Mada za sehemu hiiColuminary Cash BookMada 1
- Columinary cash book
Ledger is an account in which business transactions are recorded. It holds necessary accounting information for the preparation of trial balance.
- To know the total purchases and sales of a firm during a particular financial year
- To know the amount spent on each kind of operating expense.
- To know the total amount earned on each kind of income for a particular period of time
- It helps to check arithmetical accuracy.
- It helps to prepare trial balance.
- It helps to prepare trading, profit and loss accounts.
There are three types of ledger that is sales, purchases and general ledger.
- Sales ledger: This is a book of account in which the personal accounts of credit customers are kept. A credit customer is also called debtor
- Purchases ledger: A book of account is which personal accounts of credit suppliers are kept
- General ledger: A book of account in which all other accounts are kept
Accounts has been classified as:
- Personal Account - These are the accounts that relate to the names of debtors and creditors.
- Real Account - These are accounts for keeping records of items such as machines, furniture, premises, etc.
- Nominal Accounts - These are accounts for income profit and expenses of the business.
Book of prime entry are the books accounts in which credit transactions are recorded. They include purchases day book, purchases returns day book, sales day book and sales return day book.
a. Purchases day book
This is a book of prime entry in which credit purchases are entered.
Example: Enter the following credit purchases in the purchases day book for the month of September 1990.
| Date | Details | |
|---|---|---|
| Sept 1 | Bought from Mbagala Traders | |
| 150 bags of wheat flour @ 15,000 | ||
| 60 bags of wheat @ 20,000 | ||
| 4 | Bought from Viale Shop | |
| 15 boxes of pens @ 5,000 | ||
| 30 bags of salt @ 8,000 |
PURCHASES DAY BOOK
| Date | Details | Ledger Folio | Invoice Details | Invoice Total |
|---|---|---|---|---|
| 1/9/90 | MBAGALA TRADERS 150 bags of wheat flour @ 15,000 60 bags of sugar @ 20,000 | 2,250,000 1,200,000 | 3,450,000 | |
| 4/9/90 | VIALE SHOP 15 boxes of pens @ 5,000 30 bags of salt @ 8,000 | 75,000 240,000 | 315,000 | |
| 3,765,000 | ||||
| Purchases a/c Dr | G.L | 3,765,000 |
b. Purchases returns day book
A book of account in which returns of goods to the supplier are recorded. Another name for purchases returns day book is returns outward journal.
Example: Record the following transactions in the purchases returns day book:
| Date | |
|---|---|
| Jan 1. | Goods returned to Amina Wholesaler 10 boxes of soap expired soap @ 2,500 |
| 2. | Goods returned to ABC Company 5 bags of salt @ 6,500, expired goods |
| 3 | Goods returned to Ape 16 books of Commerce Form Two @ 15,000 not the type ordered. |
PURCHASES RETURNS DAY BOOK
| Date | Details | Folio | Invoice Details | Invoice Total |
|---|---|---|---|---|
| Jan 1 | AMINA WHOLESALER 10 boxes of soap @ 2,500 expired goods | 25,000 | ||
| 2 | ABC Company 5 bags of salt @ 6,500 Expired goods | 32,500 | ||
| 3 | APE 16 books Commerce Form Two @ 15,000 Not the type ordered | 240,000 | ||
| Returns outwards a/c Cr | G.L | 297,500 |
c. Sales day book
A book of account in which credit sales made by customers are recorded.
Example: Kent Shop made the following credit sales during the month of August:
| Date | |
|---|---|
| August 1 | Sold goods to Co-operative society 120 dozens of vitenge at sh 100 a dozen. |
| 8 | Sold to Mwananchi Shop 300 pairs rubber shoes at 2,000 per pair. 450 pairs of boots at 3,500 per pair. |
| 10 | Sold goods to Umoja Shop 80 counter books at 3,000 per counter and 65 rulers at 300 per ruler. |
Required: Record the above transactions in the sales day book.
