Competitive Exams Commerce Study Material manufacturing accounting
Manufacturing accounting means accounting relating to production or manufacturing. All accounting can divide also manufacturing and non manufacturing. Accounting up to converting raw material to finished product includes in manufacturing accounting. We specially open manufacturer account for recording all items regarding production. In manufacture account we record direct material cost, labor cost and production overhead cost. Manufacture account is helpful to find out the value of cost of production which transfers to trading account. It is also part of financial statement.
Manufacturing account starts opening balance of raw material in its debit side. Amount of purchase of raw material are also debited in this account and direct labour charges and other manufacturing overheads like, depreciation of plant, lighting of plant and factories other expenses will transfer to debit side of manufacturing account. In the credit side of manufacturing account we shows closing balance of raw material and work in progress and scrap sale. The difference of both sides is the cost of production which transfers to trading account's debit side. Manufacturing account is also helpful for finding the value of gross profit because gross profit is difference between cost of sale and sale value but cost of sale can not be calculated without finding the value of cost of production. So, factory accountant records every transaction relating to factory and one these voucher entry basis we find manufacture or manufacturing account.
How can I make the accounts of NGO and Charitable societies
To make the accounts of ngo and charitable societies is very simple. In charitable societies we have to make receipt and payment account. This is just like cash account. But cash account can not be made in non profit organization. Debit side of receipt and payment account is receipt of cash. Ngo can receipt cash in the form of subscription, interest, general donation, rent received and entrance fees etc. Ngo can also pay certain expenses like salaries, printing & stationery expenses and other purchasing of fixed and current asset. This must show in the credit side of receipt and payment account. After doing this, accountant can calculate balance of cash at the end time of accounting period. It is also duty to collect other information like outstanding and advance income and expenditure: For calculating net excess of income over expenses of ngo and charitable societies. There is given a procedure to calculate above
- Showing the amount of expenses in income and expenses account
- Current year Expenses paid xxxxxxxxxx
- Add outstanding expenses upto the end of current year xxxxxxxxxx
- Less Previous year outstanding expenses xxxxxxxxxx
- Less current year advance expenses xxxxxxxxxx
- Add previous year advance expenses xxxxxxxxxx
- Expense for showing income & expenses account = xxxxxxxxxxx_________________________________________________________
- Statement showing of income in income and expenses account
- Current year Income received in cash xxxxxxxxxx
- Add receivable income upto the end of current year xxxxxxxxxx
- Less Previous year receivable income xxxxxxxxxx
- Less current year advance income xxxxxxxxxx
- Add previous year advance income xxxxxxxxxx
- Income for showing income & expenses account = xxxxxxxxxxx
Accounts for Sports Club
Making the accounts of Sport clubs or trust or society is very easy but you should know the way of maintaining it. First of all when you are making the accounts you must classify all the item in to capital and revenue nature. If expenses are in cash, so it must show in receipt and payment accounts, here do not see any nature because this account show all receipt of cash and bank from any source for business. Even if we get money through other person's credit card, then it will be deemed cash receipt. After this you can easily make income and expenditure account. This account shows net income or loss from club, so only all expenses which belongs to this year will send in expenses side of this account. It is not necessary that these are in cash it may also payable also.
Accounting for Temple
It is very easy to make the accounts of temple. A temple is religious place. So recording of donation from devotee is very necessary. Devotee may be monthly or annual member. A seal of Of temple must be on the receipt and continually it records in the books of accounts. It is also necessary to record all the expenses related to langur, rent, lighting, and electricity, building repair and other smangum expenses. For this temple accountant should make the income and expenditure account and receipt and payment account. If it is registered under charitable trust, then to make accounts of such temple is very useful for keep the faith of devotee. Because fraud in temple fund can decrease the number of devotee in that temple
For division of profit or loss from partnership
for division of properties in case of dissolution of partnership In partnership accounts you must open profit and loss appropriation account. It is accounts in which accountant can adjust salary, interest on capital and interest on drawing and also new division of profit or loss. So it is necessary to make this account. At the time of admission, partnership accounts can be change. Because Capital accounts will change because, old partner sacrify for new partner so it is the duty to new partner to give some part of goodwill in cash of any other way. So that other partner can credit it in their capital accounts.
