A C C O U N T I N G L A K S H A N

ACCOUNTINGPROCEEDPREVIOUS

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ACCOUNTINGMAIN MENUMAIN MENU

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INTRODUCTION TO ACCOUNTING

ADJUSTMENTS

BANK RECONCILIATION

DEPRECIATION

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ACCOUNTINGMAIN MENUMAIN MENU

PREVIOUSPREVIOUS

MANGEMENT ACCOUNTING

COST ACCOUNTING

FINAL ACCOUNTS FORMATS

Accounting is an art of recording , Classifying and Summarizing , in a Significant manner and in terms of money transaction and event which are in part at Lst of a Financial Character and

interpreting the results there of

American institute of certified public Accounts

DEFINITION

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FORMAT OF ACCOUNT

Date details page value Date details page value

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ACCOUNTING EQUATIONS

EQUITY = ASSESTSCAPITAL + LIABILITIES = ASSESTS CAPITAL + LIABILITIES +INCOME =ASSESTS + EXPENDITURE

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SUBSIDIARY BOOKS

CASH BOOK

PURCHASE DAY BOOK

SALES DAY BOOK

RETURN OUT WARDS BOOK

RETURN IN WARDS BOOK

PETTY CASH BOOK

JOURNAL PROPER

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NEXT

DEALDEAL

PURCHASE

SALES

RETURN OUT WARDS

RETURN IN WARDS

DEPRECIATION, BAD DEBTS

SOURCE DOCUMENTSSOURCE DOCUMENTS

PURCHASE INVOCES

SALES INVOCES

DEBIT NOTE

CREDIT NOTE

JOURNALVOUCHERS

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ERRORS OF ACCOUNTINGERRORS OF ACCOUNTING

ERRORS OF OMISSIONERRORS OF OMISSION

COMPENSATING ERRORSCOMPENSATING ERRORS

ERRORS OFPRINCIPLEERRORS OFPRINCIPLE

DUPLICATION ERRORSDUPLICATION ERRORS

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Ex; pay Rs500/= for light bill.

Cash account

Light bill 500

Light bill account

Cash 500

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NEXT

Ex ; received Rs1000/= for sales

Cash account

Sales 1000

Sales account

Cash 1000

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Sri Lankan Accounting Standards

SL.A.S 3 – Presentation Of Financial Statements SL.A.S 5 – Inventories

SL.A.S 9 – Cash Flow Statements SL.A.S 10 - Accounting Policies, Changes In Accounting Estimates

& Errors

SL.A.S 12 -Events After the Balance Sheet Date

SL.A.S 18 - Property , Plant & Equipment

SL.A.S 36 - Provisions , Contingent Liabilities & Contingent Assets

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FINAL ACCOUNTS FORMATS

MAIN MENU NEXT

FINAL ACCOUNTSFINAL ACCOUNTS

Manufacturing AccountManufacturing Account

Trading Account Trading Account

Profit & Loss AccountProfit & Loss Account

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FINAL ACCOUNTSFINAL ACCOUNTS

Profit & Loss Appropriation Account Profit & Loss Appropriation Account

Income StatementIncome Statement

Balance Sheet Balance Sheet

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MANUFACUTURING ACCOUNTMANUFACUTURING ACCOUNTMANUFACUTURING ACCOUNTMANUFACUTURING ACCOUNT

Materials Opening stock x + Purchases x - Purchases (x) x

returns x

- Closing stock (x) Consumed Materials Cost x Direct wages xOther Expenses xPrime cost x Manufacturing

overhead cost x X

Manufacturing cost x

X

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TRADING ACCOUNTTRADING ACCOUNT

Opening stock x+purchase x-return outwards (x) x

x- Closing stock (x)Sales cost x Gross profit x

X

Sales xReturn in wards (x)

X

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PROFIT & LOSS ACCOUNTPROFIT & LOSS ACCOUNT

