Accounting Basics
For Beginners
Dr. P. Sreelakshmi
ACCOUNTING BASICS FOR BEGINNERS
Module 1: Nature of Financial Accounting
Learning Outcome
At the end of the module you would have an understanding of:
a.
b.
c.
d.
e.
Why understanding the financial accounting is important for managers
The different financial statements
The important users of financial statements
Basic assumptions of financial statements
Important terms in financial accounting
Introduction:
Accounting basics will introduce you to some of thefundamentalAccounting principles,
concepts, and Terminology.Some of the terms that you will learn would include Revenues,
Expenses, Assets, Liabilities, Income Statement, Balance Sheet, Statement of Cash Flows
etc.Basically, the main purpose of Financial Accounting is to provide useful Financial
information to people or groups both inside and outside of companies often called external
users.
Who Uses Financial Accounting?
The ultimate goal of financial accounting is to compile business transactions and other input
documents like invoices and sales receipts in the form of general purpose financial statements
that can be understood by external users.
The key concept here is that external users must be able to understand and use this financial
information when they are making decisions about the company.





Shareholders or Investors: These can be individuals or entities which own the
enterprise by virtue of holding the shares in the company. The ownership would have
been acquired by subscribing to the share capital through an offer by the company /
promoters or by buying the shares in the open market, if the shares are traded. They
will participate in the profits and losses of the company. Participation in the losses
might be limited or unlimited depending upon the type of organisation.
Lenders or Creditors: Are the people who fund the company to get over the short or
long terms financial needs of the company. They do not possess any ownership rights.
However, they would lend money at some interest rate.
Customers: People or entities which buy goods and services from the enterprise.
Suppliers: Those who supply goods or services to the enterprise.
Regulators: Government agencies who regulate the type of businesses. E.g. RBI,
TRAI, IRDA etc.
1



Unions: They are interested in safeguarding the interest and welfare of the
employees.
Brokers and Analysts: They advise the general public, to invest or not in the
company.
Media: Report about the way the company and the promoters operate
Accounting has simple and surprisingly elegant ways to track a business. To be precise,
accounting is about tracking a business. The end product of the financial accounting process
is a set of reports that are called financial statements.To begin with, lets us understand some
basic Accounting Terms.
Basic Accounting Terms:
In order to understand the subject matter clearly, one must grasp the following common
expressionsalways used in business accounting. The aim here is to enable the student to
understand with theseoften used concepts before we embark on accounting procedures and
rules.
Transaction: It means an event or a business activity which involves exchange of money or
money’sworth between parties. The event can be measured in terms of money and changes
the financialposition of a person e.g. purchase of goods would involve receiving material and
making paymentor creating an obligation to pay to the supplier at a future date. Transaction
could be a cashtransaction or credit transaction. When the parties settle the transaction
immediately by makingpayment in cash or by cheque, it is called a cash transaction. In credit
transaction, the paymentis settled at a future date as per agreement between the parties.
Profit: The excess of Revenue Income over expense is called profit. It could be calculated for
eachtransaction or for business as a whole.
Loss: The excess of expense over income is called loss. It could be calculated for each
transactionor for business as a whole.
Asset: Asset is a resource owned by the business with the purpose of using it for generating
futureprofits. Assets can be Tangible and Intangible. Tangible Assets are the Capital assets
which havesome physical existence. e.g. Plant and Machinery,Furniture and Fittings, Land
and Buildings, Books, Computers, Vehicles, etc. The capital assets whichhave no physical
existence and whose value is limited by the rights and anticipated benefits thatpossession
confers upon the owner are known as intangible Assets. e.g. Goodwill, Patents, Trade-marks,
Copyrights,Brand Equity, Designs, Intellectual Property, etc.
Liability: It is an obligation of financial nature to be settled at a future date. It represents
amountof money that the business owes to the other parties. E.g. when goods are bought on
credit, thefirm will create an obligation to pay to the supplier the price of goods on an agreed
future dateor when a loan is taken from bank, an obligation to pay interest and principal
amount is created.
2
Capital : It is amount invested in the business by its owners. It may be in the form of cash,
goods,or any other asset which the proprietor or partners of business invest in the business
activity. Frombusiness point of view, capital of owners is a liability which is to be settled
only in the event of closureor transfer of the business. Hence, it is not classified as a normal
liability. For corporate bodies, capitalis normally represented as share capital.
