Treatment of Transactions Under Traditional Approach

Compiled by G.RAVI SANKAR SAGAR – M.Com., Lecturer in Commerce and Accountancy, Tirupati. Mob: 8099647473. Analysis of Transactions under Traditional Approach Expense – Income Asset – Liability Loss – Gain Provisions - Reserves Type of Account Nature Final Accounts Trading/P&L/B.S If Given in Adjustments Category of Expenses Balance (Dr/Cr) Trading/ P&L/ B.S Dr/Cr Recorded twice in Two Places B.A/ B.L Tr/P&L O.S/ P.P Expenses – Trading Account Purchases Nominal Expense Trading Dr - Purchases Expenses Dr Carriage/Carriage Inwards Nominal Expense Trading Dr Tr B.L B.A Purchases Expenses Dr Carriage on Purchases Nominal Expense Trading Dr Tr B.L B.A Purchases Expenses Dr Purchases Commission Nominal Expense Trading Dr Tr B.L B.A Purchases Expenses Dr Freight/ Freight Inwards Nominal Expense Trading Dr Tr B.L B.A Purchases Expenses Dr Cartage/ Cartage Inwards Nominal Expense Trading Dr Tr B.L B.A Purchases Expenses Dr Clearing charges Nominal Expense Trading Dr Tr B.L B.A Purchases Expenses Dr Octroi Nominal Expense Trading Dr Tr B.L B.A Purchases Expenses Dr Marine Insurance Nominal Expense Trading Dr Tr B.L B.A Purchases Expenses Dr Import Duty Nominal Expense Trading Dr Tr B.L B.A Purchases Expenses Dr Royalty Paid for Copy rights, books, mines Nominal Expense Trading Dr Tr B.L B.A Purchases Expenses Dr Customs Duty Nominal Expense Trading Dr Tr B.L B.A Purchases Expenses Dr Duty paid on Purchases Nominal Expense Trading Dr Tr B.L B.A Purchases Expenses Dr Miscellaneous Purchase Expenses Nominal Expense Trading Dr Tr B.L B.A Purchases Expenses Dr Wages/ Wages and Salaries Nominal Expense Trading Dr Tr B.L B.A Factory Expenses Dr Consumable Store Expense Nominal Expense Trading Dr Tr B.L B.A Factory Expenses Dr Water Charges Nominal Expense Trading Dr Tr B.L B.A Factory Expenses Dr Motive Power Nominal Expense Trading Dr Tr B.L B.A Factory Expenses Dr Oil, Fuel, Gas, Coal Nominal Expense Trading Dr Tr B.L B.A Factory Expenses Dr Electricity Charges Nominal Expense Trading Dr Tr B.L B.A Factory Expenses Dr Factory Lighting and Heating Nominal Expense Trading Dr Tr B.L B.A Factory Expenses Dr Salary to Factory Manager Nominal Expense Trading Dr Tr B.L B.A Factory Expenses Dr Salary to Works Manager Nominal Expense Trading Dr Tr B.L B.A Factory Expenses Dr Commission to Works Manager Nominal Expense Trading Dr Tr B.L B.A Factory Expenses Dr Factory Rent, Rates, Insurance Nominal Expense Trading Dr Tr B.L B.A Factory Expenses Dr OtherProduction/ Sundry Manufacturing Expenses Nominal Expense Trading Dr Tr B.L B.A Factory Expenses Dr Packing of Finished Goods Nominal Expense Trading Dr Tr B.L B.A Factory Expenses Dr Repairs and Renewals for Machinery Nominal Expense Trading Dr Tr B.L B.A Factory Expenses Dr Stock Insurance Premium Nominal Expense Trading Dr Tr B.L B.A Factory Expenses Dr Power Nominal Expense Trading Dr Tr B.L B.A Factory Expenses Dr Purchases Returns/ Returns Outwards/ Returns (Cr) Nominal Gain Trading Dr - As a deduction from Purchases Cr Drawings (Goods) Nominal Trading Dr - As a deduction from Purchases Dr Donation/Charity (Goods) Nominal Trading Dr - As a deduction from Purchases Dr Free Samples Nominal Trading Dr - As a deduction from Purchases Dr Stock used for Fixed Asset Nominal Trading Dr - As a deduction from Dr Compiled by G.RAVI SANKAR SAGAR – M.Com., Lecturer in Commerce and Accountancy, Tirupati. Mob: 8099647473. Purchases Stock used