BCOC-131: FINANCIAL ACCOUNTING
TUTOR MARKED ASSIGNMENT
COURSE CODE : BCOC-131
COURSE TITLE : FINANCIAL ACCOUNTING
ASSIGNMENT CODE : BCOC-131/TMA/2019-20
COVERAGE : ALL BLOCKS
Note: Attempt all the questions. Each question carries 20 marks.
Q 1. Journalise the following transactions. Post them in to ledger and prepare a Trial balance.
a) Business started with a capital of Rs 8,00,000
b) Furniture purchased in cash from jai Rs. 38000
c) Payment made to Raman Rs. 5000
d) Commission Received from Suresh Rs. 2000
e) Goods purchased from Ramlal Rs. 7,00,000
f) Rent paid to Anil Rs. 3000
g) Goods sold to Jaya Bahaduri in cash Rs. 5,00,000
h) Payment made to Hari Rs. 3920 and discount received Rs. 80
i) Cash received from Neelam Rs. 1880 and discount allowed Rs. 120
j) Bad debts Rs. 400 (20)
Q 2. Dinesh Ltd. On 1st April 2015, purchased a machine from Rajesh Ltd. On hire purchase
basis. The cash price of the machine was Rs 25,000. The payment was to be made Rs 5000 on
the date of the contract and the balance in four annual instalments of Rs. 5000 each plus interest
at 5% per annum payable on December 31st each year, and the first such instalment being
payable on 31.12.2015. Depreciation is to be charged @ 10% on original cost.
Show the journal entries and ledger accounts in the books of both the parties. (20)
Q 3. Modi textiles, Delhi consigned to Vinod Enterprises, Calcutta 100 cotton bales. The invoice
price of each bale was Rs 1500 each which includes 20% profit on invoice price. The consignor
paid Rs. 2500 for insurance and Rs 4000 for carriage and freight. The consignee received cotton
bales and sold 75 bales for cash and realised Rs 112500. He incurred Rs 1800 on godown rent
and was allowed 10% commission on sales. 5 cotton bales were spoiled in godown and they are
to be valued at 50% depreciation. Show consignment account in the books of Modi Textiles. (20)
Q 4. The Trial Balance prepared by Dhanraj did not tally and the difference was transferred to
Suspense Account. Subsequently, the following errors were found. Rectify the errors and show
the suspense Account. Also explain the effect of rectifying errors on the profits.
a) A sale of Rs. 1600 to Kamalnath was posted to Karunanath.
b) Insurance paid amounting to Rs 250 was posted twice.
c) A sale of Rs 1500 for old machinery was passed through the sale book.
d) A purchase of Rs. 600 from Kamesh was not passed through the books.
e) Rs. 80, the debit balance on commission account was omitted from the trial balance.
f) The purchase returns book was undercast by Rs 700. (20)
Q 5. Define Computerized Accounting. Differentiate between Manual and Computerised
Accounting System. Explain the advantages and disadvantages of Computerised Accounting
System. (20)
BCOC-131, FINANCIAL ACCOUNTING
ASSIGNMENT
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Note : Disclaimer/Special Note: These are just the sample of the Answers/Solutions to some of the
Questions given in the Assignments. These Sample Answers/Solutions are prepared by Private
Teachers/Tutors/Authors for the help and guidance of the student to get an idea of how he/she can
answer the Questions given in the Assignments. We do not claim 100% accuracy of these sample
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answers as these are based on the knowledge and capability of Private Teacher/Tutor. Sample
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answers may be seen as the Guide/Help for the reference to prepare the answers of the Questions
given in the assignment. As these solutions and answers are prepared by the private teacher/tutor so
the chances of error or mistake cannot be denied. Any Omission or Error is highly regretted though
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every care has been taken while preparing these Sample Answers/Solutions. Please consult your own
Teacher/Tutor before you prepare a Particular Answer and for up-to-date and exact information, data
and solution. Student should must read and refer the official study material provided by the
university.
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SECTION-A
Note: Attempt all the questions. Each question carries 10 marks.
