💰 Basics of Accounting (CMM-101T)

UNIT 1 — Introduction to Accounting

1.1 Accounting kya hai? (Meaning & Definition)

Socho tumhare papa ki ek chhoti dukaan hai. Roz subah counter kholte hain, shaam ko band karte hain. Din bhar me kitna maal aaya, kitna bikri hui, kitna udhaar gaya, kitna kharcha hua — agar ye sab kuch likhi hui jagah na ho, to agle mahine unhe ye bhi pata nahi chalega ki faayda hua ya nuksaan. Wahi likhne-rakhne ka systematic kaam Accounting hai.

American Institute of Certified Public Accountants (AICPA) ke shabdon me:

Accounting ka process (step by step)

Step 1  IDENTIFY  ->  Financial transaction identify karo (voucher aaya)
Step 2  RECORD    ->  JOURNAL me likho (double entry)
Step 3  CLASSIFY  ->  LEDGER me posting karo (account-wise)
Step 4  SUMMARISE ->  TRIAL BALANCE banao
Step 5  FINALISE  ->  Trading a/c + P&L a/c + Balance Sheet
Step 6  ANALYSE   ->  Ratio / trend analysis
Step 7  COMMUNICATE -> Report / Annual report se users tak

Characteristics / Features (properties of accounting)

1.2 Importance / Need / Objectives & Scope

(A) Objectives of Accounting

• Record karne ka objective: Har transaction ka systematic record rakhna.
• Profit/Loss nikalna: Period ka net result (Profit & Loss account se).
• Financial position batana: Balance Sheet se assets-liabilities ka picture.
• Property/assets ki jaankari aur un mein kya-kya badla — record rakhna.
• Decision support: Management, owners, bank, sarkar — sabko sahi info dena.

(B) Importance — kisko kaam aata hai? (Users of accounting information)

(C) Scope / Branches of Accounting

1.3 Basic Terms (Vocabulary — ratta maarne layak)

1.4 Accounting Principles / Concepts / Conventions (GAAP)

Ye "khel ke rules" hain. Inhi ke aadhar par financial statement samajhne layak rehte hain. Isko GAAP (Generally Accepted Accounting Principles) kehte hain.

(A) Key Concepts (basic assumptions — assume karke chalta hai)

(B) Conventions (practice-based guidelines)

1.5 Accounting Equation (sabse zyada use hoti hai)

Examples — equation kaise kaam karta hai

1.6 Types of Accounts (Accounts ke bhed)

(A) Traditional / Golden classification

Personal account ke do bhed bhi likhne hote hain: Natural (Ram, Shyam), Artificial (firms, companies, banks, government) aur Representative (Outstanding Salary A/c, Prepaid Rent A/c — ye vyakti nahi, unki taraf se khade hain).

(B) Modern / Practical classification (5 types — ALCRE)

1.7 Golden Rules of Debit & Credit (D-C ka baap)

Traditional rules (account type ke hisaab se)

Modern rules (ALCRE) — jo aaj software/Tally me chalta hai

1.8 Book-keeping vs Accounting vs Accountancy

1.9 Basis & Forms of Accounting

UNIT 2 — Journal, Ledger & Trial Balance

2.1 Journal — "Roznamcha"

Format of Journal

Date  | Particulars (Dr/Cr)              | L.F | Debit(₹) | Credit(₹)
------|----------------------------------|-----|----------|----------
Apr 1 | Cash A/c              Dr.        |     | 5,00,000 |
      |    To Capital A/c                |     |          | 5,00,000
      | (Being cash brought in as capital)|   |          |

• Date — transaction ki tareekh.
• Particulars — Debit account pehle likho (prefix "Dr."), neeche "To" lagakar credit account; dono ki narration bracket me.
• L.F. = Ledger Folio (ledger me kis page par posting ki, uska number).
• Dr./Cr. amount — barabar hona chahiye.
• Narration — short explanation "Being ..." — ye examiner ko confident dikhata hai.