for Maintenance (Repairs) Nominal Trading Dr - As a deduction from Purchases Dr Sales Returns/ Returns Inward/ Returns (Dr) Nominal Loss Trading Cr - As a deduction from Sales Dr Miscellaneous Factory Expenses Nominal Expense Trading Dr Tr B.L B.A Factory Expenses Dr General/Sundry Expenses Nominal Expense Trading Dr Tr B.L B.A Under any Category Dr Expenses – Profit and Loss Account Salaries/ Salaries and Wages Nominal Expense P&L Dr P&L B.L B.A Office and AdmExp Dr Office Rent Nominal Expense P&L Dr P&L B.L B.A Office and AdmExp Dr Rent and Rates Nominal Expense P&L Dr P&L B.L B.A Office and AdmExp Dr Insurance/ Fire Insurance Nominal Expense P&L Dr P&L B.L B.A Office and AdmExp Dr Printing Nominal Expense P&L Dr P&L B.L B.A Office and AdmExp Dr Stationery Nominal Expense P&L Dr P&L B.L B.A Office and AdmExp Dr Audit Expenses Nominal Expense P&L Dr P&L B.L B.A Office and AdmExp Dr Legal Expenses Nominal Expense P&L Dr P&L B.L B.A Office and AdmExp Dr General Expenses Nominal Expense P&L Dr P&L B.L B.A Under any Category Dr Repairs Nominal Expense P&L Dr P&L B.L B.A Office and AdmExp Dr Postage Nominal Expense P&L Dr P&L B.L B.A Office and AdmExp Dr Conveyance Charges Nominal Expense P&L Dr P&L B.L B.A Office and AdmExp Dr Telegrams Nominal Expense P&L Dr P&L B.L B.A Office and AdmExp Dr Office lighting Nominal Expense P&L Dr P&L B.L B.A Office and AdmExp Dr Staff Welfare Expenses Nominal Expense P&L Dr P&L B.L B.A Office and AdmExp Dr Telephone charges Nominal Expense P&L Dr P&L B.L B.A Office and AdmExp Dr Office Repairs and Renewals Nominal Expense P&L Dr P&L B.L B.A Office and AdmExp Dr Bank Charges and Commissions Nominal Expense P&L Dr P&L B.L B.A Office and AdmExp Dr Other Commissions Nominal Expense P&L Dr P&L B.L B.A Office and AdmExp Dr Income Tax Nominal Expense P&L Dr P&L B.L B.A Office and AdmExp Dr Interest on Bank OD Nominal Expense P&L Dr P&L B.L B.A Office and AdmExp Dr Miscellaneous Office and Administration Expenses Nominal Expense P&L Dr P&L B.L B.A Office and AdmExp Dr Entertainment Expenses Nominal Expense P&L Dr P&L B.L B.A Office and AdmExp Dr Carriage outwards Nominal Expense P&L Dr P&L B.L B.A Selling and DistExp Dr Carriage on sales Nominal Expense P&L Dr P&L B.L B.A Selling and DistExp Dr Advertisements Nominal Expense P&L Dr P&L B.L B.A Selling and DistExp Dr Bad Debts Nominal Expense P&L Dr P&L B.L B.A Selling and DistExp/ Loss Dr Travelling Expenses Nominal Expense P&L Dr P&L B.L B.A Selling and DistExp Dr Packing Expenses Nominal Expense P&L Dr P&L B.L B.A Selling and DistExp Dr Brokerage Nominal Expense P&L Dr P&L B.L B.A Selling and DistExp Dr Trade Expenses Nominal Expense P&L Dr P&L B.L B.A Selling and DistExp Dr Freight Outwards Nominal Expense P&L Dr P&L B.L B.A Selling and DistExp Dr Cartage Outwards Nominal Expense P&L Dr P&L B.L B.A Selling and DistExp Dr Delivery Van Expenses Nominal Expense P&L Dr P&L B.L B.A Selling and DistExp Dr Commission to Sales Men Nominal Expense P&L Dr P&L B.L B.A Selling and DistExp Dr Sales Promotion Expenses Nominal Expense P&L Dr P&L B.L B.A Selling and DistExp Dr Publicity Nominal Expense P&L Dr P&L B.L B.A Selling and DistExp Dr Sales Tax which cannot be recovered from customers Nominal Expense P&L Dr P&L B.L B.A Selling and DistExp Dr Insurance of finished stock of goods in transit Nominal Expense P&L Dr P&L B.L B.A Selling and DistExp Dr Establishment Expenses Nominal Expense P&L Dr P&L B.L B.A Selling and DistExp Dr Compiled by