In the books of Ashok Trial balance as on 31st March, 2017

Procedure and answer
(i) Open a new spreadsheet in MS-EXCEL
(ii) Enter labels and values in the cells as given above
(iii) Write total cost in G1 and annual depreciation in H1
(iv) Calculate total cost in the cell G2 by the formula
= Sum(B2:D2) and copy formula to cell G3
(v) Calculate annual depreciation in the cell H2 by the formula
= SLN(G2,E2,F2) and copy formula to cell H3
Output

Amount of depreciation = \({(Price\ of\ the\ Asset + Installation\ charges)-Scrap value\over Estimated\ life\ of\ the\ Asset}\)
\(=-{25,000-1,000\over 10}={24,000\over 10} \)
= Rs.2,400
Rate of Depreciation = \({Amount\ of\ depreciation\over Original\ Cost}\times100\)
\(={2,400\over 25,000}\times100=9.6\%\)

Journal Entries

Dr.                                         Ledger Account Cash Account                                                 Cr.

Dr.                                                             Bank Account                                                 Cr.

Dr.                                                          Capital Account                                                    Cr.

Dr.                                             Purchase Account                                                              Cr.

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.

The various branches of accounting are

(i) Financial Accounting :
1. It involves recording of financial transactions and events.
2. It provides financial information to the users for taking decisions.
3. It ends up with the preparation of trading and profit and loss account and balance sheet,
(ii) Cost Accounting :  
It involves the collection, recording, classification and appropriate allocation of expenditure for the determination of the costs of products or services and for the presentation of data for the purposes of cost control and managerial decision making.
(iii) Management Accounting :
It is concerned with the presentation of accounting information in such a way as to assist management in decision making and in the day - to - day operations of an enterprise.
(iv) Social Responsibility Accounting :
It is concerned with presentation of accounting information from the view point of the society by showing the social costs and social benefits.
(v) Human Resource Accounting :
It is concerned with identification, quantification, and reporting of investments made in human resources of an enterprise.

Posting of a Compound Journal Entry: Compound or Combined journal entry is one where more than one transactions are recorded by passing only one journal entry instead of passing several journal entries. Since every debit must have the corresponding equal amount of credit, special care must be taken in posting the compound journal entry, where there may be only one debit aspect but many corresponding credit aspects of equal value or vice versa.
Example: Jan. 15,2018, Cash Sales Rs. 10,000 cash received from Kannan Rs. 5,000 and commission earned Rs. 2,500.

Cost of Goods sold Opening stock + Purchases + Expenses on purchases - Closing stock
= Rs.30,000 + Rs. 54,600 + Rs. 6,000 -Rs. 36,600
= Rs. 54,000
Gross profit Net Sales - Cost of Goods sold
= Rs. 90,000 - Rs. 54,000
= Rs. 36,000

(i) Division of work: As journal is sub-divided, the work will be subdivided and different persons can work on different books at the same time and the work can be speedily completed.
(ii) Efficiency: The sub-division of work gives same work is done by a person repeatedly, the person becomes efficient in handling it. Thus, specialization leads to efficiency in accounting work.
(iii) Prevents errors and frauds: Internal check becomes more effective as the work can be divided in such a manner that the work of one person is automatically checked by another person. With the use of internal check, the possibility of occurrence of errors or fraud may be avoided or minimised.
(iv) Saving in time: As there are many subsidiary books, work of entering can be done simultaneously by many person. Thus it saves time and accounting work can be completed quickly.
(v) Detailed informations available: As all transactions relating to a particular item are entered in a subsidiary book, it gives detailed information. It is easy to arrive at monthly or quarterly totals.

(i) The unsold goods in stock at the end of the accounting period is termed as closing stock. The stock is valued at cost price or not realisable value whichever is lower.
(ii) The valuation principle is based on the convention of conservatism.

Value of Closing Stock will appear :
(a) On the credit side of trading account and
(b) On the assets side of balance sheet.

Procedure
(i) Open a new spreadsheet in MS-Excel
(ii) Enter values in the cells as given below

(iii) Compute RATE in the cell B6 by the formula
=RATE(B1,B2,B3,B4,B5)*12
Answer 10%

When the two accounts involved in a transaction are cash account and bank account, then both the aspects are entered in cash book itself. As both the debit and credit aspects of a transaction are recorded in the cash book, such entries are called contra entries.
Example:
(i) When cash is paid into bank, it is recorded in the bank column on the debit side and in the cash column on the credit side of the cash book.
(ii) When cash is drawn from bank for office use, it is entered in cash column on the debit side and in the bank column on the credit side of the cash book.

Book keeping has the following limitations.
(i) Only monetary transactions are recorded in the books of accounts.
(ii) Effect of price level changes are not considered.
(iii) Financial data recorded are historical in nature, i.e., only past data are recorded.

Credit transaction is a transaction in which cash is not received or paid immediately, but will be received or paid later

(a) All assets, expenses and lossed have debit balance.
(b) All liabilities, gains and incomes have credit balance.

(i) Readymade Software
(ii) Customised Software

Purchase price of plant = 4000
Erection charges = 2,000
Odginal cost = Ptuchase price + Installation charges
(i.e 40,000) + 2,000 =42000)
Effective life of the plant = 5 years
Estimated scrap value = Nil
\(\text { Amount of Depreciaion }=\frac{\text { Original cost - Estimated scrap value }}{\text { Estimated useful life of the asset in years }}\) 
= \(\frac{42000-0}{5 \text { years }}\) 
= Rs.8,400

i) Carriage of Rs.1,000 spent on machinery purchased and installed is capital expenditure.
ii) Office rent paid Rs.2,000 is revenue expenditure.
iii) Wages of Rs.5,000 paid to machine operators is revenue expenditure.
iv) Hire charges for the use of motor vehicle, hired for five years, but paid yearly is revenue expenditure.

The values involved in the preparation of bank reconciliation statement are
(i) Prevention of fraud
(ii) Identifying errors
(iii) Fulfilment of commitment on time by finding out reasons of undue delay in clearance of cheque

(a) Cash withdrawn by proprietor - Decrease in Cash and decrease in capital.
(b) Purchase of furniture for cash-Increase in furniture and decrease in cash

(i) Transactions relating to previously purchased goods returned to the suppliers are recorded in a separate subsidiary book which is called purchases returns book.
(ii) Since goods are 'going out' to the suppliers, they are also known as 'returns outward' and the book is called as 'returns outward book or returns outward journal'.