Types of Journal entries (aadhi neend me bhi yaad)

Worked Journal Example (poora solve) — "Sunrise Traders"

Journal Entries (Sunrise Traders)

Apr 1  Cash A/c                      Dr.  5,00,000
          To Capital A/c                             5,00,000
       (Being business started with cash)

Apr 3  Furniture A/c                 Dr.     60,000
          To Cash A/c                                  60,000
       (Being furniture purchased for cash)

Apr 5  Purchase A/c                  Dr.  1,20,000
          To Sohan (Creditor) A/c                   1,20,000
       (Being goods purchased on credit)

Apr 8  Cash A/c                      Dr.     40,000
          To Sales A/c                                 40,000
       (Being goods sold for cash)

Apr 12 Sohan A/c                     Dr.  1,00,000
          To Cash A/c                               1,00,000
       (Being cash paid to creditor)

Apr 15 Mohit (Debtor) A/c            Dr.     75,000
          To Sales A/c                                 75,000
       (Being goods sold on credit)

Apr 18 Rent A/c                      Dr.     15,000
       Salary A/c                    Dr.     25,000
          To Cash A/c                                  40,000
       (Being rent and salary paid)

Apr 25 Cash A/c                      Dr.     45,000
          To Mohit A/c                                 45,000
       (Being cash received from debtor)

Total Debit = 5,00,000+60,000+1,20,000+40,000+1,00,000+75,000+40,000+45,000 = 9,80,000
Total Credit = same = 9,80,000  ✅ Balanced

2.2 Ledger — "Khata" (principal book)

Format of Ledger Account (T-format)

Dr.                         CASH A/C                          Cr.
Date | Particulars |  J.F | Amount | Date | Particulars | J.F |  Amount
Apr 1| To Capital  |      |5,00,000| Apr 3| By Furniture|     |   60,000
Apr 8| To Sales    |      |  40,000| Apr12| By Sohan    |     |1,00,000
Apr25| To Mohit    |      |  45,000| Apr18| By Rent     |     |   15,000
     |             |      |        | Apr18| By Salary   |     |   25,000
     |             |      |        | Apr30| By Balance c/d|   |3,85,000
     |             |      |5,85,000|      |             |     |5,85,000
May 1| To Balance b/d|     |3,85,000|      |             |     |

Posting ke steps

1. Journal ka debit account dhoondo, uska ledger me debit side likho; "To (credit account ka naam)" likho.
2. Journal ka credit account dhoondo, uska ledger me credit side likho; "By (debit account ka naam)" likho.
3. Har posting me J.F. (Journal Folio) likho.
4. Mahine/period ke end me dono side jodo → farak = balance. "Balance c/d" likh kar dono side barabar karo.
5. Naye period me "Balance b/d" likh kar shuru karo.

Journal vs Ledger

2.3 Trial Balance

Objectives / Uses

• Arithmetical accuracy check karna (Debit total = Credit total).
• Final accounts banane ka base dena (Trading, P&L, Balance Sheet).
• Errors detect karna (partially).
• Ek jagah sab account balances ka summary dena.

Rule: kaunsa account Dr. side, kaunsa Cr. side

Format of Trial Balance

TRIAL BALANCE as on 30 April
S.No | Account Name        | L.F | Debit (₹) | Credit (₹)
1    | Cash A/c            |     | 3,85,000  |
2    | Furniture A/c       |     |   60,000  |
3    | Purchase A/c        |     | 1,20,000  |
4    | Sales A/c           |     |           | 1,15,000
5    | Sohan (Creditor) A/c|     |   20,000  |
6    | Mohit (Debtor) A/c  |     |   30,000  |
7    | Rent A/c            |     |   15,000  |
8    | Salary A/c          |     |   25,000  |
9    | Capital A/c         |     |           | 5,00,000
     | TOTAL               |     |6,55,000   | 6,55,000

Methods of preparing Trial Balance

1. Totals method — har account ke total (debit total/Credit total) list karo.
2. Balances method — sirf net balance likho (sabse common).
3. Totals-cum-balances method — dono.

Errors — konse pakde jaate hain, konse nahi

Rectification of Errors

• Before Trial Balance: Entry ko seedha sudhar do (kuch cases me journal se).
• After Trial Balance, difference hua: Pehle Suspense Account kholo, difference daalo, phir ek-ek galti ka rectification entry karke Suspense ko band karo.
• After final accounts: Agar profit affected hua ho to Profit & Loss Adjustment A/c (previous year adjustment) use karo.

Common rectification examples

UNIT 3 — Final Accounts (Trading A/c, P&L A/c, Balance Sheet & Receipts-Payments)

3.1 Final Accounts kya hote hain?

3.2 Trading Account

Format of Trading Account (Vertical/T-form)

Trading Account for the year ended 31 March

Dr. Particulars            Amount | Particulars                     Amount
To Opening Stock          xx,xxx  | By Sales                  xx,xxx
To Purchases     xx,xxx           |    Less: Returns inward  (xx,xxx)
   Less: Returns outward (xx,xxx) |    = Net Sales             xx,xxx
     = Net Purchases      xx,xxx  | By Closing Stock           xx,xxx
To Wages / Carriage in / Freight  |
   / Octroi / Dock / Factory rent |
   / Fuel, Power, Coal / Gas /    |
   Customs duty (import)  xx,xxx  |
To Gross Profit (transferred to   |
   P&L A/c)               xx,xxx  |
----------------------------------|-----------------------------------
        TOTAL             ======  |        TOTAL              ======