Establishment

expenses x

Selling & distribution

expenses x

Financial expenses x

Net profit x

X

Gross profit x

incomes x

X

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PROFIT & LOSS APPROPRIATION ACCOUNTPROFIT & LOSS APPROPRIATION ACCOUNT

Interest on

Capital - A x

B x X

Salary - A x

B x X

Profit - A x

B x X

X

Profit X

Interest on

Drawings - A x

B x X

X

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INCOME STATEMENT

Sales xxSales cost (x)Gross profit xx Incomes xSelling & distribution expenses xEstablishment expenses xFinancial expenses xOther expenses x (xx)Net profit before tax x Tax (x)Net profit after the tax X

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BALANCE SHEETBALANCE SHEET

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HORIZONTAL METHOD

VERTICAL METHOD

BALANCE SHEETBALANCE SHEET

Capital x

+profit x

Long term liabilities x

Current liabilities Accrued expenses x Income received in

Advance x

X

Fixed assests x

Intangible assests x

Current assests Accrued income x

X

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BALANCE SHEET

Non current assets

Property, plant & equipment xCurrent assetsInventories x

Total assets xxEquity x

Long term liabilities x

Current liabilities x

Total equity & liabilities xx

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DEPRECIATIONDEPRECIATION

STRAIGHT LINE METHODSTRAIGHT LINE METHOD DIMINISHING / REDUCING BALANCE DIMINISHING / REDUCING BALANCE

METHODMETHOD SUM OF YEARS DIGITS METHODSUM OF YEARS DIGITS METHOD REVALUATION METHODREVALUATION METHOD PRODUCTION UNITS METHODPRODUCTION UNITS METHOD

MAIN MENUMAIN MENU

STRAIGHT LINE METHODSTRAIGHT LINE METHOD

ANNUITY = COST – SCRAP VALUEANNUITY = COST – SCRAP VALUE

DEPRICIATION EFFECTIVE LIFEDEPRICIATION EFFECTIVE LIFE

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Cost – 150000Cost – 150000 Effective life – 3 YearsEffective life – 3 Years Scrap value – 30000Scrap value – 30000Count the Annuity depreciation in Straight line method.Count the Annuity depreciation in Straight line method.

40000 40000

40000

1st Year = 150000 – 30000 3

2nd Year = 150000 – 30000 3

3rd Year = 150000 – 30000 3

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40000 40000

40000

TOTAL COST = 150000TOTAL COST = 150000

TOTAL DEPRECIATION = (120000)TOTAL DEPRECIATION = (120000)

SCRAP VALUE = 30000SCRAP VALUE = 30000

++ ++

MENUMENU

REDUCING BALANCE METHODREDUCING BALANCE METHOD

R = 1 - N SR = 1 - N S CC

R R = Depreciation Percentage = Depreciation Percentage N N = Effective life= Effective lifeS S = Scrap value= Scrap valueC C = Cost= Cost

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Cost = 1000Cost = 1000

Effective life = 3 yearsEffective life = 3 years

Scrap value = 125Scrap value = 125

1. Count the depreciation percentage.1. Count the depreciation percentage.

R = 1 - 3 125 R = 1 - 3 125

1000 1000 = 1- 0.5

0.5 = 50%NEXTNEXT

2. Count the annuity depreciation in reducing 2. Count the annuity depreciation in reducing

balance methodbalance method 1st Year = 1000 50

100

2nd Year = 500 50 100

3rd Year = 125 50 100

= 500 = 250

= 125

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500500 250250

125125

++ ++

TOTAL COST = 1000TOTAL COST = 1000

TOTAL DEPRECIATION = (875)TOTAL DEPRECIATION = (875)

SCRAP VALUE = 125SCRAP VALUE = 125

MENUMENU

MANGEMENT ACCOUNTING

• RATIO ANALYSIS

MAIN MENU

RATIO ANALYSIS

• PROFITABILITY RATIOS

• LIQUIDITY RATIOS

• ACTIVITY RATIOS

• GEARING RATIOS

• INVESTORS’S RATIOS

MENU

PROFITABILITY RATIOS• GROSS PROFIT RATIO• NET PROFIT RATIO• RETURN ON INVESTMENT RETURN ON TOTAL ASSETS RETURN ON NET ASSETS RETURN ON CAPITAL EMPLOYED

