Two days session on

Management Accounting
(“Let’s have fun with numbers”)

By Pramod Jain
B.Com (H), MBA(M), DTL, DCM, PGDFA,
MBA(F), LL.B., CFA, AICWA, FCS, ACA
Chartered Accountant

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Chartered Accountant

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 Financial
Accounting

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 Exercise – 1 : Prepare Profit & Loss and Balance Sheet from the following
transactions by M/S Dhanur Enterprise during April 2008.
April Transactions
1 X starts business with a capital of Rs. 2000000/-.
2 Purchased goods worth Rs. 1000000/-
3 Sold 50% of the goods for Rs. 1500000/-
4 Paid Rs. 20000/- towards rent
5 Paid salary of Rs. 50000/-
6 Bought computer worth Rs. 200000/-
7 Charged depreciation on the computer for the period – Rs. 10000/-
8 Bought furniture on credit from ABC for Rs. 300000/- to be paid after 60 days.
9 Sold 20% of the goods purchased to Ranjan Varma on a credit of 45 days for Rs. 200000/-
10 Paid sales commission of Rs. 10000/- to S. Anikhindi.
30 Power Bill of Rs. 1000 for the month of April was received on May 10th paid on 20th May .
30 Mr. X expects that Ranjan Varma may not pay 10% of the dues from him hence needed to
make a provision for the same.
30 Find out the value of Closing Stock and account for the same in the final accounts.

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 Meaning of Accounting
• Accounting is an art of:
– recording,
– classifying and
– summarizing
• Transactions and events which are of
financial character at least in part and
interpreting the results thereof.
• The end product of the financial accounting
is the financial statements consisting of
Balance Sheet and Profit & Loss Account.
• Where the job of an Accounts Manager
ends, the job of the Finance Manager
begins.

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 Process of Financial Accounting
1. Journal / Subsidiary
Books
2. General Ledger/
Subsidiary Ledgers
3. Trial Balance
4. Adjustment Entries
5. Final Accounts:
1. Trading / Manufacturing
Account
2. Profit & Loss Account
3. Balance Sheet

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Foundation of Financial Accounting
is laid on:

1.Types of Accounts
&
2.Accounting Rules

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 1.Types of Accounts

1. Real Accounts
2. Personal Accounts
3. Nominal Accounts

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 1.Real Accounts
• Real accounts are those accounts
where the underlying item is real
one.
• These accounts represent assets
and liabilities of the Business
enterprise.
• Balances in the real accounts are
carried forward to the next
financial year as the opening
balance.

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 2.Personal Accounts
• Are the accounts where an entity is
involved.
• The simple rule for identification is,“a
personal account is one in which an
entity is involved”.
• Balance in the Personal accounts is
carried forward to the next financial
year.

•Personal Account here does not mean the account of the owner of the Business.
It simply refers to the entities with whom the business has been dealing with.
•Personal accounts should not be confused with the accounts of
an individual such as – My saving account, My Vehicles Account etc.

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 3. Nominal Accounts
• Nominal accounts are those
accounts which represent
income / gain or loss and
expenses.
• Such accounts are closed at the
end of the year by transferring
the balance to Manufacturing /
Trading and Profit & Loss
Account.

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 Thank you and have
a great evening
Pramod Jain
Chartered Accountant

7/A3, Visava Park, D P Road, Aundh Pune– 411007

Tel: (Off.) 020-32316885, (Cell) 9371007286, (Resi.) 020-25883274
Email : pramod7jain@vsnl.net / pramod7jain@gmail.com

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Chartered Accountant

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