3.3 Profit & Loss Account

Typical items — Debit side (expenses/losses)

• Office & administrative: Salary, Rent (office), Printing & Stationery, Postage, Telephone, Insurance, Audit fees, Legal charges.
• Selling & distribution: Advertisement, Carriage outward, Salesman commission, Bad debts, Provision for doubtful debts, Discount allowed, Packing (for delivery).
• Financial: Interest on loan, Bank charges, Discount on issue of shares, Interest on capital.
• Maintenance & others: Repairs, Depreciation, Loss by fire/theft (jo insurance se cover nahi hua), Charity/Donation.

Credit side (incomes/gains)

• Gross Profit (Trading A/c se)
• Discount received, Commission received, Interest received on investments/deposits
• Rent received, Dividend received, Profit on sale of old asset, Excess provision written back, Bad debts recovered

Profit & Loss Account for the year ended 31 March

Dr. Particulars              Amount | Particulars                    Amount
To Salary                   xx,xxx  | By Gross Profit b/d         xx,xxx
To Rent, Rates & Taxes      xx,xxx  | By Discount received        xx,xxx
To Printing & Stationery    xx,xxx  | By Commission received      xx,xxx
To Advertising              xx,xxx  | By Interest received        xx,xxx
To Carriage outward         xx,xxx  | By Rent received            xx,xxx
To Bad debts + Provision    xx,xxx  | By Profit on sale of asset  xx,xxx
To Depreciation             xx,xxx  | By Bad debts recovered      xx,xxx
To Interest on loan         xx,xxx  |
To Net Profit (to Capital)  xx,xxx  |
------------------------------------|------------------------------------
       TOTAL                ======  |       TOTAL                 ======

3.4 Balance Sheet

Two formats

Balance Sheet as on 31 March
Liabilities                 Amount | Assets                      Amount
Capital          xx,xxx            | Fixed Assets:
  Add: Net Profit  xx,xxx          |   Building / Plant / Machinery
  Less: Drawings  (xx,xxx)         |   Furniture, Vehicles (after dep)
Long-term Liabilities:             | Investments
  Bank Loan, Debentures            | Current Assets:
Current Liabilities:               |   Closing Stock, Debtors (less prov.)
  Creditors, Bills payable,        |   Bills receivable, Prepaid expenses
  Outstanding expenses, Bank O/D,  |   Accrued income
  Provision for tax, Income         | Cash in hand, Cash at bank
  received in advance              | Loans & Advances, Loose tools
-----------------------------------|-----------------------------------
       TOTAL               ======  |        TOTAL                ======

3.5 Adjustments (ye pura numerical ka scoring part hai)

Balance Sheet banate waqt kuch entries wo hoti hain jinka effect do jagah hota hai — P&L me bhi aur Balance Sheet me bhi. Isliye adjustment ke baad dono side dobara banana padta hai.

Worked Numerical — Trading + P&L + Balance Sheet

Given (Sunrise Traders, year ended 31 March):
Opening stock     1,20,000    Sales                9,00,000
Purchases         5,60,000    Sales returns          20,000
Carriage inward     15,000    Purchase returns       30,000
Wages               45,000    Closing stock         1,50,000
Salary              80,000    Rent received          12,000
Rent (office)       36,000    Discount received       8,000
Advertisement       25,000    Capital               4,00,000
Bad debts            6,000    Loan (12% p.a.)       2,00,000
Insurance           14,000    Creditors             1,10,000
Depreciation on furniture 8,000  Furniture         1,60,000
                                Debtors (before provision) 1,05,000
                                Cash + Bank           1,78,000

Step 1: Trading Account
Dr. To Opening Stock 1,20,000 | By Sales 9,00,000
    To Purchases 5,60,000      |    Less Returns 20,000 => 8,80,000
      Less Returns 30,000 => 5,30,000 | By Closing Stock 1,50,000
    To Carriage inward 15,000  |
    To Wages 45,000            |
    To Gross Profit c/d 2,20,000 |
    TOTAL 10,30,000 | TOTAL 10,30,000
GP = 8,80,000 + 1,50,000 - (1,20,000 + 5,30,000 + 15,000 + 45,000) = 2,20,000

