Fundamentals of Accounting - Assignment

ACCOUNTING
FUNDAMENTALS

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
(a) Ledger accounts................................................................................................................1
(b) Trial Balance.....................................................................................................................3
(c) Statement of profit & loss and financial position of Maxim.............................................3
TASK 2............................................................................................................................................3
(a) Journal entries and Ledger accounts of Pendo .................................................................3
(b) Trial balance.....................................................................................................................6
(c) Statement of profit or loss and a statement of financial position......................................6
TASK 3............................................................................................................................................7
(a) Ledger accounts................................................................................................................7
(b) Trial balance...................................................................................................................10
(c) Statement of profit & loss and financial position of Mafuta...........................................10
TASK 4..........................................................................................................................................11
(a) Journal entries and Ledger accounts...............................................................................11
(b) Trial balance .................................................................................................................15
TASK 5..........................................................................................................................................16
CONCLUSION..............................................................................................................................18
REFERENCES..............................................................................................................................19

INTRODUCTION
Accounting fundamentals are those factors who are helping to recording accounting
terms in business books. In accounting fundamentals are consist of accounting principles,
concepts, dual concepts, going concern, monetary terms etc. Accounting fundamentals are
supported to accounting terminology for solving complex terms (Mitra, 2016). In this report
consist of nature, behaviour and purpose of cost accounting, for solving practicals applying
techniques of cost accounting. Basic principles of accounting are solving by appropriate software
and prepare financial statement with the help of routine and non routine transactions. After
recorded these transactions analysis of financial statement.
In this report structure from task 1 to task 4 prepare primary accounts such as journal
entries for record transactions, ledger accounts, trial balance, statement of profit and loss and
statement of financial position. These accounts shows financial information of every company.
In task 5 explain revenue expenditure and capital expenditure and also defined difference
between both expenditures. All the above 4 task depend on task 5 because it helps to identify
expenditures.
TASK 1
Journal entries
Date Particulars Debit (£) Credit (£)
April, 5 Cash A/c 300.00
To Capital a/c 300.00
April, 7 Purchase a/c 200.00
To cash a/c 200.00
April, 8 Cash a/c 250.00
To Loan from Tatiana 250.00
April, 15 Motor van a/c 150.00
To cash a/c 150.00
April, 20 Cash A/c 350.00
To sales a/c 350.00
April, 28 Rent a/c 50.00
To cash a/c 50.00
1

April, 29 Loan a/c 200.00
To Cash A/c 200
April, 30 Drawings a/c 60.00
To cash a/c 60.00
(a) Ledger accounts
Cash a/c
Date Particular Amount Date Particular Amount
05/04/18 To capital a/c 300.00 07/04/18 By purchase 200.00
08/04/18
To loan form
Tatiana 250.00 15/04/18 By Motor van 150.00
20/04/18 To sales 350.00 28/04/18 By rent 50.00
29/04/18 By loan paid 200.00
30/04/18 by Drawing 60.00
30/04/18
By closing
balance 240.00
900.00 900.00
Capital a/c
Date Particular Amount Date Particular Amount
30/04/18 To drawing 60.00 05/04/18 By cash 300.00
30/04/18 To closing balance 240.00
300.00 300.00
Purchase a/c
Date Particular Amount Date Particular Amount
07/04/18 To cash 200.00 30/04/18 By trading a/c 200.00
200.00 200.00
Loan a/c
Date Particular Amount Date Particular Amount
29/04/18 To cash 200.00 08/04/18 By cash 250.00
30/04/18 To closing balance 50.00
250.00 250.00
Motor van
2

Date Particular Amount Date Particular Amount
15/04/16 To cash 150.00 30/04/16
By closing
balance 150.00
150.00 150.00
Sales a/c
Date Particular Amount Date Particular Amount
30/04/16 To Trading a/c 350.00 20/04/18 By cash 350.00
350.00 350.00
Rent a/c
Date Particular Amount Date Particular Amount
28/04/18 To cash 50.00 20/04/18 By P&l ac 50.00
50.00 50.00
Drawing a/c
Date Particular Amount Date Particular Amount
30/04/18 To cash a/c 60.00 30/04/18 By capital a/c 60.00
60.00 60.00
(b) Trial Balance
Particulars Debit (£) Credit (£)
Cash A/c 240.00
Capital a/c 300.00
Purchase a/c 200.00
Loan a/c 50.00
Motor van a/c 150.00
Rent a/c 50.00
Sales a/c 350.00
Drawings a/c 60.00
700.00 700.00
(c) Statement of profit & loss and financial position of Maxim
Statement of profit & loss a/c
Particulars Amount
Sales a/c 350.00
3

Less – Cost of goods sold 100.00
Gross Profit 250.00
Less – Expenses
Rent a/c 50.00
Net Profit 200.00
Statement of Financial position as at April, 30
Amount
Non Current assets
Motor van 150.00
Current Assets
Cash A/c 240.00
Inventory 100.00 340.00
Total Assets 490.00
Capital a/c 300.00
Add – Net Profit 200.00
Less – Drawings 60.00 440.00
Current Liabilities
Short term loan 50.00
Total Liabilities 490.00
TASK 2
(a) Journal entries and Ledger accounts of Pendo
Journal entries of Pendo
Date Particulars Debit (£) Credit (£)
January, 1 Cash a/c 5000.00
To capital a/c 5000.00
January, 2 Motor van a/c 600.00
4

To cash a/c 600.00
January, 3 Purchase a/c 1300.00
To cash a/c 1300
January, 4 Cash a/c 1000.00
To loan from Sergei 1000.00
January, 10 Motor van expenses a/c 200.00
To cash a/c 200.00
January, 13 Cash a/c 300.00
To sales a/c 300.00
January, 20 Cash a/c 500.00
To sales a/c 500.00
January, 24 Storage expenses a/c 150.00
To cash a/c 150.00
January, 27 Loan a/c 350.00
To Cash a/c 350.00
January, 30 Drawings a/c 175.00
To Cash a/c 175.00
Cash a/c
Date Particular
Amount
(£) Date Particular
Amount
(£)
01/01/18 To capital a/c 5000.00 02/01/18 By motor van 600.00
04/01/18
To loan form
sergri 1000.00 03/01/18 By Purchase 1300.00
13/01/18 To sales 300.00 10/01/18 By motor expenses 200.00
20/01/18 To sales 500.00 24/01/18
By storage
expenses 150.00
27/01/18
By repayment of
loan 350.00
30/01/18 By drawing 175.00
31/01/18 By closing balance 4025.00
6800.00 6800.00
5

Motor van a/c
Date Particular
Amount
(£) Date Particular
Amount
(£)
02/01/18 To Cash 600.00 31/01/18 By closing balance 600.00
600.00 600.00
Purchase a/c
Date Particular
Amount
(£) Date Particular
Amount
(£)
03/01/18 To Cash 1300.00 31/01/18 By trading a/c 1300.00
1300.00 1300.00
Loan form Sergie a/c
Date Particular
Amount
(£) Date Particular
Amount
(£)
27/01/18 To Cash 350.00 04/01/18 By cash 1000.00
31/01/18 To balance c/d 650.00
1000.00 1000.00
Sales a/c
Date Particular
Amount
(£) Date Particular
Amount
(£)
31/01/18 To trading a/c 800.00 13/01/18 By cash 300.00
20/01/18 By cash 500.00
800.00 800.00
Storage expenses
Date Particular
Amount
(£) Date Particular
Amount
(£)
24/01/18 To Cash 150.00 31/01/18 By P&L a/c 150.00
6

