Importance of accounting is enumerated as below :
(i) Systematic records :
1. All the business transactions are recorded in the books of accounts.
2. Any event or happening which has financial effects is included in the accounting records.
(ii) Preparation of financial statements :
Results of business operations and the financial position of the concern are provided by accounting periodically through the preparation of financial statements namely profit and loss account and balance sheet.
(iii) Assessment of progress :
Analysis and interpretation of financial statements can be done to assess the progress made in different areas and it also identify the areas of weaknesses.
(iv) Information to interested groups :
Accounting supplies appropriate information to different interested groups 'like owners, creditors, management, employees, financiers, tax authorities, and government.
(v) Taxation :
Accounting records are the basis source for computation and settlement of sales tax, income tax, and other local taxes.

Dr. Cash account Cr.

Date	Particulars	J.F.	Rs.	Date	Particulars	J.F.	Rs.
2018				2018
Jan. 1	To Capital A/c		62,000	Jan 3	By Purchase A/c		12,000
10	To Sales A/c		10,000	12	By Wages A/c		4,000
				25	By Furniture A/c		6,000
				31	By Balanced c/d		50,000
			72,000				72,000
Feb 1	By Balance b/d		50,000

Merits:
Following are the merits of written down value method.
(a) Equal charge against income: 
(i) In theinitial years depreciatiori is high and repair charges are low.
(ii) Hence, the total burden on profit in respect of depreciation and repairs put together remains almost similar year after year.
(b) Logical method :
(i) In the earlier years, when the asset is more productive, high depreciation is charged.
(ii) In the later years when the asset becomes less productive, the depreciation charge is less.
Limitations :
Following are the limitations of written down value method.
(a) Assets cannot be completely written off:
Under this method, the value of an asset even if it becomes obsolete and useless, cannot be reduced to zero and some balance would continue in the asset account.
(b) Ignores the interest factor:
(i) This method does not take into account the loss of interest on the amount invested in the asset.
(ii) The amount 'would have earned interest, had it been invested outside the business is not considered.
(c) Difficulty in determining the rate of depreciation:
(i) Under this method, the rate of providing depreciation cannot be easily determined
(ii) The rate is generally kept higher because it takes very long time to write off an asset down to its scrap value.
(d) Ignores the actual use of the asset:
(i) Under this method, a fixed rate of depreciation is provided on the written down value of the asset by applying the predetermined rate of depreciation on its original cost.
(ii) But, the actual use of the asset is not considered in the computation of depreciation.

(a) Akila account should be debited with Rs. 270
(b) Narendran account should be credited with Rs. 450
(c) Furniture account should be credited with Rs. 36
(d) Machinery account should be debited with Rs. 2,000
(e) Purchases account should be credited with Rs. 90

(i) The debit balance as per the cash book means the balance of deposits held at the bank.
(ii) Such a balance will be a credit balance as per the passbook.
(iii) Such a balance exists when the deposits made by the firm are more than its withdrawals.
(iv) It indicates the favourable balance as per cash book or favourable balance as per the passbook.
(v) In other words, the excess amount withdrawn over the amount deposited in the bank. It is also known as unfavourable balance as per cash book or unfavourable balance as per pass book.

Redrafted Trial balance as on 31st March, 2017

S.No	Name of account	L.F	Debit balance  Rs	Credit balance  Rs
1	Building		60,000
2	Machinery		17,000
3	Returns outward			2,600
4	Bad debts		2,000
5	Cash		400
6	Discount received			3,000
7	Bank overdraft			10,000
8	Creditors			50,000
9	Purchases		1,00,000
10	Capital			72,800
11	Fixtures		5,600
12	Sales			1,04,000
13	Debtors		60,000
14	Interest received			2,600
	Total		2,45,000	2,45,000

(i) Cash discount is an allowance for prompt and is based on Net Price List
(ii) An allowance given to customers is known as Discount Allowed and
(iii) An allowance made by creditors off the amount owing is called Discount Received.
Accounting treatment of discounts:
Company ABC's book have the following transactions relating to discounts:
2.03.2018 Received from Mr. ABC,      Rs. 2,900
discount allowed from XYZ is               Rs. 100
Accounting entry for discount allowed:
Debit: Bank A/c Dr.                                Rs. 2,900
Credit: Accounts Receivable Mr. ABC Rs. 3,000
Being discount allowed of 100 to customer Mr. ABC for prompt payment.

Following are the principles of double entry system:
(i) In every business transaction, there are two aspects
(ii) The two aspects involved are the benefit or value receiving aspect and benefit or value giving aspect.
(iii) These two aspects involve minimum two accounts; at least one debit and at least one credit.
(iv) For every debit, there is a corresponding and equivalent credit. If one account is debited the other account must be credited.

(i) Sales of goods for cash - This transactions are not recorded in the sales book.
(ii) Sale of goods on Credit - This transactions are recorded in sales book.
(iii) Purchases of goods on Credit - This transactions are recorded in purchases book.
(iv) When the proprietor takes goods for personal use - This transaction are recorded in Transfer entry.
(v) Goods returned to Suppliers for which cash is not received immediately - This transactions are recorded in sales returns book.
(vi) Asset purchased as credit. This transactions are not recorded in the purchases book.

(i) Only financial transactions are to be recorded because it is due to Money Measurement concept, which states that only those transactions are to be recorded in the books of accounts which consist of cash.
(ii) Hence it is concerned with the Nominal value not the real value.
(iii) For example Mohan purchase television for Rs.12,000. So this, will recorded in journal entry book as it has cash transactions.