The term 'obsolescence' refers to the economic deterioration of assets, due to change in technology invention of improved equipment, market decline due to change in taste and fashion, etc. or inadequacy of existing plant to meet the increased business. Depreciation is affected by obsolescence as it decreases the value of assets.

Expenses paid in advance are called prepaid expenses. These are also called unexpired expenses because the period for which it has been paid has not expired. In other words, the benefit of the expenses already paid will be available in the next accounting year. To calculate the true and fair profit of the business, it is necessary to make adjustment for prepaid expenses.
Prepaid or unexpired expenses are treated in final accounts as follows:
(i) It is deducted from respective item of expenses on the debit side of the Trading and Profit & Loss Account.
(ii) It will appear on the assets side of Balance Sheet as a separate item.

Posting is the process of transferring entries from journal or Subsidiary Books to the Ledger.

A computer system contains the following six elements:
(i) Hardware
(ii) Software
(ill) People
(iv) Procedures
(v) Data
(vi) Connectivity
(i) Hardware: Hardware of Computer Systems includes Input Devices, C.P.U., Output Devices and Secondary Storage Components. Input Devices includes Keyboard, Mouse, Joystick, Touch Screen, Scanner, Voice Input System, Magnetic Ink, Character Reader, Bar Code Reader etc.
C.P.U Central Processing Unit, has three unit i.e. storage unit, control unit Arithmetic logic unit. Storage unit has two types of memory : RAM (Random Access Memory and ROM (Read Only Memory).
Output Devices includes Monitor or Visual Display Unit (VDU), Printers and Voice Response System. Secondary Storage Devices includes Hard-disk, Floppy Disk, Compact Disk and digital.
(ii) Software: A sets of programmes, which is used to work with hardware is called its software. There are six types of software which are following:
(a) Operating System
(b) Utility Software
(c) Application Software
(d) Language Processors
(e) System Software
(f) Connectivity Software.
(a) Operating System: It is an important programme to start a computer and make them user interactive.
For e.g. Window XP, Unix etc.
(b) Utility Software: These are pre-written programs to provide procedures commonly required by all applications.
(c) Application Software: These are user-oriented programmes designed and developed for performing certain specified tasks.
(d) Language Processors: It checks for language syntax and finally translate the source programme into machine language.
(e) System Software: It controls the operations of the computer. It helps in controlling the internal functions of a computer.
(f) Connectivity Software: These are helpful in creating and controlling a connection between a computer and a server.
(iii) People: Those who interact with the computer are called live ware of the computer system. They are the most important part of the computer system. System Analysts: They design the data processing system. Operators: They write programmes to implement the data processing system design.
(iv) Procedures: The various operations performed in a certain way in order to achieve some desired results.
Types of Procedures:
(a) Software-oriented: Procedures that provides set of instructions required for using the software of a computer system.
(b) Hardware-oriented: Procedures that provides a set of information about the various components of the computer system.
(c) Internal procedure: It helps in sequencing the working or operations of each sub-system of computer system.
(v) Data: Data are facts and may consist of numbers, text, picture, maps, Nc's etc. A computer stores, processes, classifies, organizes and retrieves data as and when required, in order to provide information which is required for taking decisions.
(vi) Connectivity: It refers to the way in which a computer system is connected to other electronic devices and link ups such as satellite link, Internet, telephone lines etc.

(i) Bills of exchange,
(ii) Promissory Note.

Liabilities side of the Balance Sheet:
(i) Capital
(ii) Long-term Liabilities
(iii) Current Liabilities
(iv) Secured Loans
(v) Unsecured Loans.

Rajhans Traders paid Rs 25,000 to Preetpal Traders (a supplier of goods). This transaction was correctly recorded in the cash book, but while posting to the ledger, Preetpal's account was debited with Rs 2,500 only. This constitutes an Error of Commission.

(i) Bills Receivable : A bill of exchange, when accepted by a debtor is called a bills receivable. A bill of exchange is an order instrument, written by a creditor and accepted by a debtor to pay a certain amount on demand or after a certain period.
(ii) Bills Payable: When credit purchases are made, the settlement/payment to the creditors are sometimes done through a document, known as "Bills Payable." These bills are accepted by the business and will be honoured by paying to the suppliers, on the date mentioned on the bill.
(iii) Income : Income is different from 'revenue'. The difference between revenue and expense (if revenue is more than expense) is called income. For example, the goods costing Rs 10,000 are sold for Rs 12,000; the cost of goods, i.e., Rs 10,000 is expense. The sale of goods, i.e., Rs 12,000 is the revenue and the difference between revenue and expense, i.e., Rs 2,000 is the income.

There is a violation of prudence concept. "Do not anticipate profits but provide for all losses" is the premise on which conservatism (prudence) concept is based. This concept suggests that if choice is available, the accountant should anticipate all probable losses and should provide for them but he should not anticipate probable gains and revenues. Following are some of the examples of conservatism:
(i) Making the provision for doubtful debts and discount on debtor.
(ii) Valuing the stock in trade at market price or cost price, whichever is less.
(iii) Creating provision against fluctuation in the price of investments.
(iv) Charging of small capital items, like crockery, to revenue.
(v) Adopting written-down-value method of depreciation.
(vi) Amortization of intangible assets like goodwill.
(vii) Showing joint life policy at surrender value as against the amount paid.
(viii)Not providing for discount on creditors.

Pay-in-slip: This document serves the purpose of providing an evidence that on particular date, a specific amount has been deposited in the bank. When a depositor deposits money in the bank account, he fills up a form provided by the bank containing the information about the date, amount to be deposited and the name of the depositor, etc. The bank clerk signs, stamps the counterfoil of the pay-in-slip and return it to the depositor.

(i) Cost of goods available
for sale = Opening stock + Net purchase
= 25,000 + 7,50,000 + 3,00,000 - 10,000
= Rs.11,65,000
[Net purchase = Totalpurchase - Purchase Return]
(ii) Cost of goods sold during the year = Cost of goods available - Closing stock
= 11,65,000 - 30,000
= Rs.11,35,000
(iii) 

Accounting Equation: Assets = Liabilities + Capital

(i) Amount paid to Vendor of Mach

(ii) Amount debited to Machinery Account:

(iii)

Cash Book is a book of original entry, therefore, transactions recorded in Cash Book must be posted into ledger. While posting from simple Cash Book, following points should be kept in mind:
(i) Cash Book is a subsidiary book as well as a principal book. It serves as a Cash Book as well as a Cash account. Therefore, cash account is not prepared in the Ledger.
(ii) Transactions recorded on the Debit side of Cash Book are posted to the credit side of the effected accounts in ledger by writing the words "By Cash Account" in the 'Particulars' column.
(iii) Transactions, recorded on the Credit side of Cash Book, are posted to the Debit side of the accounts in the ledger by writing the words "To Cash A/c" in the 'Particulars' column.

(i) Account: An account is a basic way of recording/ posting business transactions in terms of 'Debit' and 'Credit'.
(ii) Sales : The term 'Sales' is used only for the sale of goods which are purchased with the purpose of resale. The term 'sales' includes both cash sales and credit sales. In accounting terminology, sale of assets are not sales. Sales should be a regular feature.
(iii) Goods: Articles purchased for sale or for use in the manufacturing of other products as raw material are known as 'Goods'. For example: furniture will be the goods for the firm dealing in furniture but it will be an asset for the firm dealing in stationery.
(iv) Voucher: A voucher is an evidence, in writing, of a transaction that has taken place.

(i) Under the Accounting Entity Principle, an accounting entity is held to be "Separate and distinct from its owners". Following this Principle we therefore record all the transactions of the business from the point of view of the business and not from the point of view of the proprietor.
(ii)As we consider owner to be distinct from the business, he is treated as a creditor to the extent of the capital. It is important to understand that without such a distinction, the affairs of the business will be all mixed up with the private affairs of the proprietor and true picture of the firm will not be available.
(ii)The principle of accounting entity is applicable to all types of business. In case of sole proprietorship and partnership firm, though the sole proprietor or the partners are not considered as separate entities in the eyes of law, for accounting purposes they will be considered as separate entities. In case of companies, the law recognises legal entity of the business separate from its owners, i.e., shareholders. The accountant will record transactions between the owner and the firm. For instance, when capital is provided by the owner, the record will be shown by the firm as having received money and the same being owed to the proprietor. In case, the proprietor withdraws money from the business, it will be charged to him. An account is maintained for the owner in the name of capital like other parties.

"A bill of exchange is an instrument in writing containing an unconditional order signed by the maker, directing a certain person to pay a certain sum of money only to, or to the order of, a certain person or to the bearer of the instrument." (Section 5 of the Negotiable Instruments Act, 1881).
Advantages of Bills of Exchange: The following advantages accrue from bills of exchange:
(i) Purchase and sale of goods on credit:
With the help of bills of exchange, goods can be sold and purchased on credit without difficulty since the bills of exchange contains an unconditional promise to pay.
(ii) Discounting facility:
The bills of exchange can be discounted at a bank, so that the firm allowing the credit can receive cash immediately without the debtor having to pay before time.
(iii) Easy to recover the amount:
If a bill of exchange is dishonoured, it would be easier to recover the amount legally than in the case of an ordinary debt.
(iv) Endorsement:
A bill of exchange can be endorsed to other parties; thus they serve almost the same purpose as cash.
(v) Certainty as to payment:
The date of payment is certain, so the firm which has to pay and that which has to receive the amount, can thus plan cash operations.
(vi) No reminder to debtor:
The recovery of the debt is possible without having to remind the debtor.
(vii) Convenient means of remittance in foreign trade:
In foreign trade, bills of exchange are of great assistance in enabling firms to make and receive payment. It, thus, avoids the risks of carrying the currency to different places of trade.