Debtor : The sum total or aggregate of the amounts which the customer owe to the business
forpurchasing goods on credit or services rendered or in respect of other contractual
obligations, isknown as Sundry Debtors or Trade Debtors, or Trade Payable, or Book-Debts
or Debtors. In otherwords, Debtors are those persons from whom a business has to recover
money on account of goodssold or service rendered on credit.
Creditor : A creditor is a person to whom the business owes money or money’s worth. e.g.
money payable to supplier of goods or provider of service. Creditors are generally classified
as Current Liabilities.
Capital Expenditure : This represents expenditure incurred for the purpose of acquiring a
fixed assetwhich is intended to be used over long term for earning profits there from. e. g.
amount paid tobuy a computer for office use is a capital expenditure. At times expenditure
may be incurred forenhancing the production capacity of the machine. This also will be a
capital expenditure. Capitalexpenditure forms part of the Balance Sheet.
Revenue expenditure : This represents expenditure incurred to earn revenue of the current
period.The benefits of revenue expenses get exhausted in the year of the incurrence. e.g.
repairs, insurance,salary & wages to employees, travel etc. The revenue expenditure results in
reduction in profit orsurplus. It forms part of the Income statement.
Business usually prepares 3 reports.
1. A statement of financial position referred to as balance sheet
2. Income statement
3. Statement of cash flows.
In this module, we can just concentrate on the income statement and Balance sheet.
Balance Sheet : It is the statement of financial position of the business entity on a particular
date.It lists all assets, liabilities and capital. It is important to note that this statement exhibits
the state ofaffairs of the business as on a particular date only. It describes what the business
owns and whatthe business owes to outsiders (this denotes liabilities) and to the owners (this
denotes capital). It isprepared after incorporating the resulting profit/losses of Income
statement.
Profit and Loss Account or Income Statement : This account shows the revenue earned by
thebusiness and the expenses incurred by the business to earn that revenue. This is prepared
usuallyfor a particular accounting period, which could be a month, quarter, a half year or a
year. The netresult of the Profit and Loss Account will show profit earned or loss suffered by
the business entity.
3
Accounting Measurement Assumptions: Only when the financial statements are prepared
based on identical measurement criteria and assumptions, it becomes easy to interpret as it
conveys same meaning for all the users. A lot of events affect the business, like receiving
cash from customers, making payment to suppliers, tax payments, buying and selling on
credit etc. Therefore, to have identical understanding of transactions, Accounting adopts the
following four major measurement assumptions:
a. Reporting Entity: The primary assumption here is that the Firm is different from its
owners and other firms. It has an existence of its own. Owners might come and go.
But the organisation exists. Therefore, the financial statement of the firm shall show
the financial position of the firm alone and does not include the financial transaction
of any other individual or entity.
Reporting entity is also defined by the purpose and the context of financial reporting.
For e.g. A company might have different subsidiary or group companies; Some
businesses might want to reports based on segment of business like based on type of
products or Geographical segment etc.
b. Going Concern: This assumes that unless there is some substantial evidence the
business will continue (hence the term ‘Going Concern’) to exist. This assumption is
extremely important to understand, as the businesses go through difficult and
successful periods of time. However, they will be able to meet their commitments to
the stakeholders in spite of seemingly difficult position. Auditors and the management
of the firms have the responsibility to certify / state, whether the firm can continue to
operate. Usually cost commitments, the assets that the firm owns and the ability of the
organisation to generate revenue in the foreseeable future will determine if it is a
going concern or not.
c. Periodicity: As we assume that the organisations continue to exist under the going
concern assumption, the stake holders of the firm may want to find out the results of
the operation every now and then. To satisfy this condition, firms have to report to its
stake holders, on their financial performance and financial position based on an
artificial time period. This is usually a year. However, the current practices also make
it mandatory to report once a quarter.
d. Money measurement: Under this assumption, financial transactions are recorded and
Financial statements are always expressed in terms of money for the ease of
understanding. If a transaction or activity cannot be measured in terms of money, such
things cannot find a place in the accounting records. However, the type of unit of
money (i.e. currency), can be different. E.g. Rupees in India, US Dollars, UK Sterling
etc. The important assumption here is that money is a stable measure in the same way
as Kg is a stable measure for weight.
End of Module 1
4
Check Your Understanding
1. Employees are residual claimants of the profits of the business, i.e., they have to take
what is left after paying all outside claimants such as suppliers, lenders, and
government.