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GROSS PROFIT RATIO

• GROSS PROFIT = RATIO

GROSS PROFIT 100

SALES

PREVIOUS

PROFITABILITY RATIOS

NET PROFIT RATIO

• NET PROFIT RATIO = NET PROFIT 100 SALES

PREVIOUS

PROFITABILITY RATIOS

RETURN ON TOTAL ASSETS RATIO

• RETURN ON TOTAL

ASSETS RATIO = NET PROFIT AFTER 100

THE TAX + INTEREST

NET ASSETS

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PROFITABILITY RATIOS

LIQUIDITY RATIOS

• CURRENT RATIO

• ACIDTEST RATIO

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CURRENT RATIO

• CURRENT RATIO = CURRENT ASSETSCURRENT LIABILITIES

PREVIOUS

LIQUIDITY RATIOS

ACIDTEST RATIO

• ACIDTEST RATIO = LIQUID ASSETS

CURRENT LIABILITIES

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LIQUIDITY RATIOS

ACTIVITY RATIOS

• STOCK TURNOVER RATIO• STOCK RESIDENT RATIO• DEBTORS TURNOVER RATIO• AVERAGE DEBT COLLECTION

PERIOD• TOTAL ASSETS TURNOVER RATIO• FIXED ASSETS TURNOVER RATIO

PREVIOUS

STOCK TURNOVER RATIO

• STOCK TURNOVER = RATIO

SALES COSTAVERAGE STOCK

PREVIOUS

ACTIVITY RATIOS

STOCK RESIDENT RATIO

• STOCK RESIDENT = RATIO

365 (DAYS) OR 12 (MONTHS)STOCK TURNOVER RATIO

PREVIOUS

ACTIVITY RATIOS

DEBTORS TURNOVER RATIO

• DEBTORS TURNOVER = RATIO

CREDIT SALES AVERAGE DEBTORS

PREVIOUS

ACTIVITY RATIOS

AVERAGE DEBT COLLECTION PERIOD

• AVERAGE DEBT COLLECTION PERIOD =

365(DAYS) DEBTORS

TURNOVER RATIO

PREVIOUS

ACTIVITY RATIOS

TOTAL ASSETS TURNOVER RATIO

• TOTAL ASSETS TURNOVER = RATIO

SALES TOTAL ASSETS

PREVIOUS

ACTIVITY RATIOS

FIXED ASSETS TURNOVER RATIO

• FIXED ASSETS TURNOVER =

RATIO

SALES FIXED ASSETS

PREVIOUS

ACTIVITY RATIOS

GEARING RATIOS

• DEBT EQUITY RATIO• TOTAL CAPITAL TO DEBIT• INTEREST COVER

PREVIOUS

TOTAL CAPITAL TO DEBT

• TOTAL CAPITAL = TO DEBT

CAPITAL TO DEBTTOTAL CAPITAL

PREVIOUS

GEARING RATIOS

INTEREST TO COVER

• INTEREST TO COVER

=

NET PROFIT BEFOR TAX + INTEREST

INTEREST

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GEARING RATIOS

INVESTORS’S RATIOS

• EARNING PER SHARE• PRICE EARNING RATIO• EARNING YIELD

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ADJUSTMENTSADJUSTMENTS

CLOSING STOCKACCRUED EXPENSESPREPAID EXPENSESINCOME RECEIVABLEINCOME RECEIVABLE IN

ADVANCE

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DRAWINGSBAD DEBTSPROVISIONING FOR DOUBTFUL DEBTSEPF & ETFASSEST DESTROYED DUE TO