The needs to prepare a Balance Sheet are given below:
(i) It helps in determining the nature and book value of various assets, such as fixed assets, investments, current assets, etc. at the end of an accounting period.
(ii) It helps in ascertaining the nature and amount of various liabilities like long-term liabilities, current liabilities, provisions, etc., which a business owes.
(iii) It discloses important information about capital invested in a business like additional capital invested during the accounting period, drawings of the owners and profit (or loss) added to (or deducted from) the capital of the business

Here are the advantages of using computerized accounting software:
(i) Automation: Since all the calculations are handled by the software, computerized accounting eliminates many of the mundane and timeconsuming processes associated with manual accounting. For example, once issued, invoices are processed automatically making accounting less time-consuming.
(ii) Accuracy: This accounting system is designed to be accurate to the minutest detail. Once the data is entered into the system, all the calculations, including additions and subtractions, are done automatically by software.
(iii) Data Access: Using accounting software it becomes much easier for different individuals to access accounting data outside of the office,securely. This is particularly true if an online accounting solution is being used.
(iv) Reliability: Because the calculations are so accurate, the financial statements prepared by computers are highly reliable.
(v) Scalable: When a company grows, the amount of accounting necessary not only increases but becomes more complex. With computerized accounting, everything is kept straightforward because shifting through data using software is easier than shifting through a bunch of papers.
(vi) Speed: Using accounting software, the entire process of preparing accounts becomes faster. Furthermore, statements and reports can be generated instantly at the click of a button. Managers do not have to wait for hours, even days, to lay their hands on an important report.
(vii) Security: The latest data can be saved and stored in offsite locations so it is safe from natural and man-made disasters like earthquakes,fires,floods and terrorist attacks. In case of a disaster, the system can be quickly restored on other computers. This level of precaution is taken by Clever Accounting.
(viii) Cost-effective: Since using computerized accounting is more efficient than paper-based accounting, work will be done faster and time will be saved. When one considers, Clever Accounting, one of the latest online accounting solutions, which starts at a low monthly subscription, then computerized accounting really becomes a no-brainer.
(ix) Visuals: Viewing your accounts using a computer allows you to take advantage of the option to view your data in different formats. Youcan view data in tables and using different types of charts.

Money deposited into a Bank is recorded in the Bank Column of a Cash Book on the debit side while withdrawals are recorded on the credit side of the customer's account and all withdrawals on the debit side. A copy of it is also given to the customer for his knowledge in the form of a pass book or a statement of account. As the same transactions relating to deposits and withdtawals made for a certain period are recorded in the both cash book and pass book, the balances shown by the two at the end of that period should be the same. But, sometimes these two balances differ. If the two balances do not agree, it becomes necessary to know the reasons for difference. A statement showing all the causes of differences is prepared. This statement is called Bank Reconciliation Statement.
Bank Reconciliation Statement is prepared on a particular date to reconcile the bank balance in the Cash Book with the balance as per Bank Pass Book (or Bank Statement) by showing all causes of differences between the two.
The difference between the two balances arises due to some entries which have been recorded in the cash book but not in the pass book. Similarly, there may be some entries recorded in pass book but not in the cash book. Besides, disagreement between the two balances can also happen on account of errors committed either by the customer or by the bank while recording entries in their respective books.

In the Book of

Note: Errors in carrying forward the total of one page to another during a period finally affects the total of that book resulting in error of under/overcasting. In this case, carrying forward from page 4 to 5 resulted in under. casting of Rs 200 and carrying forward from page 8 to 9 resulted in overcasting of Rs 600. Overall overcasting being
Rs 600 - 200 = Rs 400.

Accounting is a systematic process of identifying, recording, measuring, classifying, verifying, summarizing, interpreting and communicating financial information. It reveals profit or loss for a period, and the value of assets, liabilities and owner's equity.
The objectives of accounting are follows:
(i) To keep systematic records.
(ii) To protect business properties.
(iii) To ascertain the operational profit or loss.
(iv) To ascertain the financial position of business.