(a) True
(b) False
2. Who among the following would be interested in a company's financial information
for the sake of resource allocation, formulation of taxation policies and investigation
of corporate crimes?
(a) Current employees
(b) Past employees
(c) Senior managers
(d) Government
3. _______ provide the risk capital to a business?
(a) Shareholders
(b) Lenders
(c) Employees
(d) Credit Rating Agencies
4. What does the accounting assumption 'reporting entity' mean?
(a) The entity is a continuing enterprise
(b) Separation of owners' business transactions from their personal transactions
(c) Valuation of entity's assets
(d) Breaking up the life of the entity into time periods
5. What does the accounting assumption 'historical cost' mean?
(a) The entity is a continuing enterprise
(b) Separation of owners' business transactions from their personal transactions
(c) Valuation of entity's assets at cost of acquisition
(d) Breaking up the life of the entity into time periods
6. The __________ assumption is an extension of the going concern assumption.
(a) Historical cost
(b) Periodicity
(c) Money measurement
(d) Reporting entity
5
Module 2: Get to know Balance Sheet
Learning Outcome
At the end of the module you would have an understanding of:
a.
b.
c.
d.
The concept of double entry system
The content of a Balance Sheet
The Accounting equation
The effect of a transaction on the accounting equation
Double Entry System:
Double entry is a simple yet powerful concept each and every one of a company's
transactions will result in an amount recorded into at least two of the accounts in the
accounting system.
Every transaction has two fold aspects, i.e., one party giving the benefit and the other
receiving the benefit.
Because of the double entry system all of a company’s transactions will involve a
combination of two or more accounts from the balance sheet and/or the income statement.
The whole Financial Accounting depends on Accounting Equation which is also known as
Balance Sheet Equation. The basic Accounting Equation is:
Assets = Liabilities + Owner’s equity
Or A = L + P
Where A = Assets, L = Liabilities, P = Capital
While trying to do this correlation, please note that incomes or gains will increase owner’s
equity and expenses or losses will reduce it.
Basics of accounting can be understood through the story of a parcel service business started
by John who named it as ‘Quick Parcel’.





John will no doubt start his business by putting some of his own personal money into
it. In means, he owns shares of ‘Quick Parcel’ equity.
Quick parcel will need to buy a sturdy, dependable delivery vehicle.
The business will begin earning fees and billing clients for delivering their parcels.
The business will be collecting the fees that were earned.
The business will incur expenses in operating the business, such as a salary for
John(as he works for the company,) expenses associated with the delivery vehicle,
advertising, etc.
6
With thousands of such transactions in a given year, John should get into the habit of entering
all of the day's business transactions. Then at the end of the year, try to track what the
business has earned or what the business has lost to be given to its owner John or the
investor.
Balance Sheet accounts:
Asset accounts (Examples: Cash, Accounts Receivable, Supplies, Equipment)
Liability accounts (Examples: Notes Payable, Accounts Payable, Wages Payable)
Stockholders' Equity accounts (Examples: Common Stock, Retained Earnings)
Income Statement accounts:
Revenue accounts (Examples: Service Revenues, Investment Revenues)
Expense accounts (Examples: Wages Expense, Rent Expense, Depreciation Expense)
Let’s illustrate the business with few sample transactions:
1.On December 1, 2017 John starts his business Quick Parcel, Inc. The first transaction that
John will record for his company is his personal investment of Rs.20,000 in exchange for
5,000 shares of Quick Parcel’s equity.
2.On December 2, Quick Parcel purchases a used delivery van for Rs14,000 by writing a
check for Rs.14,000. The two accounts involved are Cash and Vehicles (or Delivery
Equipment).
3.On December 2 when John contacts an insurance agent regarding insurance coverage for
the vehicle quick Parcel just purchased. The agent informs him that Rs.1,200 will provide
insurance protection for the next six months. John immediately writes a cheque for Rs.1,200
and mails it in.
Prepaid Insurance (an asset account reported on the balance sheet) and Insurance Expense (an
expense account reported on the income statement).
4.On December 3,a customer gives Quick Parcel a cheque for Rs.10 to deliver two parcels on
that day.
5. On December 3 the company gets its second customer-a local company that needs to have
50 parcels delivered immediately. John's price of Rs.250 is very appealing.
6. The only expense incurred by Direct Delivery so far was a fee to a temporary help agency
for a person to help Joe deliver parcels on December 3. The temp agency fee is Rs.80 and is
due by December 12.