FIRE / DUE TO THEFTS

ADJUSTMENTSADJUSTMENTS

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CLOSING STOCKCLOSING STOCKINVENTORY ACCOUNT DEBIT TRADING ACCOUNT CREDIT

INVENTORY TRADING

ACCOUNT ACCOUNT

X X

ADJUSTMENTSADJUSTMENTS

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ACCRUED EXPENSESACCRUED EXPENSES

EXPENSES ACCOUNT DEBIT ACCRUED EXPENSES CREDIT

EXPENSES ACCRUED EXPENSES

ACCOUNT ACCOUNT

X X

ADJUSTMENTSADJUSTMENTS

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PREPAID EXPENSESPREPAID EXPENSES

PREPAID EXPENSES ACCOUNT DEBIT EXPENSES ACCOUNT CREDIT

PREPAID EXPENSES EXPENSES

ACCOUNT ACCOUNT

X X

ADJUSTMENTSADJUSTMENTS

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INCOME RECEIVABLEINCOME RECEIVABLE

INCOME RECEIVABLE ACCOUNT DEBIT INCOME ACCOUNT CREDIT

INCOME RECEIVABLE INCOME

ACCOUNT ACCOUNT

X X

ADJUSTMENTSADJUSTMENTS

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INCOME RECEIVABLE IN INCOME RECEIVABLE IN ADVANCEADVANCE

INCOME ACCOUNT DEBIT INCOME RECEIVABLE IN ADVANCE CREDIT

INCOME RECEIVABLE

INCOME IN ADVANCE

ACCOUNT ACCOUNT

X X

ADJUSTMENTSADJUSTMENTS

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DRAWINGSDRAWINGS

DRAWINGS ACCOUNT DEBIT ASSETS ACCOUNT CREDIT

DRAWINGS ASSETS

ACCOUNT ACCOUNT

X X

ADJUSTMENTSADJUSTMENTS

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BAD DEBTSBAD DEBTS

BAD DEBTS ACCOUNT DEBIT DEBTORS ACCOUNT CREDIT

BAD DEBTS DEBTORS

ACCOUNT ACCOUNT

X X

ADJUSTMENTSADJUSTMENTS

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PROVISIONING FOR PROVISIONING FOR DOUBTFUL DEBTSDOUBTFUL DEBTS

DOUBTFUL DEBTS ACCOUNT DEBIT

PROVISIONING FOR DOUBTFUL DEBTS ACCOUNT CREDIT

DOUBTFUL DEBTS P. F.D.D.

ACCOUNT ACCOUNT

X X

ADJUSTMENTSADJUSTMENTS

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EPF & ETFEPF & ETF

EPF

ETF

ADJUSTMENTSADJUSTMENTS

PREVIOUSPREVIOUS

EPFEPF

EMPLOYEE

EMPLOYER

ADJUSTMENTSADJUSTMENTS

PREVIOUSPREVIOUS

EPF - EMPLOYEEEPF - EMPLOYEE

SALARY ACCOUNT DEBIT EPF ACCOUNT CREDIT

SALARY EPF ACCOUNT ACCOUNT

X X

ADJUSTMENTSADJUSTMENTS

PREVIOUSPREVIOUS

EPF - EMPLOYEREPF - EMPLOYER

EPF EXPENSES ACCOUNT DEBIT EPF ACCOUNT CREDIT

EPF EXPENSES EPF

ACCOUNT ACCOUNT

X X

ADJUSTMENTSADJUSTMENTS

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ETFETF

ETF EXPENSES ACCOUNT DEBIT

ETF ACCOUNT CREDIT

ETF EXPENSES ETF

ACCOUNT ACCOUNT

X X

ADJUSTMENTSADJUSTMENTS

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ASSEST DESTROYED DUE TO ASSEST DESTROYED DUE TO FIRE / DUE TO THEFTS FIRE / DUE TO THEFTS