150.00 150.00
Drawing a/c
Date Particular
Amount
(£) Date Particular
Amount
(£)
30/01/18 To Cash 175.00 31/01/18 By Capital a/c 175.00
175.00 175.00
Capital a/c
Date Particular
Amount
(£) Date Particular
Amount
(£)
31/01/18 To Drawing 175.00 01/01/18 By cash 5000.00
31/01/18 To balance c/d 4825.00
5000.00 5000.00
Motor expenses
Date Particular
Amount
(£) Date Particular
Amount
(£)
10/01/18 To Cash 200.00 31/01/18 By P&L a/c 200.00
200.00 200.00
(b) Trial balance
Trial Balance at 31 January
Particulars Debit (£) Credit (£)
Cash a/c 4025.00
Capital a/c 5000.00
Motor van a/c 600.00
Purchase a/c 1300.00
Loan a/c 650.00
7

Motor van expenses a/c 200.00
Sales a/c 800.00
Storage expenses a/c 150.00
Drawings a/c 175.00
6450.00 6450.00
(c) Statement of profit or loss and a statement of financial position
Statement of Profit and Loss
for the month ended 31 January
Particulars Amount (£) Amount (£)
Sales a/c 800.00
Less – Cost of Goods sold 500.00
Gross Profit 300.00
Less- Expenses
Motor van expenses 200.00
Storage expenses 150.00 350.00
Net Loss 50.00
Statement of financial position at January, 31
Particulars Amount (£) Amount (£)
Non Current assets
Motor Van 600.00
Current assets
Cash 4025.00
Closing Stock 800.00 4825.00
Total assets 5425.00
Capital account 5000.00
Less- Net loss 50.00
Less – Drawings 175.00 4775.00
8

Current liabilities
Short term loan 650.00
Total Liabilities 5425.00
Working Notes – Cost Of goods sold = Purchase – Closing inventories
= 1300.00 – 800.00 = 500.00
TASK 3
(a) Ledger accounts
Cash a/c
Date Particular Amount (£) Date Particular Amount (£)
Jan, 1 To Balance b/d 343.00 Jan, 5 By Wages a/c 12.00
Jan, 7 To Smith's a/c 18.00 Jan, 9 By Max's a/c 21.00
Jan, 11 To Sales a/c 64.00 Jan, 14 By Wages a/c 14.00
Jan, 21 To Sales a/c 110.00 Jan, 14 By Purchases a/c 75.00
Jan, 23 To Harvey's a/c 25.00 Jan, 15 By Rich's a/c 162.00
Jan, 28 To Sales a/c 84.00 Jan, 20
By Fixtures and
fittings a/c 32.00
Jan, 31 To Sales a/c 31.00 Jan, 21 By Wages a/c 17.00
Jan, 23 By office expenses a/c 3.00
Jan, 28 By Wages a/c 15.00
Jan, 31 By Balance c/d 323.00
674.00 674.00
Feb, 1 To Balance b/d 323.00
Capital a/c
Date Particular Amount (£) Date Particular Amount (£)
Jan, 1 To Payables 33.00 Jan, 1 By Cash in hand a/c 343.00
Jan, 31 To balance c/d 1049.00 By Inventory 458.00
By Furniture and
fittings 198.00
9

By Receivables 83.00
1082.00 1082.00
Fixtures and fittings a/c
Date Particular
Amount
(£) Date Particular
Amount
(£)
Jan, 1 To Balance b/d 198.00 Jan, 31 By Balance c/d 230.00
Jan, 20 To cash a/c 32.00
230.00 230.00
Feb, 1 To Balance b/d 230.00
Sales a/c
Date Particular
Amount
(£) Date Particular
Amount
(£)
Jan, 31 To Trading a/c 412.00 Jan, 2 By Harvey's a/c 124.00
Jan, 11 By Cash a/c 64.00
Jan, 21 By Cash a/c 110.00
Jan, 28 By Cash a/c 84.00
Jan, 31 By Cash a/c 30.00
412 412.00
Wages a/c
Date Particular
Amount
(£) Date Particular
Amount
(£)
Jan, 5 To cash a/c 12.00 Jan, 31 Profit and loss a/c 58.00
Jan, 14 To cash a/c 14.00
10

