1. Financial Accounting Teacher : Mohammad Junaid Iqbal
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2. Lecture # 1
Book keeping:- The word book or books mean the book of accounts and keeping implies maintaining in proper form & order.
 The book keeping may be defined as the art of recording business transactions in book in a regular and systematic
manners. OR
 The science and art of correctly recording in books of
account all those business transactions that result In the
transfer of money worth. OR
The science and art of recording business transactions in
systematic way as a trader may we know the result of this
trade at the end of certain period and may also prove the

3. accuracy of such records.
The science and art of correctly recording business daily in a set of books with a view of
having permanent record of transaction and
financial result there-of.
Important terms of book keeping
Transaction
Proprietor
Drawing
Purchase return
sellers
sellers return

4. Debtor Creditor Assets Voucher Cash discount Equity Transaction:-
The dealing between two person or things or parties is called transaction.
Transactions are of two types
1) Cash transaction 2) Credit transaction

5. Credit transaction:- Cash transaction:-
when a cash is paid or required as a result of
an exchange the transaction is said to be
cash transaction.
Credit transaction:-
when a payment or receipt of cash is postponed for a future data this transaction is said to be credit transaction.
Proprietor:-
He is the owner of a business, he invest capital in it and give his time and attention to it.

6. The amount with which the trader start his business OR
Capital:-
The amount with which the trader start his business OR
 The amount which is actually invested in business at any given time is known as capital.
Drawing:-
The cash or goods taken away by the proprietor from the business for his personal use are called Drawings.
Purchase return:-
If a goods purchases are found defter or unsatisfactory. They are sometime return to the

7. person from whom they were purchased are called purchase return.
sellers:-
sold the goods is called sellers. It has two types
1) cash sellers
2) credit sellers
Sellers return:-
If a person to whom goods have been sold finds that they are defective and unsatisfactory and return, then are called sellers return.
Debtor :-
 A person who owe money to another is Debtor.
 When we say that owe Mr. rahim R.s=2000

8. we mean that we have received from Mr. Rahim R
we mean that we have received from Mr.Rahim R.s=2000 which we have to repay
we stand as debtor to Mr.rahim for r.s=2000.
Creditor:-
A person who pays out something or to whom money is owing is a creditor.
Assets:-
The property that are possessed by the business is called assets.

9. Liabilities:-
They are the debts due by a business to it proprietor and others.
Voucher:-
Any written evidence in support of a business transaction is called voucher.
Cash discount:-
 It is a deduction allowance allowed by a creditor to a debtor.
 If a person pays his debts before the due date of payment the recipient may grant

10. him an allowance for doing to. This allowance is known as cash discount.
Equity:-
A clam which can b enforced against the assets of the firm is called Equity .
Equity are of two types.
1) The right of the creditor
2) The right of the owner
The equities of creditor represent debts of the business and are called liabilities .
The equities of the owners is called capital proprietorship or owners equity.

11. Lecture # 2 Double ENTRY BOOK-Keeping
 The double entry theory of book keeping
can be defined as the system of recording transactions having two fundamental aspects.
One involving the receiving of a benifet and the other to giving the benefit in the same set of book.
Every transaction involves two fold aspects e.g an aspects of receiving and an aspects of giving.
One who receives is a debtor (DR) and

12. one who gives is a creditor (cr). Single entry VS Double entry
Single entry system is a system of book-keeping which does not follow the double entry system.
as such does not record or give effect to the two fold aspects of each and every transaction.
As such single entry system of book-keeping is not perfect and fraud and mistakes can easily be detected.
Meaning of Accounting
Accounting is defined as “the art of recording classifying and summarizing in term of money

13. transaction and event of a financial characters and interpreting the result there-of.
Branches of Accounting
Accounting has three main forms of branches
Financial Accounting
Cost Accounting
Management Accounting
1) Financial Accounting:-
 It is the original form of accounting. It is mainly confined to the preparation of financial statement for the use of outsiders like
creditor , banks and financial institution etc.