Step 2: P&L Account
Dr. To Salary 80,000    | By Gross Profit 2,20,000
    To Rent 36,000      | By Rent received 12,000
    To Advertisement 25,000 | By Discount received 8,000
    To Bad debts 6,000  |
    To Insurance 14,000 |
    To Depreciation 8,000 |
    To Interest on loan 24,000 |
    To Net Profit c/d 47,000 |
    TOTAL 2,40,000 | TOTAL 2,40,000
Net Profit = 2,40,000 - 1,93,000 = 47,000

Step 3: Balance Sheet as on 31 March
Liabilities                     | Assets
Capital 4,00,000                | Furniture 1,60,000 - 8,000 = 1,52,000
 Add: Net Profit 47,000         | Debtors 1,05,000
 = 4,47,000                     | Stock 1,50,000
Loan 2,00,000                   | Cash & Bank 1,78,000
Creditors 1,10,000              |
Interest on loan outstanding 24,000 |
TOTAL 7,81,000 | TOTAL 7,81,000  ✅

3.6 Manufacturing Account (extra but poocha jata hai)

Jo firm khud maal banati hai (e.g. biscuit factory), wo trading se pehle Manufacturing A/c banati hai. Isme: Opening WIP + Raw material consumed + Direct wages + Factory overheads − Closing WIP = Cost of Production, jo Trading A/c me transfer kiya jaata hai.

3.7 Receipts & Payments Account (Not-for-Profit organisations)

Receipts & Payments Account for the year ended 31 March
Dr. Receipts                          Cr. Payments
To Balance b/d (cash+bank)  xx,xxx    By Rent & Taxes            xx,xxx
To Subscriptions received   xx,xxx    By Salaries                xx,xxx
To Entrance fees            xx,xxx    By Electricity & Water     xx,xxx
To Donations                xx,xxx    By Sports expenses         xx,xxx
To Interest received        xx,xxx    By Charity/Donations given xx,xxx
To Sale of old furniture    xx,xxx    By Insurance               xx,xxx
To Bank interest            xx,xxx    By Purchase of furniture   xx,xxx
To Locker rent              xx,xxx    By Investments purchased   xx,xxx
                                      By Balance c/d (cash+bank) xx,xxx
TOTAL =====                             TOTAL =====

Receipts & Payments vs Income & Expenditure vs Balance Sheet

UNIT 4 — Depreciation Accounting & Stock Valuation

4.1 Depreciation kya hai?

Tumhare ghar me fridge 10 saal chalega. Uska purana hona — body rust lagna, compressor ka weak hona, resale value girna — ye sab depreciation hai. Company ke books me bhi har fixed asset ki value saal-dar-saal ghanti hai — kyunki wo "use" hota hai.

Causes of Depreciation (5 causes — exam me pakka)

Need / Objectives of charging depreciation

• True profit nikalna — asset ke use ka cost usi saal ke revenue se match karna (matching concept).
• True financial position — asset ko grip value par dikhana.
• Replacement fund — paisa jama hoke nai machine kharidne me kaam aaye.
• Tax benefit — expense hone se taxable profit kam, tax bachta hai.
• Cost of production sahi nikalna — cost accounting ke liye zaroori.
• Dividend decision — capital ko dividend me baant dena galat hoga.

Factors (jo calculation me chahiye)

1. Cost of asset (kharid ki keemat + installation + freight + erection)
2. Estimated useful life (saal/ghante/units)
3. Estimated scrap/salvage/residual value
4. Method of depreciation chunna

4.2 Methods of Depreciation

SLM vs WDV — comparison table (ca favourite)

Worked example — dono method side by side

Machine cost        = ₹5,00,000
Scrap value         = ₹50,000
Useful life         = 5 years
WDV rate            = 20% p.a.

SLM: Depreciation = (5,00,000 - 50,000) / 5 = ₹90,000 every year
Year  Depreciation  Book value (closing)
1     90,000        4,10,000
2     90,000        3,20,000
3     90,000        2,30,000
4     90,000        1,40,000
5     90,000          50,000  (= scrap ✅)

WDV: Dep = 20% of book value
Year  Depreciation      Book value (closing)
1     20% of 5,00,000 = 1,00,000   4,00,000
2     20% of 4,00,000 =   80,000   3,20,000
3     20% of 3,20,000 =   64,000   2,56,000
4     20% of 2,56,000 =   51,200   2,04,800
5     20% of 2,04,800 =   40,960   1,63,840
NOTE: WDV me kisi bhi saal value 0 nahi hoti - sirf girti rehti hai.