G.RAVI SANKAR SAGAR – M.Com., Lecturer in Commerce and Accountancy, Tirupati. Mob: 8099647473. Miscellaneous selling and Distribution Expenses Nominal Expense P&L Dr P&L B.L B.A Selling and DistExp Dr Discount Allowed Nominal Expense P&L Dr P&L B.L B.A Financial Expenses Dr Interest on Capital Nominal Expense P&L Dr P&L B.L B.A Financial Expenses Dr Interest on Loans Paid Nominal Expense P&L Dr P&L B.L B.A Financial Expenses Dr Discount on Bill Discounted Nominal Expense P&L Dr - Financial Expenses Dr Miscellaneous Financial Expenses Nominal Expense P&L Dr P&L B.L B.A Financial Expenses Dr Appreciation on Assets Nominal Gain P&L Cr P&L Addition to concerned Asset Abnormal Gain Cr Depreciation on Assets Nominal Expense P&L Dr P&L Deduction from concerned asset Depreciation Expense (Non – Cash Expense) Dr Repairs for Buildings, Furniture, Machinery etc. Nominal Expense P&L Dr P&L B.L B.A Maintenance Expenses Dr Miscellaneous/Sundry Expenses Nominal Expense P&L Dr P&L B.L B.A Any Expense concerned Dr Losses – Profit and Loss Account Loss on Sale of Assets Nominal Loss P&L Dr - Abnormal Losses Dr Loss stock Due to Fire Accident Nominal Loss Tr Dr Tr and P&L Depends on Situation Abnormal Losses Dr Loss of Stock by Embezzlement Nominal Loss Tr Dr Tr and P&L Depends on Situation Abnormal Losses Dr Loss of Stock by Theft, Fraud, Misappropriation etc. Nominal Loss Tr Dr Tr and P&L Depends on Situation Abnormal Losses Dr Loss of stock due flood, earth quake etc. Nominal Loss Tr Dr Tr and P&L Depends on Situation Abnormal Losses Dr Loss of Any asset due to Fire accident, Theft, Fraud etc. Nominal Loss P&L Dr P&L As deduction from asset concern Abnormal Losses Dr Incomes and Gains – Profit and Loss Account Sales Nominal Income P&L Cr - Revenue Income Cr Discount Received Nominal Income P&L Cr P&L B.A Cr Revenue Income Cr Commission Received Nominal Income P&L Cr P&L B.A B.L Revenue Income Cr Bad debts Recovered Nominal Income P&L Cr - Revenue Income Cr Interest on Drawings Nominal Income P&L Cr P&L B.L Non – Trade Income Cr Interest on Deb, Inv etc. Nominal Income P&L Cr P&L B.A B.L Non – Trade Income Cr Rent Received on Property Nominal Income P&L Cr P&L B.A B.L Non – Trade Income Cr Apprentice Premium Nominal Income P&L Cr P&L B.A B.L Non – Trade Income Cr Profit on sale of Marketable Securities Nominal Income P&L Cr P&L B.A B.L Non – Trade Income Cr Interest on Marketable Securities Nominal Income P&L Cr P&L B.A B.L Non – Trade Income Cr Interest received on Loans and Advances Nominal Income P&L Cr P&L B.A B.L Non – Trade Income Cr Royalty Income Received Nominal Income P&L Cr P&L B.A B.L Non – Trade Income Cr Bank Interest Received Nominal Income P&L Cr P&L B.A B.L Non – Trade Income Cr Dividends from Shares Nominal Income P&L Cr P&L B.A B.L Non – Trade Income Cr Profit on Sale of Assets Nominal Gain P&L Cr - Abnormal Gain Cr Profit on Sale of Invest.. Nominal Gain P&L Cr - Abnormal Gain Cr Miscellaneous/ Sundry Income Nominal Income P&L Cr - Revenue Income Cr Compiled by G.RAVI SANKAR SAGAR – M.Com., Lecturer in Commerce and Accountancy, Tirupati. Mob: 8099647473. Assets Asset – Liability Type of Account Asset - Liability Recorded In As/Li If Given in Adjustments Category of Asset/ Liability Balance Tr/P&L Dep. App. W.O W.O Opening Stock Real Asset Trading Dr - Current Assets Dr Closing Stock Real Asset Trading Cr Tr B.A Current Assets Dr Cash in Hand/ Cash Real Asset B.S As - Current Assets Dr Cash at Bank/ Bank Real Asset B.S As - Current Assets Dr Sundry Debtors Real Asset B.S B.A P&L B.A Current Assets Dr Short Term Investments Real Asset B.S B.A P&L B.A Current Assets Dr Bills Receivable Personal Asset B.S B.A P&L B.A Current Assets Dr Prepaid Expenses Personal Asset B.S B.A Tr/P&L B.A Current Assets Dr Income Receivable Personal Asset B.S B.A Tr/P&L B.A Current Assets Dr Plant and Machinery Real Asset B.S B.A P&L B.A Tangible Fixed Asset Dr Furniture, Fitting and Fixtures Real Asset B.S B.A P&L B.A Tangible Fixed Asset Dr Motor Vehicles Real Asset B.S B.A P&L B.A Tangible Fixed Asset Dr Land Real Asset B.S B.A P&L B.A Tangible Fixed Asset Dr Freehold land Real Asset B.S B.A P&L B.A Tangible Fixed Asset Dr Loose Tools Real Asset B.S B.A P&L B.A Tangible Fixed Asset Dr Long term investments Real Asset B.S B.A P&L B.A Tangible Fixed Asset Dr Vehicles Real Asset B.S B.A P&L B.A Tangible Fixed Asset Dr Asset under Lease Real Asset B.S B.A P&L B.A Tangible Fixed Asset Dr Other Equipment Real Asset B.S B.A P&L B.A Tangible Fixed Asset Dr Goodwill Real Asset B.S B.A P&L B.A Intangible Fixed Asset Dr Patents Real Asset B.S B.A P&L B.A Intangible Fixed Asset Dr Trade Marks Real Asset B.S B.A P&L B.A Intangible Fixed Asset Dr Copy rights Real Asset B.S B.A P&L B.A Intangible Fixed Asset Dr Huge Advertisement Exp Nominal Expense B.S B.A P&L B.A Fictitious Assets Dr Preliminary Expenses Nominal Expense B.S B.A P&L B.A Fictitious Assets Dr Discount on Issue of Debentures Nominal Expense B.S B.A P&L B.A Fictitious Assets Dr Heavy repairs due to heavy rains, floods, earthquakes. Nominal Expense B.S B.A P&L B.A Fictitious Assets Dr Paint for Lease building Nominal Expense B.S B.A P&L B.A Fictitious Assets Dr Expenses for change of business Nominal Expense B.S B.A P&L B.A Fictitious Assets Dr Repairs for lease building Nominal Expense B.S B.A P&L B.A Fictitious Assets Dr Liabilities Capital Personal Liability B.S B.L - Capital Cr Drawings Personal Advane B.S B.L P&L As a deduction from capital Loans and Advances Dr Provisions Personal Liability B.S B.L P&L B.A Deduction from Asset (B.S - Assets) Cr Reserves Personal Liability B.S B.L P&L B.L Reserves and Surplus (B.S - Liabilities) Cr Bills Payable Personal Liability B.S B.L P&L B.L Current Liabilities Cr Sundry Creditors Personal Liability B.S B.L P&L B.L Current Liabilities Cr Bank OD Personal Liability B.S B.L P&L B.L Current Liabilities Cr Short – Term Loan Personal Liability B.S B.L P&L B.L Current Liabilities Cr Outstanding Expenses Personal Liability B.S B.L Tr/P&L B.L Current Liabilities Cr Income Received in Advance Personal Liability B.S B.L P&L B.L Current Liabilities Cr Loan from Individual Personal Liability B.S B.L P&L B.L Current Liabilities Cr Long term loan from Bank Personal Liability B.S B.L P&L B.L Long term Liabilities Cr Debentures Personal Liability B.S B.L P&L B.L Long term Liabilities Cr Compiled by G.RAVI SANKAR SAGAR – M.Com., Lecturer in Commerce and Accountancy, Tirupati. Mob: 8099647473. Loans from Financial Institutions Personal Liability B.S B.L P&L B.L Long term Liabilities Cr 5% Loan on Mortgage Personal Liability B.S B.L P&L B.L Long term Liabilities Cr Explanation for Abbreviations Abbreviations Explanation O.S Outstanding P.P Prepaid B.L Balance sheet – Liabilities Side B.A Balance Sheet – Assets Side Dr Debit Cr Credit P&L Profit and Loss Account Tr Trading Account As Assets Side Li Liabilities Side Exp Expenses Adm Administration Dist distribution