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Q1. Journalise the following transactions. Post them into ledger and prepare a Trial
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balance.
a) Business started with a capital of Rs 8,00,000
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b) Furniture purchased in cash from Jai Rs. 38,000
c) Payment made to Raman Rs. 5,000
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d) Commission Received from Suresh Rs. 2,000
e) Goods purchased from Ramlal Rs. 7,00,000
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f) Rent paid to Anil Rs. 3,000
Ans.
Jrounal Entries
[Link]. Particulars Ammount (Dr.) Ammount (Cr.)
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(i) cash A/c Dr. 8,00,000
To Capital A/c 8,00,000
(Business started with cash)
(ii) Furniture A/c Dr. 38,000
To Cash A/c 38,000
(Being Furniture perchased by Cash)
(iii) Raman A/c Dr. 5,000
To Cash A/c 5,000
(Being payment made to Raman)
(iv) Cash A/c Dr. 2,000
To Commission A/c 2,000
(v) Purchases A/c Dr. 7,00,000
To Ramlal A/c 7,00,000
(Being goods purchased from Ramlal)
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(vi) Rent A/c Dr. 3,000
To Cash A/c (Being rent paid to Anil) 3,000
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Ledger Accounts
Cash A/c
Particulars Ammount
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Date To Capital A/c 8,00,000
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To Commission A/c 2,000
8,02,000
By Raman A/c 5,000
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By Rent A/c 3,000
By Furniture 38,000
By Balance 7,56,000
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8,02,000
Capital A/c
Date Particulars Ammount
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To Balance b/d 8,00,000
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8,00,000
By Cash A/c 8,00,000
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8,00,000
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Furniture A/c
Date Particular Ammount
To Cash A/c 38,000
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38,000
By Balance c/d 38,000
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38,000
Raman A/c
Date Particulars Ammount
To Cash A/c 5,000
5,000
By Balance c/d 5,000
5,000
Commission A/c
Date Particulars Ammount
To Balance b/d 2,000
2,000
By Cash A/c 2,000
2,000
Purchase A/c
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Date Particular Ammount
To Ramlal A/c 7,00,000
7,00,000
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By Balance c/d 7,00,000
7,00,000
Ramlal A/c
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Particulars Ammount
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To Balance b/d 7,00,000
7,00,000
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By Purchase A/c 7,00,000
7,00,000
Rent A/c
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Particulars Ammount
To Cash A/c 3,000
3,000
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By Balance c/d 3,000
3,000
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Trial Balance
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Particulars Ref. Debit Credit
Cash 7,56,000
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Capital 8,00,000
Furniture 38,000
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Raman A/c 5,000
Commission A/c 2,000
Purchases A/c 7,00,000
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Ramlal A/c 7,00, 000
Rent A/c 3,000
Total 15,02,,000 15, 02,000
Q2. Dinesh Ltd. on 1st April 2015, purchased a machine from Rajesh Ltd. on hire
purchase basis. The cash price of the machine was Rs 25,000. The payment was to be
made Rs 5,000 on the date of the contract and the balance in four annual instalments of
Rs. 5,000 each plus interest at 5% per annum payable on December 31st each year, and
the first such instalment being payable on 31.12. 2015. Depreciation is to be charged @
10% on original cost. Make necessary ledger accounts in the books of Hire Purchaser.
Ans.
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Q3. Modi textiles, Delhi consigned to Vinod Enterprises, Calcutta 100 cotton bales. The
invoice price of each bale was Rs 1,500 each which includes 20% profit on invoice price.
The consignor paid Rs. 2,500 for insurance and Rs 4,000 for carriage and freight. The
consignee received cotton bales and sold 75 bales for cash and realised Rs 1, 12, 500. He
incurred Rs 1,800 on godown rent and was allowed 10% commission on sales. 5 cotton
bales were spoiled in godown and they are to be valued at 50% depreciation. Show
consignment account in the books of Modi Textiles.
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Ans.