Journal entry (har saal):
Depreciation A/c            Dr.
     To Machinery / Asset A/c
(P&L me depreciation expense; Balance Sheet me asset ki value kam)

Transfer at year end:
Profit & Loss A/c           Dr.
     To Depreciation A/c

4.3 Depreciation vs Depletion vs Amortisation

4.4 Stock / Inventory Valuation

Methods of Stock Valuation

Worked example — FIFO vs Weighted Average

Transactions:
1 Apr  Opening stock   100 units @ ₹10  = 1,000
10 Apr Purchase        200 units @ ₹12  = 2,400
20 Apr Purchase        100 units @ ₹15  = 1,500
Total available        400 units       total cost = 4,900
Sale during month      250 units  (closing stock = 150 units)

FIFO (purana pehle gaya):
Sold = 100 units @10 (1,000) + 150 units @12 (1,800) = 2,800
Closing stock = 50 units @12 (600) + 100 units @15 (1,500) = ₹2,100

Weighted Average:
Average cost = 4,900 / 400 = ₹12.25
Closing stock = 150 x 12.25 = ₹1,837.50
Cost of goods sold = 250 x 12.25 = ₹3,062.50

Compare: FIFO closing stock (2,100) > Weighted average (1,837.50)
=> FIFO me zyada profit, FIFO se tax bhi zyada. Isi logic se exam me
   "price badhne par kaunsa method zyada profit dikhayega?" ka answer = FIFO.

UNIT 5 — Computerised Accounting & Tally

5.1 Role of Computers in Accounting

Benefits / Role of computers (10 points — poora answer)

Limitations / Challenges

• Setup cost (software + hardware + training) zyada.
• Staff ko training chahiye — thoda resistance hota hai.
• Data security & hacking/virus ka risk; regular backup zaroori.
• System failure/power cut ka risk — UPS aur cloud backup chahiye.
• GIGO: Garbage In Garbage Out — galat input se galat report.
• Sab kuch automate ho gaya to basic accounting samajh kamzor ho sakti hai 😅

5.2 Tally — Practical Applications

Tally ke features (exam me likhne layak)

Accounting ke basic concepts Tally me

• Company Information: create company, company details (name, financial year, address, currency), alter, delete, security control, backup/restore.
• Groups: Ledger accounts ko group me baantna (28 pre-defined primary/secondary groups). Jaise Sundry Debtors, Sundry Creditors, Bank Accounts, Cash-in-hand, Sales Accounts, Purchase Accounts, Expenses, Capital, Loans.
• Ledgers: Actual accounts jinme entry ki jaati hai — Capital, Ram (debtor), SBI bank, Rent, Salary, GST Output.
• Vouchers: Transaction ke prakaar.
• Display/Reports: Day Book, Ledger, Trial Balance, Trading A/c, P&L A/c, Balance Sheet, Cash/Fund Flow, Ratio Analysis, Outstanding statements.

Types of Vouchers in Tally

Basic steps — Tally me company banana

Step 1  Gateway of Tally > Company Info > Create Company
        -> Name, Financial year (1 Apr - 31 Mar), book beginning, currency
Step 2  Create Ledgers: Accounts Info > Ledgers > Create
        -> Capital A/c (Group: Capital Account)
        -> Cash A/c      (Group: Cash-in-hand)
        -> SBI A/c       (Group: Bank Accounts)
        -> Purchase A/c  (Group: Purchase Accounts)
        -> Sales A/c     (Group: Sales Accounts)
        -> Rent, Salary  (Group: Indirect Expenses)
        -> Ram           (Group: Sundry Debtors)
        -> Sohan         (Group: Sundry Creditors)
Step 3  Voucher entry karo (F4 - F9 ke through) as per transaction
Step 4  Reports dekho: Display More Reports > Trial Balance / P&L / Balance Sheet
Step 5  Backup: Company Info > Backup / restore data; period-end closing

Worked practical example (Tally me kya karna hoga)

Transaction: Ram ko ₹25,000 ka maal cash me becha

Tally me:
  Voucher: SALES (F8)
  Party A/c: Cash            (Debit)
  Sales Ledger: Sales A/c    (Credit)
  Amount: 25,000
  GST (agar registered ho to): CGST 2.5% + SGST 2.5% ya IGST 5%
  -> Bill print, e-invoice QR (turnover limit ke baad)
Note: Tally khud debit-credit auto-balance karega.

Transaction: Bank se cash nikala ₹10,000
  Voucher: CONTRA (F4)
  -> Cash A/c Dr. 10,000 ; To Bank A/c 10,000

Transaction: Depreciation ₹8,000 pass karni hai
  Voucher: JOURNAL (F7)
  -> Depreciation A/c Dr. ; To Furniture A/c

5.3 Computerised vs Manual Accounting