Let’s now get to the basics of getting started with recording his transactions
Basic accounting equation, which is really the same concept as the balance sheet, it's just
presented in an equation format:
7
Just as assets are on the left side of the accounting equation,to increase an asset account's
balance, you put more on the left side of the asset account. In accounting jargon, you debit
the asset account. To decrease an asset account balance you credit the account, that is, you
enter the amount on the right side.
Just as liabilities and stockholders' equity are on the right side (or credit side) of the
accounting equation,to increase the balance in a liability or stockholders' equity account, you
put more on the right side of the account. In accounting jargon, you credit the liability or the
equity account. To decrease a liability or equity, you debit the account, that is, you enter the
amount on the left side of the account.
1. On December 1, 2017 John starts his business Quick Parcel, Inc. The first transaction
that John will record for his company is his personal investment of Rs.20,000 in
exchange for 5,000 shares of Quick Parcel’s equity.
Transaction
Assets
No. / Date
Cash
1
20,000
=
Liabilities
-
+ Equity
20,000
2. On December 2, Quick Parcel purchases a used delivery van for Rs14,000 by writing
a check for Rs.14,000. The two accounts involved are Cash and Vehicles (or Delivery
Equipment).
Transaction
No. / Date
1
2
Assets
= Liabilities + Equity
Cash
Van
20,000
0
20,000
-14,000
14,000
Quick Parcel's accounting system will show an increase in its account Cash from zero
to Rs.20,000, and an increase in its stockholders' equity account Common Stock by
Rs.20,000. Both of these accounts are balance sheet accounts. There are no revenues
because no delivery fees were earned by the company, and there were no expenses.
3. On December 2 John contacts an insurance agent regarding insurance coverage for the
vehicle Quick Parcel just purchased. The agent informs him that Rs.1,200 will
provide insurance protection for the next six months. John immediately writes a
cheque for Rs.1,200 and mails it in.
8
Assets
= Liabilities
Transaction
No. / Date
Cash
Van
Ins prepaid
1
20,000
0
2
-14,000
14,000
Balance
6,000
14,000
0
3
-1,200
1,200
Balance
4,800
14,000
1,200
Equity
20,000
20,000
20,000
4. On December 3, a customer gives Quick Parcel a cheque for Rs.10 to deliver two
parcels on that day.
Date
Cash
1
2
Balance
3
Balance
3
Balance
20,000
-14,000
6,000
-1,200
4,800
10
4,810
Assets
Van
Ins prepaid
=
Liabilities
14,000
14,000
14,000
1,200
1,200
14,000
1,200
+ Equity
0
20,000
0
20,000
20,000
10
20,010
5. On December 3 the company gets its second customer-a local company that needs to
have 50 parcels delivered immediately. John's price of Rs.250 is very appealing.
Date
Cash
1
2
Balance
3
Balance
3
Balance
3
Balance
20,000
-14,000
6,000
-1,200
4,800
10
4,810
250
5,060
Assets
Van
Ins prepaid
14,000
14,000
14,000
1,200
1,200
14,000
1,200
14,000
1,200
=
Liabilities
+
Equity
0
20,000
0
20,000
20,000
10
20,010
250
20,260
6. The only expense incurred by Direct Delivery so far was a fee to a temporary help
agency for a person to help John deliver parcels on December 3. The temp agency fee
is Rs.80 and is due by December 12.
9
Assets
Date
1
2
Balance
3
Balance
3
Balance
3
Balance
3
Balance
=
Cash
Van
Ins prepaid
20,000
-14,000
14,000
6,000
14,000
-1,200
1,200
4,800
14,000
1,200
10
4,810
14,000
1,200
A/c
Rec
4,810
14,000
1,200
250
250
4,810
14,000
1,200
250
Liabilities
+ Equity
A/c Payable
0
20,000
0
20,000
80
80
20,000
10
20,010
250
20,260
-80
20,180
Assets include costs that are not yet expired (not yet used up), while expenses are costs that
have expired (have been used up). Since the Rs.1,200 payment is for an expense that will not
expire in its entirety within the current month, it would be logical to debit the account Prepaid
Insurance. (At the end of each month, when Rs.200 has expired, Rs.200 will be moved from
Prepaid Insurance to Insurance Expense.)
