Answer 1:

Introduction:
The double-entry accounting system is used to record the company's accounting transactions
on tape. An original-access book in which accounting transactions are recorded chronologically
is known as a journal. A double-entry accounting system is also followed by a journal; there is
a credit for each debit. It serves as the foundation for the various accounting ledgers created
when accounting entries are published in the journal's ledgers. It contains a record of every
business transaction that occurred during the accounting period.
Concept and application:
Business firms use accounting journals to record service transactions such as sales, cash,
accounts payable, etc. These magazines are optional and can be used if the company wants to
use them. The sales journal contains information about supplies and stores provided by the
entity on credit terms. The cash journal documents the unit's cash transactions. These
transactions may include cash payments for expenses or purchases of goods, or cash receipts
for the sale of products.
Similarly, there are several other journals that can record different classifications of events.
The number of accounting entries is significant and separate in different places when a
company uses different journals to record different transactions. So companies choose to use a
minimum number of magazines.

However, every company makes use of the main journal. It includes records of each
commercial transaction the corporation has ever engaged in.
1. Date of transaction
2. Description.
3. The ledger accounts are affected.
4. Amounts by which each ledger is affected.
5. Details of debits and credits.
Accounting records were traditionally prepared manually. The need for an accounting diary
became apparent. The transactions were posted to the general ledger from this document.
Today's automated bookkeeping creates a general record with all the important financial
activities and adjusting access.
It is essential to record important details about financial transactions while creating an
accounting diary. These specifics can be found in bills, orders, invoices, and other sources; the
journal records the information in chronological order after examining and confirming the
transaction's legitimacy.
The twofold access technique of bookkeeping controls access to journals. An impact is
provided in two columns, a credit and a debit, to record each transaction. Journal entries are
the transactions that were recorded.

Date Description Dr./Cr. Amount Amount

03/12 Cash a/c Dr. Rs. 5,000
Bank a/c Dr. Rs. 5,00,000
To capital a/c Cr. Rs. 5,05,000
(capital introduced in the business)
05/12 Furniture a/c Dr. Rs. 60,000
To bank a/c Cr. Rs. 30,000
To sundry payable Cr. Rs. 30,000
(furniture purchased for ₹60000, ₹30000 paid
through bank and the creditors created for the
balance amount)
07/12 Stock-in-trade a/c Dr. Rs. 3,15,000
To bank a/c Cr. Rs. 3,15,000
(goods bought and payment made through
bank account)
08/12 Bank a/c Dr. Rs. 5,00,000
To stock-in-trade Cr. Rs. 3,15,000
To profit on sale of goods Cr. Rs. 1,85,000
(goods sold for cash and profit realized)
10/12 Rent a/c Dr. Rs. 10,000
Salary a/c Dr. Rs. 10,000
Electricity expense a/c Dr. Rs. 10,000
To bank a/c Rs. 30,000
(rent, electricity and salary expenses paid
through bank account)
Conclusion
Each accounting transaction has two lines in the above journal. When prepared in accordance
with the double-entry accounting system, a debit is equivalent to a credit.

Answer 2:
Introduction:
Accounting is the process of summarizing, evaluating and reporting financial transactions.
Correct accounting plays a key role in determining the efficiency of the company and
monitoring the development and survival of the business organization. Correct accounting of
the various departments of the organization helps to evaluate the efficiency of the various
departments of the organization. This will help you determine the true profitability of your
operations. It is widely regarded as the key to success for small business owners. The audit
procedure helps to maintain the accounts of the company - the accounting method helps to
analyze and translate the financial results of business procedures.
Concept and Application:
A company's income statement reflects gains or losses over time. There can be specify months,
quarters, or fiscal years. The main components of the profit and loss account are:
1. Revenue, also known as sales
2. Cost of goods sold or cost of sales
3. Selling, General or Ad TV administrative expenses.
4. Marketing and Advertising
5. Technology/ Research & Development
6. Interest Expense
7. Taxes
8. Net incomes
Following are the five essential components required in formulating a profit and loss
statement:
1. Direct and indirect expenses
In order for a business to carry out its day-to-day operations, it may incur multiple costs.
Additionally, expenses are incurred to support sales. The company's expenses can be broken
down into two categories: both direct and indirect costs.
The costs that are directly related to the purchase or production of goods are referred to as
direct expenses. The income of a factory worker, the manufacturing system's gas costs, and
other direct costs are examples.
Other than direct costs, there are indirect costs. The costs associated with leasing, printing and
stationary, devaluation, and so on are examples of indirect expenses.
2. Liability
A liability is something that happens when a certain business owes money to another person or
business. One sort of duty for a specific firm is having to pay money to another organisation
that devalues the company's assets, such as bank loans and credit card debt. Owners are not the
only ones responsible for the financial debts of the company. There are basically two types of
debt: long-term debt and existing debt. The first is a situation where the obligations are made
for a maximum of one year and the second refers to a situation where the debts are more than
one year. The term "responsibility" is also used in a corporate framework called minimal
responsibility cooperation. It refers to a type of partnership where all partners in the business
owe the business a limited amount of value.
3. Revenue
Revenue is the term used to describe the money that a business entity earns through selling its
goods or providing services. Sales and revenue are occasionally used interchangeably or as
synonyms. For instance, a restaurant receives cash from its customers when it provides them
food; this money makes up the majority of the restaurant's revenue. Profit and pricing are
typically combined to produce revenue. Profits result from subtracting the charges from the
revenue.
4. Loans
Management is running the organization with no intention of shutting down anytime soon.
Proper management of funds is necessary to prevent embezzlement and diversion. Any
business needs funds to carry out its activities without inconvenience. These funds can be
donated by business owners or purchased from outside organizations such as banks. Funds
received with the intention and promise of repayment are called loans.
5. Other incomes
In addition, an organization may generate some revenue from activities that are not its primary
sources of revenue. Rent, interest, and returns are examples of these incomes. As a result, a
business may generate revenue from either additional or supporting tasks or core company
procedures. Revenue from Operations refers to the income generated by the primary operations
of the business, while all other income is referred to as other income.
Conclusion
Any business or organization must prepare an economic declaration. It reflects the company's
financial situation. It demonstrates the amount of money spent by the business and the amount
of money made by the business in a single fiscal year. There are numerous types of financial
accounts that a business must prepare; Ledger loss, profit, and account and trial equilibrium
are all examples of these. The benefit and misfortune account recommends every one of the
association's costs, misfortunes, wages, and gains in one monetary year. The debit side of the
account is where expenses are supposed to be shown.

