Accounting Cycle: Rules of Debit & Credit (British Approach)

Accounting Cycle
1. Business transaction
2. Journal
3. Ledger
4. Trial Balance
5. Adjustment Entries
6. Adjustment Trial Balance
7. Closing Entries
8. Closing Trial Balance
9. Cash Flow Statement
10.Income Statement
11.Statement of Owner’s Equity
12.Balance Sheet
Rules of Debit & Credit(British Approach)
Details Debit Credit
Assets Increase + Decrease -
Expenses Increase + Decrease -
Drawings Increase + Decrease -
Liabilities Decrease - Increase +

Owner’s Equity Decrease - Increase +
Revenues Decrease - Increase +
ZAKI
zakisarfraz@yahoo.com
Journal
Date Details L/F Dr Cr

June1 Cash 60000
P.c Capital 60000
Investment by owner
02 Air Craft 220000
Cash 40000
Notes Payable 180000
Purchase air craft on cash & notes payable
04 Rent Expense 2500
Cash 2500
Paid rent expenses
15 Account Receivable 8320
Crop Dusting Revenue 8320
Crop dusting revenue yet not receive
15 Salaries Expense 5880
Cash 5880
Paid salaries expenses
18 Maintenance Expense 1890
Cash 1890
Paid maintenance expenses
25 Cash 4910
Account receivable 4910
Cash received
30 Account Receivable 16450
Crop dusting revenue yet not receive
30 Salaries Expense 6000
Cash 6000
Salaries expense paid
30 Fuel Expense 2510
Account Payable 2510
Fuel expense payable
30 P.c Drawing 2000
Cash 2000
Drawing by owner
ZAKI
Ledger
Dr Cash Cr
Date Details $ Date Details $
June01 Capital 50000 June02 Air craft 40000
25 Acoount 4910 04 Rent Expense 2500
receivable
15 Salaries expense 5880
18 Maintenance 1500
expense
30 Salaries expense 6000
30 P.c drawing 2000
30 Balance c/d 6640
Total 64910 Total 64910
Account Receivable
June15 Crop dusting 8320 June25 Cash 4910
revenue
30 Crop dusting 16450
revenue
30 Balance c/d 19860
Air Craft
June02 Cash 40000
02 Notes payable 18000
June30 Balance c/d 220000
Notes Payable
June02 Air craft 180000
Account Payable
June30 Fuel expense 2510
ZAKI
P.c Capital
June01 Cash 60000
P.c Drawing
June30 Cash 2000
Crop Dusting Revenue
June15 Account 8320
receiable
Account 16450
receivable
Maintenance Expense
June 30 Cash 1890
Fuel Expense
June 30 Account 2510
payable
June 30 Balance c/d 2510
Salaries Expense
June15 Cash 5880
30 Cash 6000
ZAKI
Rent Expense
June04 Cash 2500
Name Company
Trial Balance
For the Month
Details Dr Cr
Cash 6640
Account Receivable 19860
Air Craft 220000
Notes Payable 180000
Account Payable 2510
P.c Capital 60000
P.c Drawing 2000
Maintenance Expense 1890
Fuel Expense 2510
Salaries Expense 11880
Rent Expense 2500
Total 267280 267280
ZAKI
Adjustment Entries
1.Entries to Aportion Recoded Cost:
In which we paid cash in advance & after then we use advance as expense.
Working Entry:
Prepaid Insurance
Cash
To record cash paid for prepaid insurance
Current Entry:
Insurance Expense
Prepaid Insurance
To record insurance expense for the month
2.Entries to Aportion Unrecorded Revenue:

In which we receive cash in advance & after then we earned revenue.
Working Entry:
Cash
Unearned Revenue
To record cash received in advance
Current Entry:
Uneaned Revenue
Revenue Earned
To record revenue earned for the month
ZAKI
3.Entries to Record Unrecorded Expense:
In which we receive services in advance & after then we paid cash.
Working Entry:
Salaries Expense
Salaries Payable
To record salaries payable for the month
Current Entry:
Salaries Payable
Cash
To record salaries paid for the month
4.Entries to Record Unrecorded Revenue:

In which we provided services & after then we receive cash
Working Entry:
Account Receivable
Repair Service Revenue
To record service revenue yet not receive
Current Entry:
Cash
Account Receiable
To record Receive cash for the month
NOTE:
In the adjustment entries the cash is not involved.
ZAKI
Closing Entries

1 Closing Expenses:
Income Summary xxx
All Expenses xxx
All expenses closed into income summary a/c
2 Closing Revenues:
All Revenues xxx
Income Summary xxx
All revenues closed into income summary a/c
3 Closing Capital due to Loss:

Name Capital xxx
Income Summary xxx
Loss closed into income summary a/c
4 Closing Capital due to Income:

Income Summary xxx
Name Capital xxx
Income closed into income summary a/c
5 Closing Capital due to Drawing:

Name Capital xxx
Name Drawing xxx
Drawing closed into income summary a/c
ZAKI
Company Name
Closing Trial Balance
For the month
Details Dr Cr
Cash xxx
Account Receivable xxx
Office Supplies (Remaining) xxx
Land (Original Value) xxx
Building (Original Value) xxx
Office Equipment (Original Value) xxx
Account Payable xxx
Accumulated Depreciation:Building (Old+New) xxx