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Q4. The Trial Balance prepared by Dhanraj did not tally and the difference was
transferred to Suspense Account. Subsequently, the following errors were found.
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Rectify the errors and show the suspense Account.
a) A sale of Rs. 1, 600 to Kamalnath was posted to Karunanath.
b) Insurance paid amounting to Rs 250 was posted twice.
c) A sale of Rs 1,500 for old machinery was passed through the sale book.
d) A purchase of Rs. 600 from Kamesh was not passed through the books.
e) Rs. 80, the debit balance on commission account was omitted from the trial
balance.
f) The purchase returns book was undercast by Rs 700.
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Q5. Define Computerized Accounting. Explain the advantages and disadvantages of
Computerised Accounting System.
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Ans. A computerized accounting system consists of software designed to track all of your
company's accounting transactions, with the goal of producing financial output for monthly
reports, annual financial statements, tax return information and other report configurations used
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to analyze your company’s operations, efficiency and profitability.
While free or low-cost online software systems don't offer much customizability to your specific
business, larger companies often use a computerized accounting system software package that has
been installed on the company's mainframe computer servers and made available to several users.
This type of large-scale computerized accounting software often comes with a large degree of
customizability. Companies can have the software designed to accommodate multiple c urrencies,
business entities located in different parts of the world and branches of the company that sells
different sets of products. Also, it can be customized to produce an array of financial reports that
calculate key performance metrics specifically geared to the company’s industry and operational
benchmarks.
Concept of computerized accounting system:
A computerized accounting system is an accounting information system that processes the financial
transactions and events as per Generally Accepted Accounting Principles (GAAP) to produce reports
as per user requirements. Every accounting system, manual or computerized, has two aspects. First, it
has to work under a set of well-defined concepts called accounting principles. Another, that there is a
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user -defined framework for maintenance of records and generation of reports.
In a computerized accounting system, the framework of storage and processing of data is called
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operating environment that consists of hardware as well as software in which the accounting system,
works. The type of the accounting system used determines the operating environment. Both hardware
and software are interdependent. The type of software determines the structure of the hardware.
Further, the selection of hardware is dependent upon various factors such as the number of users,
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level of secrecy and the nature of various activities of functional departments in an organization
Take the case of a club, for example, where the number of transactions and their variety is relatively
small, a Personal Computer with standardized software may be sufficient. However, for a large
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business organization with a number of geographically scattered factories and offices, more powerful
computer systems supported by sophisticated networks are required to handle the voluminous data
and the complex reporting requirements. In order to handle such requirements, multi-user operating
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systems such as UNIX, Linux, etc. are used.
Modern computerized accounting systems are based on the concept of database. A database is
implemented using a database management system, which is define by a set of computer programmer
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(or software) that manage and organize data effectively and provide access to the stored data by the
application programmer. The accounting database is well-organized with active interface that uses
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accounting application programs and reporting system. Every computerized accounting system has
two basic requirements
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1- Accounting Framework: It consists a set of principles, coding and grouping structure of
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accounting.
2- Operating Procedure: It is a well-defined operating procedure blended suitably with the
operating environment of the organization.
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The use of computers in any database-oriented application has four basic requirements as mentioned
below
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Front-end Interface: It is an interactive link or a dialog between the user and database-
oriented software through which the user communicates to the back-end database. For
example, a transaction relating to purchase of goods may be dealt with the accounting system
through a purchase voucher, which appears on the computer’s monitor of data entry operator
and when entered into the system is stored in the database. The same data may be queried
through reporting system say purchase analysis software programmer
Back-end Database: It is the data storage system that is hidden from the user and responds
to the requirement of the user to the extent the user is authorized to access.
Data Processing: It is a sequence of actions that are taken to transform the data into
decision useful information.
Reporting System: It is an integrated set of objects that constitute the report. The
computerized accounting is also one of the database-oriented applications wherein the
transaction data is stored in well-organized database. The user operates on such database
using the required and desired interface and also takes the desired reports by suitable
transformations of stored data into information. Therefore, the fundamentals of computerized
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accounting
Advantages of Computerized Accounting are as follows:
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Faster Processing: Computers require far less time than human beings in performing a
particular task. Therefore, accounting data is processed faster using a computerized
accounting system.