ASSEST DESTROYED ACCOUNT DEBIT

TRADING ACCOUNT CREDIT

ASSEST DESTROYED TRADING

ACCOUNT ACCOUNT

X X

ADJUSTMENTSADJUSTMENTS

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BANK RECONCILIATION

REVISED BANK BOOK

BANK RECONCILATION SATEMENT

EXERCISE

MAIN MENU

BANK RECONCILIATION SATEMENT

STARTING WITH A REVISED BANK BOOK BALANCE

STARTING WITH A BANK STATEMENT BALANCE

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BANK ACCOUNT

DATE DETAILS AMOUNT DATE DETAILS AMOUNT

1/1/09 CASH DEPOSIT 30000 1/1/09 00659930 4000

2/1/09 CHEQUE DEPOSIT 8000 5/1/09 00659931 5000

29/1/09 CHEQUE DEPOSIT 2000 20/1/09 00659932 6000

21/1/09 00659933 5000

20/1/09 DRECT REMITTANCE 2000

23/1/09 00659934 8000

23/1/09 00659935 2000

31/1/09 BALANCE 10000

40000 40000

1/2/09 BALANCE 10000

DATE PARTICULARS DEBIT CREDIT BALANCE

1/1/09 CASH 30000 30000

4/1/09 00659930 4000 26000

8/1/09 00659931 5000 21000

11/1/09 CHEQUE 8000 29000

20/1/09 D.REMIT 2000 31000

23/1/09 00659933 5000 26000

25/1/09 00659935 2000 24000

28/1/09 S.O 3000 21000

30/1/09 B.CHARGES 1000 20000

BANK STATEMENT REVISED

28/1/09 ST.ORDER 3000

30/1/09 BANK CHARGES 1000

31/1/09 BALANCE 8000

42000 42000

1/2/09 BALANCE 8000

BANK RECONCILIATION STATEMENT

REVISED CASH BOOK BAL

+

CHEQUES ISSUED BUT

NOT TRANSFER - 00659932

00659934 14000

- 22000

CHEQUES DEPOSIT BUT

NOT REALIZATION ( )

BANK STATEMENT BALANCE 20000

8000

6000

8000

2000

PREVIOUS

REVISED BANK BOOK

BALANCE XX DIRECT REMITTANCES XX

XX

STANDING ODERS XX

XX

PREVIOUS

BANK RECONCILIATION STATEMENT

REVISED CASH BOOK BALANCE XX

+ CHEQUES ISSUED BUT NOT TRANSFER XX

- XXCHEQUES DEPOSIT BUT NOT REALIZATION (XX)

BANK STATEMENT BALANCE XX

PREVIOUS

BANK RECONCILIATION STATEMENT

BANK SATEMENT BALANCE XX

+ CHEQUES DEPOSIT BUT NOT REALIZATION XX

- XXCHEQUES ISSUED BUT NOT TRANSFER (XX)