14. 3) Management accounting:- It is the accounting for the management i.e
the chief purpose of financial accounting is to calculate profit or loss made by the business.
2) Cost Accounting:-
Function of cost accounting is to ascertain the cost of product and help the management in the control of cost.
3) Management accounting:-
It is the accounting for the management i.e
accounting which provides necessary information
to the management for discharging its information.
It is the reproduction of financial accounting in
such a way as will enable the management to
take decision and to control activities.

15. lecture # 05 Parties interested in Accounting information
(1) Owner (2) Management
(3) Creditor (4) Employees
(5) Investors (6) Government
(7) Consumers
The above portion was given as assignment
Accounting Cycle:-
It refers to a complete sequence of an accounting procedures which are required to be repeated in same order during each accounting period.
Accounting cycle include
(a) Recording (b) Classifying
(c) summarizing

16. Recording:-
All transaction should be recorded in the journal or books of original entry known as
subsidiary books as and when they take place .
Classifying:-
All the entries in journal or book of original Entry should be posted to the appropriate ledger accounts to find at a glance the total effect of all such transaction in a particular account.
Summarizing:-
Last stage is to prepare the trial balance and final accounts with a view to ascertaining the profit or

17. loss made during a trading period and the financial position of the business on a particular date.

18. Lecture # Journal
The word journal has been derived from the French word "jour " means day .so journal means daily.  Transaction are recorded daily in journal and hence it has been name so. Its is a book of original entry to record chronologically ( I.e. on order of date and in detail the various transaction of a traders.  Characteristics of Journal
1) journal is the first successful step of double entry system. A transaction is recorded first of all in journal .so the journal is called the " book of original Entry" .
2) A transaction is recorded on the same day it takes place so the journal is called day book.

19. 3) Transaction are recorded chronologically so journal is called chronological book.
4) For each transaction the name of two concerned accounts indicating which is debited and which is credited are clearly written in two consecutive lines.
5) Narration is written below each entry.
The amount is written in the last two column debited amount in debit column and credit amount in credit column.

20. 3) proprietorship 4) Revenue 5) Expenses 1). Assets:-
Lecture # 07 Rules of Debit & Credit
In order to understand the rules of debit and credit the accounts are classified into five(5) categories
  1) assets liability
3) proprietorship ) Revenue
 5) Expenses
1). Assets:-
      Assets means the resources of the business or commodities possessed by the business. e.g Land building , cash stock in trade etc.
 2) liability:-        Liability mean claim of the suppliers of cash or  commodities on credit up to his balance due on the date .e.g.

21. e.g Suppliers of goods
3) Proprietorship:-
It means the claim of the owner of the business for his interest up to his investment after finalizing the expanses and revenue up to the date of capital
4) Revenue:-
 It means any type of income directly or indirectly of the business .e.g interest received, sale of goods, dividend received etc.
5) Expenses:-
Expenses means any type of expenses directly or indirectly of the business. e.g.

22. Increase in expenses is debit. Decrease in expenses is credit.
HOW TO USE THESE RULES
HOW TO DEBIT & HOW TO CREDIT
ASSETS:-       Increase in assets is debit.       Decrease in assets is credit. LIABILITIES:-
  Decrease in liability account is debit.       Increase in liability account is credit. PROPRIETORSHIP:-
        Decrease in proprietorshiip account is debit.         Increase in proprietorship account is credit. REVENUE:-
        Decrease in revenue account is debit.        Increase in revenue account is credit. EXPENSES:-
       Increase in expenses is debit.        Decrease in expenses is credit.

23.                        PRACTICALLY
DEBIT       NAME OF Financial ACCOUNT     CREDIT Increase     Assets                   Decrease Increase      Expenses              Decrease Decrease      Liability               Increase Decrease     Proprietor             Increase Decrease     Revenue Increase
Numerical on next page

24. On 1st January 1991 , salman started business with a capital of at R
On 1st January 1991 , salman started business with a capital of at R.S 20'000 and his transection of the month were as follows
Jan 02           Purchased build for cash R.s   8000 
    Jan 08           Purchased goods from C   R.s  1000
  Jan 15           Sold goods for cash         R.s 500
  Jan 20           Goods returned to  C     R.s. 100
    Jan 22           Sold goods to rehman     R.s. 400
    Jan 25           Rehman returned goods   R.s. 25
    Jan 31           Salaries  paid for month   R.s. 200
    Jan 31           Rent paid for month           R.s. 150
Rescored these transaction in journal 

25.   Date         Particular         L.F      Dr           Cr                                                                                         Cash
 1st jan              Cash account to                          20,000
                                    Capital acc
     1991             Started business                                                  20,000
                                    Or  Cap. into 
 2nd Jan.           Building acc to                            8000
                                     Cash acc
     1991.            Purchased build                                                    8000
                                   For cash
   8th Jan.             Purchased  acc                           1000
                                    To C acc
                Purchased goods                                                      
                                   From C
   15th Jan.         Cash acc.                                      500
                                      To sale acc
   1991.                Sold goods for cash                                            500

26.   20th Jan.          C     to purchase                           100
                                       Return 
                Goods return to C                                               100
   22nd Jan          Rehman to                                    400
                                                Sale acc 
               Sold goods to rehman                                         400
   25th Jan.         Sales return                                      25
                                          To rehman 
                 Rehman return goods                                          25
    31st Jan.          Salaries to                                       200
                                        Cash 
                  Salaries paid                                                          200
    31st Jan.          Rent to                                           150
                                           Cash 
     1991.               Rent paid                                                             150
_____________________________________________________________
                                                               Total.       ,375          10, 375

27. On 1st April 1991 a merchant started business with a capital of R
On 1st April 1991 a merchant started business with a capital of R.s and his transactions of the month were as follows   
April 2nd          Purchase  machinery  For R.s   700
    April 3rd        Bought furniture from  salman   R.s  300
    April   07       Purcgase goods for cash     R.s 2500
    April 08       Sold goods to rehman &sons  R.s. 1500
    April 10         Bought goods from b         R.s. 1000
                                                &
                          Bought goods from.  C     R.s. 2000
April 12         Received cash from rehman      R.s                                            & sons
Allowed him discount  Of Rupee R.s. 50

28. April 15 Paid " B " cash R. s. 975 Discount receive R. s
    April 15         Paid " B " cash                                     R.s. 975                              Discount receive                               R.s. 25    April 16         Returned  goods to "C"                       R.s.   500   April  17         Sold goods to aslam.                          R.s  April 20         Goods return by aslam.               R.s.   200   APRIL 21       Purchase from kareem goods  Of    RS 600                            of the list price subject to a 10%
                trade discount   April 22           paid "c" cash                                   RS 1500   April 25           Gave away a charity                       RS 50                             cash  &  goods worth                       RS 30   April 27          Distributed goods                            RS 200                             worth as free sample                           & Goods taken away                       RS 100                              by the proprietor for personal use  April 28           Amount withdraw                                 RS 200                               By the proprietor for private use   April 30      Salaries paid for  month                   RS 500
  Date              Particular         L.F      Dr            Cr
   1st april                Cash account to                  15,000                                     Capital acc                                    Cash to capital                           ,000

29. we are sorry and its now up-to-date completely.
   nd April             Machinery acc to                                                                   Cash acc                            Purchased  Machinery for cash                                  7000    3rd april              Furniture acc                           300                                     To  salman                               Bought furniture  to salman                                        300
  April 07               Purchase acc.                                                                            To cash acc                             Purchase goods for cash                                                April 08.         rehman & sons to                                   1500                                       Sold acc                        Sold goods to rehman and sons                                         April 10             Purchase acc                                           3000                                        To "B" , " C "                        Bought goods from B &                                                                                                         C.                                                            2000   April 12        Cash discount to                                       1450 cash                                       rehman & sons.                           50 discount                      Received cash from rehman & sons                        
some little bit transaction left from 15 to 30 in above
we are sorry and its now up-to-date completely.

30. Designed By: JAMAL SHAH
This is
Introduction to financial accounting
For BSCS students
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Designed By: JAMAL SHAH