Question
Explain process of accounting.

Answer

Accounting system is a man made science, which has rules and principles. Accounts are prepared according to these rules and principles. The process of accounting is followed as under:
$1.$ Voucher : While writing the accounts in the business, different bills, cash memo, receipts, counterfoil of the cheques, etc. are given. These kind of papers are called voucher. Businss transactions are recorded in books of account on the strength of such vouchers. Voucher is an evidence supporting the transaction recorded in books of accounts. Voucher is the first step of a business transaction.
$2.$ Identification of transaction: Identification of transaction is the second stage of the process of accounting. Here it is determined, whether the transaction of business is economic or noneconomic, whether the transaction is cash or credit or other transaction.
$3.$ Journal (Subsidiary books) : Under the third stage of accounting process, economic transactions of business are recorded in journal or In subsidiary books.
$4.$ Ledger (Posting) : Under the fourth stage, transaction recorded in journal or subsidiary books are classified through posting in a ledger. In short, posting will be made in the affected accounts from the journal or subsidiary books.
$5.$ Trial balance : Under the fifth stage of accounting process, a trader prepares a statement from the balances of various accounts, which is known as a trial balance. Trial balance is the prior (first) stage of the preparation of final accounts.

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State double effects of the following transactions :
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Name of A/c Amt.(Rs.) Name of A/c Amt.(Rs.)
Capital account $2,10,400$ $10 \%$ government securities $25,000$
Drawings account $10,000$ Opening stock $75,000$
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Bank commission $350$ Discount allowed $5000$
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Wages $1500$ Carriage $1000$
Salary $5000$ Loss due to fire $3000$
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Trial balance as at 31-3-19
Name of Account
(Debit balance)
Amt. (₹) Name of Account
(Credit balance)
Amt. (₹)
Capital $78,200$ Drawings $2000$
Stock of goods $21,300$ Carriage inward $540$
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Goods returned debit $5600$ Bad debts reserve $1200$
Debtors $17,000$ Bad debts $500$
Wages $1600$ General reserve $1500$
Stationery expense $1400$ Goodwill $25,000$
Sales-return $2300$ Purchase $45,000$
Commission $4700$ Furniture $18,950$
Interest received $390$ Discount allowed $3650$
  1,88,490   99,390
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Name of Account Amt. (₹) Name of Account Amt. (₹)
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