Jan, 21 To cash a/c 17.00
Jan, 28 To cash a/c 15.00
58.00 58.00
Purchase a/c
Date Particular
Amount
(£) Date Particular
Amount
(£)
Jan, 5 To Rich's a/c 150.00 Jan, 31 By Trading a/c 225.00
Jan, 14 To cash a/c 75.00
225.00 225.00
Office Expenses a/c
Date Particular
Amount
(£) Date Particular
Amount
(£)
Jan, 23 To cash a/c 3.00 Jan, 31 Profit and loss a/c 3.00
Receivables from Smith's a/c
Date Particular
Amount
(£) Date Particular
Amount
(£)
Jan,1 To Balance b/d 18.00 Jan, 7 By Cash a/c 18.00
Receivables from Harvey's a/c
Date Particular
Amount
(£) Date Particular
Amount
(£)
Jan, 1 To Balance b/d 39.00 Jan, 23 By Cash a/c 25.00
Jan, 2 To Sales a/c 124.00 Jan, 31 By Balance c/d 138.00
163.00 163.00
11

Feb, 1 To Balance b/d 138.00
Receivables from Moon's a/c
Date Particular
Amount
(£) Date Particular
Amount
(£)
Jan, 1 To Balance b/d 26.00 Jan, 31 By Balance c/d 26.00
Feb, 1 To Balance b/d 26.00
Payable to Rich's a/c
Date Particular
Amount
(£) Date Particular
Amount
(£)
Jan, 15 To cash a/c 162.00 Jan, 1 By Balance b/d 12.00
Jan, 5 By purchase a/c 150.00
162.00 162.00
Payable to Max's a/c
Date Particular
Amount
(£) Date Particular
Amount
(£)
Jan, 9 To cash a/c 21.00 Jan, 1 By Balance b/d 21.00
Inventory a/c
Date Particular
Amount
(£) Date Particular
Amount
(£)
Jan, 1 To Balance b/d 458.00 Jan, 31 By Trading a/c 458.00
Jan, 31 To Trading a/c 374.00 Jan, 31 By Balance c/d 374.00
12

Feb, 1 To Balance b/d 374.00
(b) Trial balance
Trial Balance at 31 January
Particulars Debit (£) Credit (£)
Cash in hand a/c 323.00
Capital a/c 1049.00
Fixtures and fittings a/c 230.00
Sales a/c 412.00
Wages a/c 58.00
Purchase a/c 225.00
Office expenses a/c 3.00
Receivables a/c
Harvey 138.00
Moon 26.00
Inventory a/c 458.00
1461.00 1461.00
(c) Statement of profit & loss and financial position of Mafuta
Statement of Profit and Loss
For the month ended 31 January
Particulars Amount (£)
Sales 412.00
Less- Cost of goods sold 309.00
Gross profit 103.00
Less – Expenses
13

Wages 58.00
Office Expenses 3.00 61.00
Net Profit 42.00
Statement of Financial position at 31 January
Particulars Amount (£)
Non current assets
Fixtures and fittings 230.00
Current assets
Inventory 374.00
Trade receivables (138+26) 164.00
Cash 323.00 861.00
Total Assets 1091.00
Capital account 1049.00
Add – Net Profit 42.00 1091.00
Total Liabilities 1091.00
Working Note – Cost of goods sold = Opening inventories + Purchase – Closing stock
= 458.00 + 225.00 – 374.00 = 309.00
TASK 4
(a) Journal entries and Ledger accounts
Journal entries of Ricardo
Date Particular Debit Credit
June, 2 Claire a/c 8500.00
14

To Sales a/c 8500.00
June. 13 Purchase a/c 12000.00
To Gerogina a/c 12000.00
June, 14 Hywel a/c 8550.00
To Sales a/c 8550.00
June, 20 Cash a/c 6000.00
To Sales a/c 6000.00
June, 21 Purchase a/c 4500.00
To Andrew a/c 4500.00
June, 22 Sales return a/c 1000.00
To Claire a/c 1000.00
June, 24 Mandy a/c 5000.00
To Sales a/c 5000.00
June, 24 Cash a/c 7125.00
Discount allowed a/c 375.00
To Claire a/c 7500.00
June, 25 Cash a/c 8550.00
To Hywel a/c 8550.00
June, 25 Gerogina a/c 12000.00
To Cash a/c 11160.00
To Discount received a/c 840.00
June, 27 Andrew a/c 4500.00
To Discount received a/c 90.00
To Cash a/c 4410.00
(a) Ledger accounts
15

Sales a/c
Date Particular
Amount
(£) Date Particular Amount (£)
30/06/18 To Trading a/c 28050.00 02/06/18 By Claire 8500.00
14/06/18 By Hywel 8550.00
20/06/18 By cash 6000.00
24/06/18 By Mandy 5000.00
28050.00 28050.00
Purchase a/c
Date Particular Amount (£) Date Particular
Amount
(£)
13/06/18 To Georgina 12000.00 30/06/18 By Trading a/c 16500.00
21/06/18 To Andrew 4500.00
16500.00 16500.00
Claire a/c
Date Particular Amount Particular Amount
02/06/18 To sale 8500.00 By Cash 7125
By discount allowed 375
8500.00 8500
Georgina a/c
Date Particular
Amount
(£) Date Particular Amount (£)
25/06/18 To Cash 11160.00 13/06/16 By Purchase 12000.00
To Discount received 840.00
12000.00 12000.00
Hywel a/c
16

Date Particular Amount (£) Date Particular Amount (£)
14/06/18 To sales 8550.00 25/06/18 By cash a/c 8550.00
8550.00 8550.00
Andrew a/c
Date Particular Amount (£) Date Particular Amount (£)
27/06/18 To Cash 4410.00 21/06/18 By Purchase a/c 4500.00
To Discount received 90.00
4500.00 4500.00
Cash a/c
Date Particular Amount (£) Date Particular Amount (£)
20/06/18 To sales 6000.00 25/06/18 By Georgian 11160.00
14/06/18 To Hywel 8550.00 27/06/18 By Andrew 4410.00
24/06/18 To claire a/c 7125.00 30/06/18
By Balance
c/d 6105.00
21675.00 21675.00
Sales return a/c
Date Particular Amount (£) Date Particular Amount (£)
22/06/18 To claire a/c 1000.00 30/06/18 By Trading a/c 1000.00
1000.00 1000.00
Mandy a/c
Date Particular
Amount
(£) Date Particular Amount (£)
24/06/18 To sales 5000.00 30/06/18 By Balance c/d 5000.00
5000.00 5000.00
Discount allowed a/c
Date Particular Amount Date Particular Amount (£)
17

(£)
24/06/18 To Claire 375.00 30/06/18 By P&L a/c 375.00
375.00 375.00
Discount Received account.
Date Particular
Amount
(£) Date Particular Amount (£)
30/06/18 To P&L 930.00 25/06/18 By Georgina 840.00
27/06/18 By Andrew 90.00
930.00 930.00
(b) Trial balance
Trial balance at 27 June
Particulars Debit Credit
Sales a/c 28050
Purchase a/c 16500.00
Cash a/c 6105
Sales return a/c 1000.00
Mandy – Receivable 5000.00
Discount allowed a/c 930.00
Discount Received a/c 375.00
28980 28980
TASK 5
Capital Expenditure
Capital expenditure are funds that are used by organisation to upgrade and acquire fixed
assets such as property, plant, building, land and equipment (Niroomandi and et. Al, 2012) .
Capital expenditure are ongoing expenses that are spend for complete to operations of assets and
extending the useful life of an existing assets. It is used for taking new investments and projects
18