End of Module 2
10
Check your understanding
1. Identify liability items:
(a) Bank Loan
(b) Office Supplies
(c) Office Equipment
(d) Dividends
2. Which among the following do not qualify as assets?
(a) office expense
(b) Cash
(c) Inventories
(d) office supplies
3. Financial statements do not include the following:
(a) Balance Sheet
(b) Profit and loss
(c) Projected Budget
(d) Cash Flow Statement
4. What are the accounts affected by 'Received payment for goods supplied'?
(a) Assets (no effect) = Liabilities (increase) + Equity (decrease)
(b) Assets (increase) = Liabilities (no effect) + Equity (increases)
(c) Assets (no effect) = Liabilities (no effect) + Equity (no effect)
(d) Assets (decrease) = Liabilities (no effect) + Equity (decreases)
5. Asset is the sum of liabilities and _________.
(a) revenues - expenses
(b) capital - dividends
(c) capital - drawings
(d) capital + revenues - expenses - dividends - drawings
6. Cash, inventories, buildings, machines, etc., are examples of:
(a) capital items
(b) asset items
(c) revenue items
(d) expense items
11
Module 3: Understanding Income Statements
Learning Outcome
At the end of this module you would have learnt:
a.
b.
c.
d.
The meaning of Income and Expenses in an Income Statement
The difference between profit and cash
Preparation of an Income Statement
The relationship between Balance sheet and Income Statement
Income Statement: Income statement will show how profitable a business has been during
the time interval. The reporting of profitability involves two things: the amount that was
earned (revenues) and the expenses necessary to earn the revenues.
Income Statement accounts:
Revenue accounts (Examples: Service Revenues, Investment Revenues)
Expense accounts (Examples: Wages Expense, Rent Expense, Depreciation Expense)
Revenues:
The main revenues for a business are the fees it earns for delivering parcels. The revenues are
recorded when they are earned, not when the company receives the money (accrual basis of
accounting). Recording revenues when they are earned is the result of one of the basic
accounting principles known as the revenue recognition principle.
For example, if John delivers 1,000 parcels in December for Rs.4 per delivery, he has
technically earned fees totalling Rs.4,000 for that month. He sends invoices to his clients for
these fees and his terms require that his clients must pay by January 10. Even though his
clients won't be paying Direct Delivery until January 10, the accrual basis of accounting
requires that the Rs.4,000 be recorded as December revenues, since that is when the delivery
work actually took place. After expenses are matched with these revenues, the income
statement for December will show just how profitable the company was in delivering parcels
in December.
When John receives the Rs.4,000 worth of payment cheques from his customers on January
10, he will make an accounting entry to show the money was received. This Rs.4,000 of
receipts will not be considered to be January revenues, since the revenues were already
reported as revenues in December when they were earned. This Rs.4,000 of receipts will be
recorded in January as a reduction in Accounts Receivable. (In December John had made an
entry to Accounts Receivable and to Sales.)
12
B. Expenses
Now let’s turn to the second part of the income statement—expenses. The December income
statement should show expenses incurred during December regardless of when the company
actually paid for the expenses. For example, if John hires someone to help him with
December deliveries and John agrees to pay him Rs.500 on January 3, that Rs.500 expense
needs to be shown on the December income statement. The actual date that the Rs.500 is paid
out doesn't matter. What matters is when the work was done—when the expense was
incurred—and in this case, the work was done in December. The Rs.500 expense is counted
as a December expense even though the money will not be paid out until January 3.
The Rs.500 of wages expense on the December income statement will result in a matching of
the cost of the labour used to deliver the December parcels with the revenues from delivering
the December parcels. This matching principle is very important in measuring just how
profitable a company was during a given time period.
Other expenses to be matched with December's revenues would be such things as gas for the
delivery van and advertising spots.
One simple yet important point: an income statement, does not report the cash coming in—
rather, its purpose is to
(1) Report the revenues earned by the company's efforts during the period, and
(2) Report the expenses incurred by the company during the same period.
The purpose of the income statement is to show a company's profitability during a specific
period of time. The difference (or "net") between the revenues and expenses for Quick Parcel
is often referred to as the bottom line and it is labelled as either Net Income or Net Loss.
Quick Delivery Inc
Income statement
For the 3 days ended Dec 3, 2017
Revenue from services
Help Expenses
Net Income
Rs.
260
80
Rs.180
13
A balance sheet is a document that tracks a company's assets, liabilities and owner's equity at
a specific point in time. As you know, if the company's has something, it belongs to someone.
After the entries through December 3 have been recorded, the balance sheet will look like
this:
Assets
Cash
Accounts receivable
Prepaid insurance
Vehicles
Rs
4,810
250
1,200
14,000
Liabilities
Accounts Payable
Shholders Equity
(P&L)Retained earnings
20,260
Rs
80
20,000
180
20,260
There's More To Learn:
There's much more to accounting, but you've got an idea of the basics:
If a company has something, someone had better own it
A balance sheet lists assets, liabilities and owner's equity at a point in time; everything must
add up
Changes must be made in pairs: if assets, liabilities or owner's equity changes, something else
much change as well
Any system can be interesting if you look at the reasons it was created and the problem it's
trying to solve. Could you have made a simpler way to report what a company is worth and
who is owed what? We shall explore the possibilities as we interact in our class room
sessions.
End of module 3
14
Check your understanding
1. What is the effect of the transaction - 'Rent paid for commercial space'?
(a) Assets (no effect) = Liabilities (increase) + Capital (decrease)
(b) Assets (no effect) = Liabilities (no effect) + Capital (no effect)
(c) Assets (decrease) = Liabilities (no effect) + Capital (decrease)
(d) Assets (no effect) = Liabilities (increase) + Capital (decrease
2. which of the following are not “expenses”
(a) Depreciation
(b) Rent
(c) Machinery
(d) Advertising
3. Select the most appropriate account title for this item: Salaries accrued for the past
month.
(a) Salaries payable
(b) Salary expense
(c) Prepaid salaries
(d) Salaries paid
4. Trade Receivables account records:
(a) salaries accrued
(b) cash receipts
(c) purchases and sales of goods
(d) credit sales and collections
5. On April 1, 20XX, Ria set up ChefPro, an online cookery channel as a proprietorship.
The business completed the following transactions during the month:
(a) Ria invested in the business, Rs 10,000.
(b) Took an interest-free loan from a friend, Rs 20,000.
(c) Provided services for cash, Rs 39,600.
(d) Paid salaries, Rs 33,000 (including Rs 4,000 to herself).
(e) Billed customers for services provided, Rs 43,400. The amounts are due to be
received next month.
(f) Paid the monthly bill for web services, Rs 10,000.
(g) Paid insurance premium for the month, Rs 1500.
(h) Received interest income, Rs 280.
15
Required: You are required to fill in the blanks in the Statement of Profit and Loss for April
20XX and the Balance Sheet for April 20XX.
Statement of Profit and Loss
Rs.
Rs.
Revenue and Other Income
Revenue from services
Interest Income
Total revenues and other income
83,280
Expenses
Salaries expense
Web service expense
Insurance expense
Total expenses
40,500
Net Profit
Balance Sheet
Rs.
Rs.
Assets
Trade Receivables
43,400
Cash
Total Assets
Liabilities
Loan Payable
Total Liabilities
20,000
Equity
Share Capital
48,780
Total Equity
48,780
Total Liabilities and Equity
68,780
16
Answers to Test your understanding
Module 1
1. False (b);
2. Government (d)
3. Shareholders (a)
4. Separation of owners' business transactions from their personal transactions (b)
5. Valuation of entity's assets at cost of acquisition (c)
6. Historical cost (a)
Module 2
1. Bank loan (a)
2. Office expense (a)
3. Projected Budget (c)
4. Assets (increase) = Liabilities (no effect) + Equity (increases) (b)
5. Capital + revenues - expenses - dividends – drawings (d)
6. Asset items (b)
Module 3
1. Assets (decrease) = Liabilities (no effect) + Capital (decrease) (c)
2. Machinery (c)
3. Salaries payable (a)
4. Credit sales and collections (d)
5. Statement of Profit and Loss and Balance sheet
Statement of Profit and Loss
Revenue and Other Income
Revenue from services
Interest Income
Total revenues and other income
Expenses
Salaries expense
Web service expense
Insurance expense
Total expenses
Net Profit
Rs.
Rs.
83,000
280
83,280
29,000
10,000
1,500
40,500
42,780
17
Balance Sheet
Assets
Trade Receivables
Cash
Rs.
Rs.
43,400
25,380
Total Assets
Liabilities
Loan Payable
Total Liabilities
Equity
Share Capital
Total Equity
Total Liabilities and Equity
68,780
20,000
20,000
48,780
48,780
68,780
18