SALES DAY BOOK
| Date | Details | Folio | Invoice Details | Invoice Total |
|---|---|---|---|---|
| August 1 | CO-OPERATIVE SOCIETY 120 dozens vitenge @ 100 | 12,000 | ||
| 8 | MWANANCHI SHOP 300 pairs of rubbers @ 2,000 450 pairs of boots @ 3,500 | 600,000 1,575,000 | 2,175,000 | |
| 10 | UMOJA SHOP 80 counter books @ 3,000 65 rulers @ 300 | 240,000 19,500 | 259,500 | |
| Sales Account Cr | G.L | 2,446,500 |
d. Sales returns day book
A book of account in which returns of goods made by the customers are recorded. A credit note is sent by the seller to the customer to inform him that his account has been credited.
Example:
The following returns were made during the month of August
August 9 Cooperative society returned 30 dozens of vitenge at Tsh 1,000 per dozen, 10 dozen of Khanga at Tsh 1,500 per dozen damaged on transit.
15 Umoja Shop returned 20 counter books at Tsh 3,000 per counter not type ordered.
Required: Enter the above transaction in sales returns day book.
SALES RETURNS DAY BOOK
| Date | Details | Folio | Invoice Details | Invoice Total |
|---|---|---|---|---|
| August 9 | COOPERATIVE SOCIETY 30 dozen vitenge @ 1,000 10 dozen Khanga @ 1,500 Damaged on transit | 30,000 15,000 | 45,000 | |
| 15 | UMOJA SHOP 20 counter books @ 3,000 | 60,000 | ||
| 31 | Returns inward A/C Dr | G.L | 105,000 |
- Sales invoice: a document that is sent to the buyer by seller when the goods are sold on credit.
- Purchases invoice: A document received by the buyer when the goods are purchased on credit.
- Credit note: A document sent by supplier to a customer to reduce the debts.
- Debit note: A document issued by the buyer to seller as a means of requesting a credit note
Financial statement are the statements which are prepared at the end of trading period to show the profit earned or loss suffered by the business firms. It includes income statement and statement of financial position
- Assessment of past performance
- Assessment of current position
- Predictions of profitability and growth of the firm
- Prediction of bankruptcy and failure
- Assessments of management operation efficiency
- Managers of the business concern
- Shareholders
- Prospective investors
- Financial institutions
- Suppliers
- Customers
- Employees
- Competitors
- Government
This is a financial statement which reports either profit or loss made by the business firm.
This is also called balance sheet. It shows assets and liabilities of business firms.
Example: From the given trial balance below you are required to prepare:
- Income statement
- Statement of financial position
TRIAL BALANCE AS AT 31st DEC. 2008
| S/N | NAME OF ACCOUNT | DR | CR |
|---|---|---|---|
| Capital | 5,000 | ||
| Purchases | 3,000 | ||
| Sales | 3,600 | ||
| Stock 1/1/2008 | 500 | ||
| Insurance | 40 | ||
| Advertising | 200 | ||
| Lighting and heating | 80 | ||
| Land | 500 | ||
| Account receivable | 100 | ||
| Salaries | 400 | ||
| Cash at bank | 3,780 | ||
| 8,600 | 8,600 |
Closing stock at 31st December 2008 was Tsh 750
INCOME STATEMENT FOR THE MONTH ENDED 31st DEC 2008
| Sales | 3,600 | |
| Less: Cost of goods sold | ||
| Opening stock | 500 | |
| Add: Purchases | 3,000 | |
| COGAS | 3,500 | |
| Less: Closing stock | 750 | |
| (2,750) | ||
| Gross profit | 850 | |
| Less: Operating expenses | ||
| Insurance | 40 | |
| Advertising | 200 | |
| Lighting and heating | 80 | |
| Salaries | 400 | |
| (720) | ||
| Net profit | 130 |
STATEMENT OF FINANCIAL POSITION AS AT 31st DECEMBER 2008
| Non-current assets | ||
| Land | 500 | |
| Current Assets | ||
| Stock | 750 | |
| Account receivable | 100 | |
| Cash at bank | 3,780 | |
| 4,630 | ||
| Net assets | 5,130 | |
| Financed by | ||
| Capital | 5,000 | |
| Add: Net profit | 130 | |
| 5,130 |
Mwalimu
Unasoma somo hili? Niulize nikuelezee chochote kilichomo.
Ingia ili kumuuliza Mwalimu wa AI wa Sonza kuhusu mada hii.
Ingia ili kuuliza