Accumulated Depreciation:Office Equipment (Old+New) xxx
Name Capital (New) xxx
Total XXX XXX
Note:
1. Use the adjusted trial balance data.
2. Revenues and Expenses should not include bcoz it is adjusted in new
capital.
ZAKI
Company Name
Statement of Cash Flow
For the Month
Details $ $
Operating Activities:
Cash received from revenue transaction xxx
Cash paid for expenses (xxx)
Net cash provided to operating activites (xxx)
Investing Activities:
Purchase of land (xxx)
Purchase of tools (xxx)
Collection for sale of land/tools xxx
Net cash provided from investing activities xxx
Financing Activities:
Investment by owner xxx
Net cash provided from financing activities xxx
Increase/Decrease in cash for the month xxx
Cash balance at Jan 1,2001 xxx
Cash balance at Jan 31,2001 XXX
Company Name
Income Statement
For the Month
Details $ $
Revenues:
Earned xxx
Expenses:
Advertising Expense xxx
Depreciation Expense: Land xxx
Salaries Expense xxx
Total Expenses (xxx)
Net Income XXX
ZAKI
Company Name
Statement of Owner’s Equity
For the Month
Details $ $
Name Capital (Dec 31,2000) xxx
Net Income xxx
Subtotal xxx
Name Drawing (xxx)
Name Capital (Dec 31,2001) XXX
Company Name
Balance Sheet
For the month
Assets $ Liabilities & Owner’s Equity $
Cash xxx Liabilities:
Account Receivable xxx Notes Payable xxx
Land xxx Accounts Payable xxx
Building xxx Salaries Payable xxx
Office equipment xxx Total liabilities xxx
Tools xxx
Owner’s Equity:
Name Capital xxx
Total XXX Total XXX
ZAKI
Company Name
Balance Sheet
(in report form)
For the Month
Details $ $
Assets:
Cash xxx
Office Supplies (Remaining) xxx
Account Receivable xxx
Land (Original Value) xxx
Accumulated Depreciation Land (Old+New) (xxx) xxx
Building (Original Value) xxx
Total Assets XXX
Liabilities:
Notes Payable xxx
Account Payable xxx
Total Liabilities XXX
Owner Equity:
Name Capital (New) xxx
Total liablities & Owner Equity XXX
Note:
1. Use the adjusted trial balance data.
2. Include the new capital.
3. Revenues and Expenses should not include bcoz it is adjusted in new
capital.
ZAKI
Bank Reconciliation Statement
1. Uncredited/Uncleared/Uncollected/N.S.F Cheque
All those cheques, which are deposited in the bank but bank does not
credit this amount in the depositor account.
2. Unpresented/Outstanding/Payable Cheque
All those cheques, which are issued but not presented in the bank for
payment.
3. Expenses
4. Revenues
Cash book Pass Book
Receipts Payments Receipts Payment
Uncredited Add
Cheque
Unpresented Less
Cheque
Less Expense
Add Revenue
Material Accounting
Manufacturing Company
Cost of Good Manufactured & Sold Statement
For the Period Ended
Details $ $
01.Direct Material:
Opening Inventory xxx
+ Purchases xxx
+ Freight in/Carriage/Transport xxx
- Purchase Return/Purchase Discount xxx
Net Purchase xxx
Material Available for Use XXX
- Ending Inventory xxx
Material Used XXX
02.Direct Labor: xxx
Prime Cost XXX
03.Factory Over Head (Applied): xxx
Total Factory Cost XXX
04.Work in Process:
+ W.I.P Opening Inventory xxx
Cost of Good Available for Manufacturing XXX
- W.I.P Ending Inventory xxx
Cost of Good Manufactured XXX
05.Finish Good:
+ F.G Opening Inventory xxx
Cost of Good Available for Sale XXX
- F.G Ending Inventory xxx
Cost of Good Sold at Normal XXX
Under/Over Applied F.O.H:
+ Under Applied F.O.H xxx
- Over Applied F.O.H xxx
Cost of Good Sold at Actual XXX
Note:
Direct Material + Direct Labor = Prime Cost
Direct Labor + F.O.H = Conversion Cost
ZAKI
Company Name
Income Statement
For the Period Ended
Details $
Sales xxx
- C.G.S xxx
Gross Profit XXX
Operating/Commercial Expenses:
Marketing/Selling Expenses xxx
Administrative Expenses xxx
Operating Income XXX
Operating Income/Income From Operations:
+ Non Operation Incomes xxx
- Non Operation Expenses xxx
Net Income Before Interest & Tax XXX
- Interest Paid/Payable: xxx
Net Income Before Tax XXX
- Tax Provision/Paid: xxx
Net Income After Interest & Tax XXX
Company Name
Worksheet
For The Month
Account Titles Trial Balance Adjustments Adjusted Trial Income Balance Sheet
Balance Statement
Balance Sheet Dr Cr Dr Cr Dr Cr Dr Cr Dr Cr
A/c
Liquid Assets
Cash
A/R
Prepaid Items
Fixed Assets
Furniture
Land
Building
Liabilities
S/P
N/P
I/P
Capital
Drawings
Income
Statement A/c
Revenues
Expenses
S/E
T/E
I/E
Net Income
Totals
ZAKI

Accounting Cycle: Rules of Debit & Credit (British Approach)

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Accounting Cycle: Rules of Debit & Credit (British Approach)

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Accounting Cycle

Liabilities Decrease - Increase +

Date Details L/F Dr Cr

Total 267280 267280

2.Entries to Aportion Unrecorded Revenue:

4.Entries to Record Unrecorded Revenue:

Date Details L/F Dr Cr

3 Closing Capital due to Loss:

4 Closing Capital due to Income:

5 Closing Capital due to Drawing:

Account Payable xxx

Accumulated Depreciation:Building (Old+New) xxx

Name Capital (New) xxx

Total XXX XXX

Total XXX Total XXX

Cash book Pass Book

Receipts Payments Receipts Payment

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