Partnership accounting basics
In the partnership accounting, all the final accounts are same as sole trade business final accounts. But main difference in these accounts are that In partner ship accounting, we make one extra account that is called profit and loss appropriation account which is used for calculating net share of profit or loss of different partner of a firm.
This account is opened with credit balance of net profit
In the debit side, we show interest on capital, salary and commission of partners
in credit side we shows interest on drawing, after adjusting these items, we transfer net profit to partners capital accounts in their profit sharing ratio
In Absence of any partner ship deed Partner will divide profit or loss equally
No interest on capital is given
No interest on drawing is given
No salary to any partner Interest on loan given by any partner is 6% annual.
Practical Problem of Partnership accounting
Suppose A and B are the partners. They do not have any partnership agreement. How will you solve the following disputes among them?
1 A spent twice the time that B devoted to business. A claims that he should get a salary of Rs. 3000 per month for extra time spent Ans. No Salary will be given in the absence of any agreement.
2B has provided a capital of Rs. 50000 where as A has provided only Rs. 10000 as capital. A however has provided Rs. 20000 as loan to firm. What interest if any will be given to A and B? Ans. Only interest on loan@6% will be given
3 A wants to introduce his son Sunil into his business. B objects to it.
4 B wants that profit should be distributed in ratio of capital but A wants that it should be distributed equally Ans. Profit should be shared equally in the absence of any agreement.
Calculation of interest on drawing in partner ship accounting
There are four latest method apply, if any body withdraws any fund or cash for personal use from his firm.
If any partner withdraws every month in the first day the he will pay to firm@given rate for 6.5 months
If any partner withdraws every month in the middle of month, he will pay interest on drawing@given rate for 6 months
If any partner withdraws every month in the end of month, he will pay interest on drawing@given rate for 5.5 months
If any partner does not withdraw every month then his withdrawing month usage product will be calculated
suppose if he withdraw Rs. 5000 in first of march then he will calculate product of 5000X10 = 50000
after calculating product he calculate his payable interest on drawing@given rate = amount of product X R/100 X 1/12
Accounting treatment of partnership accounts at the time of admission
Admission of a New partner
Without permission, a new partner can not enter in any firm but with the acceptance of all partner, a new partner has come in partnership firm, then it is the duty of existing partner to sacrifice his share for giving share to new partner. It is the duty of new partner to give his own capital and share of goodwill to partnership firm
Accounting treatment on the time of Admission of new partner
Calculating New and sacrificing ratio
It is necessary to calculate new and sacrifice ratio at the time of admission of a new partner because all the journal entries like profit sharing of new firm and goodwill division is on base of calculated new and sacrifice ratio respectively.
Calculate the profit or loss on the revaluation of assets and liabilities.
It is necessary to calculate profit or loss on the revaluation of assets and liabilities at the time of admission. This profit or loss must be divide between old partner in old ratio. Because this is the result of the hard work of old partner only.
Calculate the share of Goodwill which will have to take from new partner
There are many method of calculating and accounting treatment of goodwill. But these days goodwill name has been changed with premium. And It has been brought in business by new partner is very famous treatment. This premium is divided by old partner in their sacrifice ratio. It means their share will transfer to their capital account.
Some time all partner can decide to maintain their new capital. If any partner's share will less than accepted portion then, that partner will give fresh capital in cash form or any partner who has given more capital from accepted capital, that partner can withdraw this excess in cash form.
Making of provision for bad debts accounts
Before making of provision of bad debts accounts, you must understand the concept of provision, reserve etc. Because without understanding these you cannot understand the concept of making of provision of bad debts accounts.
Meaning of provision or reserve
When we start our business, we faces certain losses like bad debts, depreciation or discount so if we do not keep some part of our cash or profit in cash form in business pocket, we can face the problem of lack of money for operational requirement, so we take future planning and after scientific estimation we makes provision of reserve of our losses on the certain percentage of loss it may be 5% or 10% or 15 %. This is called provision or reserve of loss.
Making of this account is very easy
It will open with opening balance of provision for bad debts
it will show in credit side of this account.
In the debit side we will write actual bad debt of trail balance and outside
in the debit side also writing new provision of bad debts with writing to balance c/d
Balancing figure will be the amount of provision transferring to profit and loss account as loss written off: