Book-keeping is part of Accounting. It is the primary stage in accounting. It is the process of recording transactions in the books of accounts.
Accounting is part of Accountancy. Accounting is the process of recording, classifying, analysing and interpreting of financial data. Accountancy is the systematic knowledge of accounting process and contains the standards, principles, policies and procedures to be followed in accounting.

Significance of debit and credit balances of various types of accounts: There are three possibilities while balancing an account during a given period. It may be a debit balance or a credit balance or a nil balance depending upon the debit total and the credit total.
(i) Debit Balance: The excess of debit total over the credit total is called the debit balance.
(ii) Credit Balance: The excess of credit total over the debit total is called the credit balance.
(iii) Nil Balance: When the total of debits and credits are equal, it is closed by merely writing the total on both the sides. It indicates the equality of benefits received and given by that account.
Balancing of different accounts: Balancing is done periodically, (i.e.,) weekly, monthly, quarterly, half-yearly or yearly, depending on the requirements of the business.
(i) Personal Accounts: These accounts are generally balanced regularly to know the amounts due to the persons (creditors) or due from the persons (debtors).
(ii) Real Accounts: These accounts are generally balanced at the end of the financial year, when final accounts are being prepared. However, cash account is frequently balanced to know the cash on hand. A debit balance in an asset account indicated the value of the asset owned by the business. Assets accounts always show debit balances.
(iii) Nominal Accounts: These accounts are in fact, not to be balanced as they are to be closed by transfer to final accounts. A debit balance in a nominal account indicates that it is an expense or loss. A credit balance in a nominal account indicates that it is an income or gain.
All such balances in personal and real accounts are shown in the Balance Sheet and the balances in nominal accounts are taken to the Profit and Loss Account.

According to the nature of assets, they may be classified into the following:
a) Fixed Assets: Fixed assets are those assets which are acquired or constructed for continued use in the business and last for many years such as land and building, plant and machinery, motor vehicles, furniture, etc.
b) Current Assets:
(a) Current assets are those assets which are either in the form of cash or can be easily converted into cash in the normal course of business or within one year.
(b) Current assets include cash in hand, cash at bank, short-term investments, bills receivable, debtors, prepaid expenses, accrued income, closing stock, etc.
c) Liquid Assets:
Liquid assets are the assets which are either in the form of cash or which can be immediately converted into cash within a very short period of time, such as cash at bank, bills receivable, short-term investments, debtors and accrued incomes.
d) Wasting Assets:
These are the assets which get exhausted gradually in the process of excavation.
Examples: mines and quarries.
e) Investments:
Amount invested outside the business in shares, debentures, bonds and other securities is called investments.

Procedure
1. Open new excel sheet.
2. Input the table as given in the question.
3. Enter the data “Achieved” in Cell D1.
4. Type the following in Cell D2:
= OR (B2 > = 500,C2 > = 500)
5. Copy the formula from D2 into D3 and D4
Output

(i) Bills Receivable Book :
     (a) Bills receivable refers to Bills drawn, the payment for which has to be received.
     (b) Such bills are drawn on debtor for a specified amount payable at sign on or after specified period.
     (c) Bills receivable book contains the details of bills drawn and its disposal.
(ii) Bills Payable Book:
      (a) Details recorded in the bills payable book are the names of the parties whose bills are accepted, date of the bills payable, due date, amount, etc.
      (b) The individual accounts of the parties whose bills are accepted will be debited with the corresponding amount in the bills payable book.

(i) Accounting is the systematic process of identifying, measuring, recording, classifying, summarising, interpreting and communicating financial information.
(ii) Accounting gives information on :
1. the resources available
2. how the available resources have been employed and
3. the results achieved by their use.
(iii) The profit earned or loss incurred during the accounting period, value and nature of assets, liabilities, and capital can be ascertained from the information recorded in accounts.

                                              In the books of Thomas
Dr. Trading and Profit and Loss Accounts for the year ended 31^st March, 20198   Cr.

(i) Open a new spreadsheet in MS-Excel
(ii) Enter the table headings as given below in different cells
A1 Customer
B1 Sales (`)
C1 Date of sales
D1 Period of credit (days)
E1 Date of settlement
F1 Credit period availed (days)
G1 Days of default
H1 Interest
I1 Amount collected
(iii) Enter customer names in A2:A5
(iv) Enter sales figures in B2:B5
(v) Enter date of sales in C2:C5
(vi) Enter period of credits in D2:D5
(vii) Enter date of settlements in E2:E5
(viii) In the cell F2 enter the formula =E2-C2 to calculate the period of credit availed in days. (ix) In the cell G2 enter the formula
=IF(F2-D2>0,F2-D2,0) to calculate the default days. (IF condition is used to avoid negative values in the case of payment before due date)
(x) In the cell H2 enter the formula =ROUNDUP((B2*2%)*(G2/365),0) to calculate interest for the default days and to round it to the nearest rupee.
(xi) In the cell I2 enter the formula =B2+H2 to add the amount of Sales and Interest.
(xii) Select the range F2:I2 and copy these cells down to the last customer.