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Accurate Information: There is less space for error because only one account entry is
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needed for each transaction unlike repeated posting of the same accounting data in manual
system.
Reliability: Computer systems are immune to boredom, tiredness or fatigue. Therefore,
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these can perform repetitive functions effectively and are highly reliable as compared to
human beings.
Easy Availability of Information: The data can be made available to different users at the
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same time. This is called data sharing.
Up-to-date Information: Account balances will always be up to date since the records are
automatically updated as and when accounting data is entered or stored.
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Efficiency: The computer-based accounting system ensures better use of time and resources.
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Storage and Retrieval: Computer based systems require a fractional amount of physical
space as compared to the books of accounts in the form of journals, ledgers and accounting
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registers.
Works as a Motivator: Employees using computer systems feel more valued as they are
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trained and specialized for the job.
Automated Document Production: Accounting reports like cash book, trial balance and
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financial statements are generated automatically and are easily accessible just by a click of
mouse.
MIS Reports: It is easier to monitor and control the business using the real time
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management information reports generated by the computerized information systems.
Disadvantages of Computerized Accounting are as follows:
Heavy Cost of Installation: Computer hardware needs replacing and software needs to be
updated from time to time with the availability of newer versions.
Cost of Training: To ensure effective and efficient use of computerized system of
accounting, newer versions of hardware and software are introduced. This requires special
training and cost is incurred to train the staff personnel as specialists.
Fear of Unemployment: Reflects the feelings of the staff on the introduction of
computerized accounting system. The staff fears redundancy and show less interest in
computers.
Disruption in Work: When computerized system is introduced, there might be loss in the
work time and certain changes in the working environment.
System Failure: The danger of a system crashing due to some failure in hardware can lead
to subsequent loss of work. This occurs when no back-up is retained.
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Time Consuming: In order to avoid loss of work at the time of system failure, there is a
need for providing back-up arrangements which is a time-consuming process.
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Unanticipated Errors not Known: Unlike human beings, computers do not have the
capability to judge or detect unanticipated errors in the system.
Breaches of Security: The danger of viruses and hacking into the system from outside
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creates a strong need for security of system. Similarly, the person who has created the specific
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program can easily defraud by tempering with the original records.
Health Dangers: Extensive use of computers may lead to many health problems such as
eyestrain, muscular complaints, backache etc. resultantly reducing working efficiency as well
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as increasing medical expenditure.
SECTION-B
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Note: Attempt all the questions. Each question carries 6 marks
Q6. Briefly explain the qualitative Characteristics of accounting information.
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Ans. The demand for accounting information by investors, lenders, creditors, etc., creates
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fundamental qualitative characteristics that are desirable in accounting information.
There are six qualitative characteristics of accounting information.
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(i) Understandable: Accounting information must be understandable. This is an important
qualitative characteristic for small business owners. Many small business owners do not have a strong
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accounting background. Financial information that is too technical or cannot be understood by a
layperson can be ineffective for business owners. Small business owners often use professional
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accountants to complete various accounting functions. Business owners should choose an accountant
who can prepare information in an easily understandable manner.
(ii) Usefulness: Business owners need accounting information that is applicable to the business
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decision at hand. They can request financial statements, accounting schedules, reconciliations or cost-
benefit analysis. For example, cost allocation reports may not provide sufficient information for
business owners who must make a decision on hiring employees. Cost allocation usually refers to
applying business costs to goods or services produced by the company, which has very little to do with
human resources. Business owners should carefully request and review accounting information to
ensure that it provides the most useful information for the decision-making process.
(iii) Relevance: Accounting information should relate to a specific time period or contain
information regarding individual business functions. Business owners often conduct a trend analysis
when reviewing financial information. The trend analysis compares historical financial information to
the company’s current accounting period information. Irrelevant historical information can severely
distort the trend analysis process. For example, reviewing the production process for budgets requires
relevant information on the cost of materials for budgets. Cost information on the materials to
produce COGS would be irrelevant.
