Trial Balance As On January 31, 20-- Lecture 1 Ali Traders Trial Balance As On January 31, 20-- Title of Account Code Dr. Rs. Cr. Rs. Cash Account 01 35,000 Bank Account 02 130,000 Capital Account 03 200,000 Furniture Account 04 15,000 Vehicle Account 05 50,000 Purchases Account 06 60,000 Mr. A (Creditor) 07 Sales 08 95,000 Mr. B (Debtor) 09 Salaries 10 5,000 Expenses 11 20,000 Expenses Payable 12 Total 330,000

Accounting Equation Assets = Capital + Liabilities Lecture 1 Accounting Equation Assets = Capital + Liabilities Assets = 35,000+130,000+15,000+50,000+15,000= 245,000 Capital = 200,000 Liabilities = 15,000 + 20,000 = 35,000 Capital + Liabilities = 235,000

Trial Balance As On January 31, 20-- Lecture 1 Ali Traders Trial Balance As On January 31, 20-- Title of Account Code Dr. Rs. Cr. Rs. Cash Account 01 35,000 Bank Account 02 130,000 Capital Account 03 200,000 Furniture Account 04 15,000 Vehicle Account 05 50,000 Purchases Account 06 60,000 Mr. A (Creditor) 07 Sales 08 95,000 Mr. B (Debtor) 09 Salaries 10 5,000 Expenses 11 20,000 Expenses Payable 12 Total 330,000

Balance Sheet of Ali Traders Lecture 1 Balance Sheet of Ali Traders Name of the Entity (Ali traders) Balance Sheet As At (January 31, 20--) Liabilities Assets Particulars Amount Rs. Capital 200.000 Fixed Assets 65,000 Profit and Loss Account 10,000 Furniture 15,000 Current Liabilities Mr. A 15,000 Exp. payable 20,000 210,000 35,000 Vehicle 50,000 Current Assets Mr. B 15,000 Bank 130,000 Cash 35,000 180,000 Total 245,000

Balance Sheet of Ali Traders Lecture 1 Balance Sheet of Ali Traders Ali traders Balance Sheet As At January 31, 20-- Particulars Amount Rs. Assets Fixed Assets Current Assets 65,000 180,000 Total 245,000 Liabilities Capital Profit and Loss Account 200,000 10,000 210,000 Current Liabilities 35,000

Working Capital Working Capital = Current Assets – Current Liabilities Lecture 1 Working Capital Working Capital = Current Assets – Current Liabilities

Cost of Sales & Closing Stock Lecture 1 Cost of Sales & Closing Stock Closing Stock – The Value of goods unsold at the end of the accounting period. Cost of Sales = Purchases – Closing Stock.

Treatment of Closing Stock Lecture 1 Treatment of Closing Stock Closing Stock = 1,000 Cost of goods sold => 60,000 - 1,000 = 59,000

Ali Traders Profit and Loss Account Lecture 1 Ali Traders Profit and Loss Account Name of the Entity (Ali Traders) Profit and Loss Account for the Month Ending January 31, 20-- Particulars Amount Rs. Income / Sales / Revenue Less: Cost of Goods Sold ( 60,000 - 1,000 ) (59,000) 95,000 Gross Profit Less: Administrative Expenses (25,000) 36,000 Net Profit 11,000

Treatment of Closing Stock Lecture 1 Treatment of Closing Stock Closing Stock = 1,000 Current assets => 180,000 + 1,000 = 181,000

Value of Stock Used = Opening Stock + Purchases - Closing Stock Lecture 1 Value of Stock Used = Opening Stock + Purchases - Closing Stock

Balance Sheet of Ali Traders Lecture 1 Balance Sheet of Ali Traders Ali traders Balance Sheet As At January 31, 20-- Particulars Amount Rs. Assets Fixed Assets Current Assets (180,000 + 1,000) 65,000 181,000 Total 246,000 Liabilities Capital Profit and Loss Account 200,000 11,000 210,000 Current Liabilities 35,000

Utilization of Fixed Assets Lecture 1 Utilization of Fixed Assets Dividing total cost by life of the asset. Rs. 65,000 / 50 months = Rs. 1,300 monthly charge

Treatment of Depreciation Lecture 1 Treatment of Depreciation Rs. 1,300 is treated as expense. Fixed assets => 65,000 - 1,300 = 63,700 This net amount of Rs. 63,700 is referred to as Book Value OR Written Down Value (WDV)

Ali Traders Profit and Loss Account Lecture 1 Ali Traders Profit and Loss Account Name of the Entity (Ali Traders) Profit and Loss Account for the Month Ending January 31, 20-- Particulars Amount Rs. Income / Sales / Revenue Less: Cost of Goods Sold ( 60,000-1,000 ) (59,000) 95,000 Gross Profit Less: Administrative Expenses Depreciation (25,000) (1,300) 36,000 (26,300) Net Profit 9,700

Balance Sheet of Ali Traders Lecture 1 Balance Sheet of Ali Traders Ali traders Balance Sheet As At January 31, 20-- Particulars Amount Rs. Assets Fixed Assets (65,000 – 1,300) Current Assets (180,000 + 1,000) 63,700 181,000 Total 244,700 Liabilities Capital Profit and Loss Account 200,000 9,700 209,700 Current Liabilities 35,000

Distribution of Profits / Drawing Lecture 1 Distribution of Profits / Drawing

Balance Sheet of Ali Traders Lecture 1 Balance Sheet of Ali Traders Ali traders Balance Sheet As At January 31, 20-- Particulars Amount Rs. Assets Fixed Assets (65,000 – 1300) Current Assets (181,000 - 5,000) 63,700 176,000 Total 239,700 Liabilities Capital Profit and Loss Account Drawing 200,000 9,700 (5,000) 204,700 Current Liabilities 35,000