The selling price is more than the book value on the date of sale of machinery. Hence, the difference 1,10,000 is profit on sale of machinery.

Trial Balance

(i) Double entry system of book keeping is a scientific and complete system of recording the financial transactions of an organisation.
(ii) According to this system, every transaction has a two fold effect.
(iii) That is, there are two aspects involved, namely, receiving aspect and giving aspect.
(iv) It is denoted by debit (Dr.) and credit (Cr.).
Following are the advantages of double entry system:
(1) Accuracy: In this system, the two aspects of each transaction are recorded in the books of accounts.This helps in checking the accuracy in accounting
(2) Ascertainment of business results: Details regarding expenses, losses, incomes, gains, assets, liabilities, debtors, creditors, etc: are readily available. This helps to ascertain the net profit earned or loss incurred during an accounting period and also to know the financial position as on a particular date.
(3) Comparative study: The business results of the current year can be compared with those of the previous years and also with other business firms. It facilitates business planning for future.
(4) Common acceptance: The business records maintained under this system are accepted by financial institutions, government and others, because it is a systematic and scientific system.

The main functions of accounting are as follows:
(i) Measurement:
1. The main function of accounting is to keep systematic record of business transactions, post them to the ledger and ultimately to prepare the final accounts.
2. Accounting works as a tool for measuring past performance of the business enterprises.
(ii) Forecasting:
 With the help of the various tools of accounting, future performance and financial position of the business enterprises can be forecasted.
(iii) Comparison:
1. Accounting helps to assess the actual performance with the targets.
2. It also discloses the accounting policies.
(iv) Decision making:
1. Accounting assists the management in planning, evaluation of performance, control and decision making by providing required information to various users of accounts.
2. This will help them to take various decisions on cost, price, sales, volume, etc.
(v) Control:
1. As accounting works as a tool of control, the strengths and weaknesses are identified to provide feedback on various measures adopted.
2. It serves as a tool for evaluating compliance of business policies and programmes.
(vi) Assistance to Government regulations:
Government needs full information on the financial aspects of the business, so that proper tax can be levied on the income earned by the enterprises.

Cash Transaction is a transaction which involves immediate cash receipt or immediate cash payment.

Rs.3,00,000 will be deducted from purchases on the debit die of trading account, Rs.1,20,000 will be shown on the debit side of profit and loss account and Rs.1,80,000 will be shown on the assets side of the balance sheets.

A mnemonic code consists of alphabets or abbreviations as symbols to codify a piece of information.
For example:

Amount of depreciation per year = \(Original\ cost\ of\ the\ asset − Estimated\ scrap\ value\over Estimated\ useful\ life\ of\ the\ asset\ in\ years\)
\(={1,00,000 – 10,000\over 10}={90,000\over 10}\) = Rs. 9,000 per year
When it is plotted on a graph for 5 years, it appears as follows:

(a) Sales account should be credited with Rs. 100.
(b) Purchases returns account should be debited with Rs. 200.

i) a) Rs.2,000 spent on additions should be treated as capital expenditure
b) Rs.1200 spent on repairs should be treated as revenue expenditure.
ii) Overhauling expenses are incurred for the engine of a motor car to get better fuel efficiency. So this expenditure should be treated as capital expenditure.

(i) Bank reconciliation statement can also be presented in an alternative method.
(ii) In such presentation, two columns are given, one to record items that increase the balance [plus items] and the other one to record items that decrease the balance [minus items].
(iii) Balances as per the cash book or bank statement are written as the starting balance.

(i) After transferring all the ledger account balances, if the trial balance does not tally, steps must be taken to locate and rectify errors.
(ii) If the errors cannot be rectified, then the trial balance is tallied by transferring the difference between the total of debit balances and the total of credit balances to a temporary account called suspense account.

Personal accounts can be classified into natural, artificial and representative personal accounts

Journal Proper is a residuary book which contains record of transactions which do not find a place in the subsidiary books such as cash book, purchases book, sales book, purchases returns book, sales returns book, bills receivable book and bills payable book.