(iv) Reliability: Accounting information must be reliable, so that business owners can be reasonably
assured that accounting information presents an accurate picture of the company’s financial health.
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Business owners often use accounting information to secure external financing for their business.
Information that is not reliable or accurate may cause lenders and investors to question the business’s
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management ability. Business owners may also struggle to secure external financing with poor
accounting information.
(v) Comparable: Comparability allows business owners to review their company’s accounting
information against that of a competitor. Business owners use comparison to gauge how well their
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companies operate under certain market conditions. Owners often use the leading company of an
industry for the comparison process. These companies usually have the most efficient and effective
business operations. Noncomparable accounting information can make this a difficult process. For
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example, business owners should consider preparing financial statements according to standard
accounting principles. The statements can then be compared to other company’s financial standard
prepared in a similar manner.
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(vi) Consistent: Consistency refers to how business owners and accountants record financial
information in a company’s general ledger. Business owners need to ensure that financial transactions
are handled the same way. Inventory purchases should be recorded the same way as yesterday, today
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and tomorrow. This helps companies create accurate historical records and limit the amount of
financial accounts or journal entries included in their general ledgers.
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Q7. What is a journal proper? List the transactions recorded in the journal proper.
Ans. Journal proper is book of original entry (simple journal) in which miscellaneous credit
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transactions which do not fit in any other books are recorded. It is also called miscellaneous journal.
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The form and procedure for maintaining this journal is the same that of simple journal.
Following are the transactions recorded in the journal proper:
a) Opening Entry: An opening entry is passed in the journal for opening a new set of accounts. This
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may be needed at the time of the commencement of business or at the commencement of new
accounting year.
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If a person commences business only with cash, there is no need to pass a journal entry. The cash
brought in is just entered in the cash book. But, if he also brings some other assets, then an opening
entry is passed in Journal Proper, debiting the concerned assets accounts and crediting the Capital
Account.
In case of a running business, an opening entry is passed at the commencement of a new accounting
year to incorporate various balances of assets and liabilities brought forward from the previous year
into current year’s books.
b) Closing Entries: At the end of the accounting year, when final accounts are prepared, the
nominal accounts are closed by transferring them to Trading Account or Profit and Loss Account. The
journal entries passed for this purpose are called ‘Closing Entries’.
c) Transfer Entries: When an amount is to be transferred from one account to another, you have to
pass an entry in the Journal Proper in order to effect the transfer. Such entries are called ‘Transfer
Entries’. Suppose, you want to transfer proprietor’s total drawings made during the year to his Capital
Account. The proprietor’s total drawings appear in Drawings Account which shows a debit balance.
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You will transfer the balance of Drawings Account to Capital Account by passing the following entry in
the Journal Proper.
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d) Adjustment Entries: At the time of preparing the final accounts, it is necessary to bring into the
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books of account certain unrecorded items like closing stock, depreciation on fixed assets, interest on
capital, expenses incurred but not yet paid, income earned but not yet received, etc. Entries passed in
the Journal Proper to record such items are called ‘Adjustment Entries’. These entries are explained in
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detail later.
e) Rectification Entries: You may commit errors while recording transactions in various books,
and while posting, totalling, balancing, etc. Such errors are generally corrected through entries in
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Journal Proper and are known as ‘Rectification Entries’.
f) Miscellaneous Entries: In addition to the entries mentioned above, if there is any transaction
which cannot be recorded in any of the special journals, it will be entered in the Journal Proper.
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Example of such transactions are:
Credit purchases of fixed assets, investments, etc.
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Credit sales of fixed assets, investments etc.
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Withdrawal of goods from the business by the owner for his personal use.
Loss of goods by theft, accident, fire, etc.
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Special allowances received from suppliers or given to customers.
Endorsement or dishonour of bills.
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Writing off bad debts.
Q8. Discuss the factors that must be taken into consideration for determining the
amount of depreciation.
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Ans. The amount of depreciation to be charged to the Profit and Loss Account in respect of a
particular fixed asset is affected by following factors:
1. Cost of the asset: Cost of the asset should include purchase price and all other costs
incurred to bring the asset to usable condition like transportation costs, erection charges, etc.
It is to be noted that financial charges, such as interest on loan taken for the purchase of the
asset is not to be included in the original cost of an ‘asset.
2. Estimated working life of the asset: The useful or economic life of the asset can be stated
in terms of time i.e., years, months, hours or in terms of quantity, i.e., number of units of
output or any other operating measure such as kilometres in the case of lorries, motor vans,
etc.
3. Estimated Scrap value: Scrap Value (also called salvage value, residual value) refers to the
estimated amount expected to be realized when the asset is sold to the end of its useful life.
While the original cost of an asset can be correctly determined, useful life and salvage value
can only be estimated, based on certain assumptions.
The total amounts of depreciation to be written off during the life time of an asset is calculated as
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follows:
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.
For example, a machine was bought for Rs. 1,00,000 and a sum of Rs. 24,000 was spent towards its
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transportation and erection charges. It was estimated that the machine has a useful life of 10 years
and that the residual value expected to realise at the end of its useful life is Rs. 14,000. The total
amount of depreciation to be written off during the economic life of an asset can be calculated as
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shown below:
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After determining the total amount of depreciation to be written off during the life time of an asset the
next step is to decide the amount of depreciation to be charged every year. In the above situation the
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annual amount of depreciation to be written off may be considered s 1/10 of the total amount of
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depreciation because its estimated life is 10 years.
However, there are various methods of calculating the amount of depreciation to be charged from year
to year.
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Q9. What are the salient features of joint ventures? Explain.
Ans. When two or more persons join together to carry out a specific business venture and share the
profits on an agreed basis, it is called a ‘joint venture’. Each one of them who join as a party to the
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joint venture is called ‘Co-venturer’. No firm name is normally used for the joint venture business
because its duration is limited to a short period. During this period, the - co-venturers are free to carry
on their own business as usual, unless agreed otherwise. The Business relationship amongst the co-
venturers comes to an end as soon as the venture is completed. Thus a joint venture is some kind of a
temporary partnership between two or more persons who have agreed to jointly carry out a specific
venture. The joint ventures are quite common in construction business, consignment, sale and
purchase of property, underwriting of shares and debentures, etc. For example, A and B agreed to
construct a college building for which they pooled their resources and skill. A provided Rs. 6 lakh and
B Rs. 4 lakh as capital. They completed the building and shared the profits in the ratio of their
contributions to capital. In this example, joining hands by A and B to construct a building is a joint
venture. A and B are co-venturers. They will share the profits in the ratio of 6 and 4 (same as the ratio
of their capitals). This venture will be closed once the construction of the college bulding is completed.
From the above discussion, the essential features of a joint venture can be listed as follows:
1. It is formed by two or more persons.
2. The purpose is to execute a particular venture or project.
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3. No specific firm name is used for the joint venture business.
4. It is of a temporary nature. Hence, the agreement regarding the venture automatically stands
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terminated as soon as the venture is completed.
5. The co-venturers share profit and loss in the agreed ratio. However, in the absence of any other
agreement between the co-venturers, the profits and losses are to be shared equally.
6. During the tenure of joint venture, the co-venturers are free to continue with their own business
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unless agreed otherwise.
Q10. What are post dated vouchers? Explain the uses of post dated vouchers.
Ans. Post- Dated boucher While entering vouchers, you can post-date them, and [Link] will
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not update the ledgers until the date in question. This is most useful for entering transactions that
take place on a regular basis. For example, if you pay for something by installments, you can set-up
the payments in advance, and [Link] will only enter them in the ledgers as they fall due. Mark
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vouchers ‘Post Dated’ by [CTRL] + [T ] or click on the button. The button toggles with ‘Current’.