Answer 3 (A)
Introduction:
A balance sheet is a financial report prepared by an organization. It shows the arrangement of
assets and liabilities on a particular date. This date usually marks the end of the company's
fiscal year. The balance sheet shows the property owned or leased by the company and the
sources from which it was financed. These financial resources can be borrowed capital, equity
capital contributed by organizational participants, or a combination of these.
Concept and application:
There are two ways to prepare a balance sheet:
a. A vertical presentation
b. A horizontal presentation or the T-form
The balance sheet is drawn based on the fundamental accounting equation. It is:
Assets = Liabilities+ equity
The foundation for the balance sheet's preparation is a test balance. It demonstrates that at a
specific point, a company's assets must equal its liabilities, commitments, and equity. The
balance sheet is said to be totaled when it happens.
The three components of balance sheet are as mentioned below:
1. Assets: The sources that the company uses to generate future revenue fall under this
category.
2. Liabilities: This group includes all of the financial obligations the company owes to third
parties and represents the company's responsibilities resulting from a previous event.
3. Equity: The amount that has been contributed by the company's owners as well as the
revenue that has been retained by the company are represented by the company's equity. Simply
put, a company's equity is the amount left over after it has paid its debts to financial institutions.
Visitors are provided with an account of the resources from which the business has acquired
funds and invested them on a balance sheet.
Horizontal Format of Balance Sheet
This style places all of the company's liabilities on the left side and all of its assets on the right
side of the balance sheet. Also known as a T-shaped balance sheet.

Figures for
Current Figures for
Year Current Year
LIABILITIES (Rs.) ASSETS (Rs.)

CAPITAL FIXED ASSETS

Common stock 1000 Land and building
Retained earnings 860 Equipment 1500
LONG-TERM LIABILITIES CURRENT ASSETS
Loans 0 Cash-in-hand 550
Cash at bank
CURRENT LIABILITIES Account receivables 250
Account payables 540 Prepaid insurance 300
Outstanding salaries 150 Supplies 150
Unearned revenue 200
PROVISIONS INVESTMENTS
Provision for taxation 0 Fixed deposit 0
Provision for bad debts 0
TOTAL 2750 TOTAL 2750

Conclusion:
The balance sheet is part of a company's financial statement to shareholders.

Answer 3 (B)
Introduction:
The ratio of a company's existing real estate to its current liabilities is called the current ratio.
Existing real estate can be realized over the course of the business cycle, usually one year.
Current liabilities are service obligations that must be paid or fulfilled within a year.
Concept and application:
The financial statements of a company are prepared to show how much money it makes and
where it stands financially compared to other members of the industry. These statements are
examined using a variety of accounting methods and tools. Ratio evaluation is one such
technique that is widely used. It defines the connection between controlling a service and
various existing monetary elements.
On a company's annual report on a particular date, the relationship between its current assets
and obligations is calculated using a current ratio. It demonstrates the ratio of the company's
current assets to its liabilities. Typically, it is referred to as the working capital ratio.
It is calculated using the following formula:
Current ratio = Current assets/Current liabilities

Current assets will include:

 Cash-in-hand
 Bank balances
 Marketable securities
 Trade receivables
 Inventories etc.

Current liabilities will include:

 Bank overdraft
 Trade payables
 Provisions
 Outstanding liabilities
 Short-term loans etc.

Calculation of current ratio of Z and X LLP

Particulars Calculations Amount (₹)

Current assets (a) 2,250

Accounts receivable 250
Supplies 150
Cash 550
Prepaid insurance 300
Common stock 1,000
Current liabilities (b) 890
Salaries payable 150
Unearned revenue 200
Accounts payable 540
Current ratio (a/b) 2.53:1

The calculations above show that the current ratio of Z and X LLP is 2.53:1

Significance of current ratio:

The current ratio helps determine the liquidity position of the company. It shows the company's
ability to make current payments or repayments with current properties.
A ratio of 2:1 is considered an excellent ratio because it indicates that the company has doubled
its current assets relative to its current liabilities. However, any ratio between 1:1 and 2:1 is
considered significant. If the ratio is less than 1:1, it indicates lower financial liquidity of the
company. If the ratio is too high, it indicates that the company still has real estate and gives up
the opportunity to use it to generate income.

Conclusion:
The current ratio is one of various liquidity ratios calculated by the company. These liquidity
indicators specify an organized relationship between the amount of current/liquid assets and
current/temporary obligations and are therefore used to determine a firm's ability to meet its
short-term obligations.