Professional Documents
Culture Documents
Month
Transactions and Events
Exchanges of economic consideration
between two parties.
External Transactions
occur between the Internal Transactions
organization and an occur within the
outside party. organization.
Recognizing Revenues and
Expenses
Revenue Recognition
We have delivered the
product to our customer,
so I think we should record
the revenue earned.
Recognizing Revenues and
Expenses
Revenue Recognition
Matching Now that we have
recognized the revenue,
Summary let’s see what expenses
of Expenses
we incurred to
Rent Rs.1,000
Gasoline 500
generate that revenue.
Advertising 2,000
Salaries 3,000
Utilities 450
and . . . . ....
Accrual Basis Vs. Cash Basis
xxxxx xxxxx
PROFIT AND LOSS ACCOUNT
It shows the net result of the
business operations during an
accounting period.
It is prepared to ascertain the Net
Profit earned or Net Loss incurred by
the business entity as a result of
business operations during an
accounting period.
FORMAT OF PROFIT & LOSSACCOUNT
Dr. Profit & Loss Account of…………for the period ending on…… Cr.
xxxxx xxxxx
BALANCE SHEET
xxxx xxxx
ILLUSTRATION 1:
The following is the Trial Balance of Shri Ram as at 31st March, 2008:
12,52,100 12,52,100