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All Post-dated vouchers are maintained in Post-dated vouchers Register.
Gateway of Tally > Display > Exception Report > Post Dated Vouchers
Difference in the treatment of Post-dated Vouchers and other Unconventional Vouchers
The major difference between Postdated vouchers and other Unconventional vouchers is that these
actually affect regular books of accounts on the date of the voucher. Post-dated vouchers are not
available for selection in Scenarios.
Q11. Distinguish Between the following:
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(a) Cash Basis and Accrual Basis of Accounting.
(b) Trading Account and Manufacturing Account.
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Ans. (a) Cash Basis and Accrual Basis of Accounting.
The difference between cash and accrual accounting lies in the timing of when sales and purchases are
recorded in your accounts. Cash accounting recognizes revenue and expenses only when money
changes hands, but accrual accounting recognizes revenue when it’s earned, and expenses when
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they’re billed (but not paid).
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(b) Trading Account and Manufacturing Account.
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Ans. A Trading Account is a Final and financial statement drawn by a firm at the end of their
accounting period showing the relationship that existed between their Sales volume and Purchases
and the Gross profit or loss arrived. When Net Sales exceeds the Cost of Sales then there is Gross
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Profit. However, if the Cost of Sales exceeds the Net Sale(Sales less Return Inwards) then there is
Gross loss.
A Manufacturing Account is part of the Final accounts drawn by a manufacturing entity before
drawing the Trading Account. Since the firm is engaged in the manufacturing or converting of raw
materials to finished goods,they express the monetary value of Prime Cost(Direct Materials + Direct
Labour + Direct Expense) and Overheads( Sum of all Indirect cost) to determine the cost of
Production. The manufacturing account is used to generate the Total Cost which is the sum of the cost
of production, Selling and distribution overhead, production overhead and Administration overheads.
Q12. Write short notes on the following:
(a) Imprest System of maintaining Petty Cash Book.
(b) Preparation of Report.
Ans. (a) Imprest System of maintaining Petty Cash Book.
Generally, Petty Cash Book is maintained on Imprest System. Under this system, an estimate is made
of the amount required for petty payments for a certain period, say a week or a month. This amount is
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handed over to the petty cashier in advance. The petty cashier is required to obtain vouchers for all
expenses he incurs. At the end of the period, the petty cashier presents the Petty Cash Book together
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with the vouchers to the chief cashier. The chief cashier verifies the entries in the Petty Cash Book and
pays to the petty cashier a sum equal to the amount spent by him. The original amount of the petty
cash with which the petty cashier had started is thus restored. This system of advance at the beginning
and reimbursing the amount spent from time to time is called ‘Imprest System’. For example, on June
.
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1, Rs. 200 is given as advance for petty payments to the petty cashier. He spent Rs. 185 on various
items during the month. The chief cashier, after verifying the expenses with the vouchers, would pay
Rs 185 to him. Thus on July 1, the petty cashier would again have Rs. 200 (Rs. 185 paid by the chief
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cashier plus the old balance of Rs. 15), the imprest amount. This system provides an adequate check
on petty payments.
(b) Preparation of Report.
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After recording transactions, Tally helps user to view different reports to assess the financial health
and performance of the firm. As soon as the transactions are entered into the tally, the preparation of
reports is done by Tally automatically The tally software creates automatically all crucial and
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important financial statements like balance sheet, profit and loss account, stock summary, trial
balance, day book etc. The user can reach to the transaction level from report by pressing enter key on
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the required item. The reports can be customized as well as per user needs
The preparation of reports is the last step in Tally ERP.9. The user need not to prepare reports, but it
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automatically gets prepared as each transaction is entered in Tally ERP.9. The reports which are
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critical for determining financial health & performance of business are reflected on main pane on
gateway of Tally under ‘Reports’. These include Balance Sheet, P&L A/c, Stock Summary and Trial
Balance. Others like Day Book, Receivables, Payables, Cash/Bank Book can be found under Display
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under Reports.
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