REVISED CASH BOOK BALANCE XX

PREVIOUS

QUESTIONSQUESTIONS

MAIN MENUMAIN MENU

RATIO ANALYSISRATIO ANALYSIS

DEPRECIATIONDEPRECIATION

BANK RECONCILIATIONBANK RECONCILIATION

COST ACCOUNTINGCOST ACCOUNTING

FINAL ACCOUNTSFINAL ACCOUNTS

COST ACCOUNTINGCOST ACCOUNTING

ELEMENTS OF COSTELEMENTS OF COST

METERIALS COSTMETERIALS COST

LABOUR COSTLABOUR COST

EXPENSESEXPENSES

MAIN MENUMAIN MENU

METERIALS COSTMETERIALS COST

EQUATIONSEQUATIONS

PRICE METHODSPRICE METHODS

GRAPHGRAPH

MENUMENU

PRICE METHODSPRICE METHODS

FIRST IN FIRST OUT - FIFOFIRST IN FIRST OUT - FIFO

LAST IN FIRST OUT - LIFOLAST IN FIRST OUT - LIFO

SIMPLE AVERAGE METHODSIMPLE AVERAGE METHOD

MENUMENU

FIRST IN FIRST OUT - FIFODATE DEATILES PRICE QUANTITY

1/1/09 RECEIVED 10 400

10/1/09 ISSUED ? 300

20/1/09 RECEIVED 12 500

30/1/09 ISSUED ? 300

DATE RECEIVED ISSUED BALANCE

QUANTITY PRICE AMOUNT QUANTITY PRICE AMOUNT QUANTITY AMOUNT

1/1/09 400 10 4000 400 4000

10/1/09 300 10 3000 100 1000

20/1/09 500 12 6000 600 7000

30/1/09 100 10 1000 500 6000

200 12 3400 300

30036003600

STOCK VALUE =

PREVIOUS

LAST IN FIRST OUT - LIFO

DATE DEATILES PRICE QUANTITY

1/1/09 RECEIVED 10 400

10/1/09 ISSUED ? 300

20/1/09 RECEIVED 12 500

30/1/09 ISSUED ? 300

DATE RECEIVED ISSUED BALANCE

QUANTITY PRICE AMOUNT QUANTITY PRICE AMOUNT QUANTITY AMOUNT

1/1/09 400 10 4000 400 4000

10/1/09 300 10 3000 100 1000

20/1/09 500 12 6000 600 7000

30/1/09 300 12 3600 300

34003400

STOCK VALUE =

PREVIOUS

DATE DEATILES PRICE QUANTITY

1/1/09 RECEIVED 10 400

10/1/09 ISSUED ? 300

20/1/09 RECEIVED 12 500

30/1/09 ISSUED ? 300

DATE RECEIVED ISSUED BALANCE

QUANTITY PRICE AMOUNT QUANTITY PRICE AMOUNT QUANTITY AMOUNT

1/1/09 400 10 4000 400 4000

10/1/09 300 10 3000 100 1000

20/1/09 500 12 6000 600 7000

30/1/09 300 11 3300 300

37003700

STOCK VALUE =

SIMPLE AVERAGE METHOD

10 + 12

2 =

PREVIOUS

0 {

IDEL TIMEJANUARY FEBRUARY

15000

25000

20000

30000

10000

5000

• MINIMUM STOCK LEVEL 5000

• MAXIMUM STOCK LEVEL 25000

• RE ORDER LEVEL 10000

• RE ORDER QUANTITY 20000{PREVIOUS

EQUATIONS

• RE ORDER LEVEL

• MINIMUM STOCK LEVEL

• MAXIMUM STOCK LEVEL

• ECONOMIC ORDER QUANTITY

PREVIOUS

RE ORDER LEVEL

RE ORDER LEVEL = MAXIMUM CONSUMED MAXIMUM IDEL TIME

PREVIOUS

MINIMUM STOCK LEVEL

MINIMUM STOCK LEVEL =

RE ORDER LEVEL – (AVERAGE CONSUMED AVERAGE IDEL TIME)

PREVIOUS

MAXIMUM STOCK LEVEL

MAXIMUM STOCK LEVEL = (MINIMUM CONSUMED MINIMUM IDEL TIME) + RE ORDER QUANTITY

PREVIOUS

ECONOMIC ORDER QUANTITY

2DCoEOQ =

Cs

PREVIOUS

FINAL ACCOUNTSFINAL ACCOUNTS

TRADING ACCOUNTTRADING ACCOUNT

PROFIT & LOSS ACCOUNTPROFIT & LOSS ACCOUNT

PREVIOUSPREVIOUS

ACCOUNTIN ENVIRONMENT

LEGAL ENVIORMENT PROFESSIONAL ENVIORMENT ECONOMICAL & POLITICAL ENVIORMENT SOCIL & CULTURAL ENVIORMENT TECHNOLOGICAL ENVIORMENT

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QUALITATIVE CHARACTERISTICS OF FINANCIAL STATEMENT

UNDERSTANDABILITYRELEVENCERELIABILITYCOMPARABILITY

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CREATED BY

LAKSHAN COORAY

Tel: 0716358322 / 0755749949

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