Equation 7500 + 1000 + 1500 = 10000 + 0

Now suppose you buy goods on credit for Rs. 500. This transaction will create liability with increase in assets.
Cash + Furniture + Stock = Capital +Creditors
Transaction 1-3 7500 + 1000 + 1500 = 10,000 + 500
Transaction 4 0 + 0 + 500 = 0 + 500
----------------------------------------------
Equation 7500 + 1000 + 2000 = 10,000 + 500


Next lets assume that you sold goods costing Rs.1500 for Rs. 2000 on credit then “Debtors” account will go up by Rs.2000 and “cost of goods sold” would come down by Rs.1500. The increase of Rs. 500 would be your “Revenue” which would be added to the capital.

Cash + Furniture + Stock + Debtors = Capital + Creditors+Revenue
Transaction 1-4 7500 + 1000 + 2000 + 0 = 10,000 + 500
Transaction 5 0 + 0 +(-)1500 + 2000 = 500 + 0
-------------------------------------------------------------
Equation 7500 + 1000 + 500 + 2000 = 10500 + 500

Lets assume now that you paid wages to the pizza delivery boys of Rs. 1300. It is an expense (loss to the company) and reduces capital.
Cash + Furniture + Stock + Debtors = Capital + Creditors
Transaction 1-5 7500 + 1000 + 500 + 2000 = 10500 + 500
Transaction 6 – 1300 + 0 + 0 + 0 = –1300 + 0
-------------------------------------------------------------
Equation 6200 + 1000 + 500 + 2000 = 9200 + 500

What is evident from above series of transactions? The accounting equation holds good in all cases. Thus one thing to note is that when one asset increases, other asset decreases or liability increases or capital increases. Similarly when asset decreases , another asset increases and liability or capital decreases.

Above transaction may be put in presentable format as given below.

Your balancesheet as on___________

Liabilities	Rs.	Assets	Rs.
Capital	9200	Cash	200
Creditors	500	Stock	500
		Debtors	2000
		Furniture	1000
	9700		9700

Now we shall see for some sample transactions how accounts are affected.

S.No	Business Transaction	Which account and how it is effected
		Assets	Liabilities
1	Capital injection in business	Cash increases	Capital creation
2	Cash used to purchase stocks	Stock increases and cash decreases	No effect
3	Purchases on credit	Stock increases	Creditors increases
4	Any expense (e.g. rent,salaries)	Cash decreases	Capital decreases
5	Sale on cash	stock decreases and cash increases	No effect
6	Payment to creditors	Cash decreases	Capital decreases
7	Credit sale	Stock decreases/Debtors increases	No effect

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Accounting assumptions, Concepts and Principles

Accounting is called as language of the business. This language has certain assumptions, concepts, and principles which are necessary for all interested parties to know to understand accounting results of the company. First we shall learn about assumptions which are like pillars. 
1) Business is an entity separate from the owners/creditors etc. By this logic owner’s capital is credit to the company. This is Accounting Entity Assumption.
2) Only financial transactions and events get recorded in accounting. This is Money Measurement Assumption
3) Users of the financial reports are interested in periodical reports because they want to know financial position for certain period by certain date. This is Accounting period principle. 4) Business shall go on without winding it up in foreseeable future is the assumption while recording transaction. This is Going Concern Assumption. In accounting there are certain concepts which guide recording of business transactions. Assumptions given above have given rise to following concepts
 1. All business transactions are recorded in TWO aspects. When business acquires asset, it is receiving benefit but it must pay which is giving benefit. This is called Dual aspect principle which is the basis for Double Entry System of book-keeping.
 2. Any revenue is recognized as income earned on a date only when it is realized. This is Revenue Realisation (Recognition) Concept. Certificate in Accounting Fundamentals L1 TCS Business Domain Academy Page 16 of 18 Unrealised revenue should not be considered as it may inflate income and hence profits.
 3. All the assets are recorded at their acquisition price and further accounting treatment is based on this cost. For example land bought at Rs. 500,000 might fetch Rs. 800,000 at the time of preparing statements but figure shown will be Rs.500000 and not 800000. This is historical cost concept.
 4. All revenues earned are matched with expenses (cost) during a given accounting period to come to the final financial position. This is matching concept. This concept helps in determining accurate profit forgiven period.
 5. Various interested parties expect full and complete disclosure so that they can make rational decision. This is Full Disclosure Concept.
 6. For each business transaction in the books of accounts should have adequate evidence to support it and free from any bias. This is Verifiable and Objective Evidence Concept. Above principles and concepts can be modified, using modifying principles given below.
  1. Cost of applying principle should not be more than the benefit derived from it. If cost is more than benefit then that principle may be modified. This is cost – benefit principle. 2. All relatively relevant information should be disclosed in the financial statement. Insignificant and immaterial information should be left out. This is materiality principle.
  3. The rules, practices, concepts and principles used in accounting by a firm should be applied year after year consistently to ensure comparability of financial statements. For example if company uses “straight line depreciation” method in the first year, it should use it consistently for forthcoming years. This is Consistency principle.
  4. Consider all prospective losses but leave all prospective profits. This is Prudence principle .The essence is ‘“anticipate no profit and provide for all possible losses”. For example, while valuing stocks, market price or cost price whichever is less should be considered.

Accounting Standards
To promote world-wide uniformity in published accounts, the Certificate in Accounting Fundamentals L1 TCS Business Domain Academy Page 17 of 18 International Accounting Standards Committee (IASC) was set up in 1973 to formulate and publish standards (International Accounting Standards-IAS) to be observed in presentation of financial statements for world-wide uniformity. IASC minimizes differences in accounting practices across countries. IASC became IASB (B for Board) in 2003. Since then, the IASB has amended some IASs/replaced some IASs with new International Financial Reporting Standards (IFRSs)/proposed certain new IFRSs on topics for which there was no previous IAS.In our country the Institute of Chartered Accountants of India (ICAI) has constituted Accounting Standard Board (ASB) in 1977. The ASB has been empowered to formulate and issue accounting standards.

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