Basic Accounting by S.A Hasib - S.E Kabir

Clw pte r 1
Int rod uct ion

Definition of Accounting 1 Role of 1-6 3
Accounting 2 Functions of Accoun
Function 3 Ma11age rial FUM~:tion 3 ting 3 His tori cal
Use rs of Acc oun ting Info rmation 4
External Use rs-Direct lnte rest 4 Exte Inte rnal Use rs 4
rnal Users- Ind irect Inte rest 5 Special
Fiel ds 6 financial Accounting 6 Aud ised Acc oun ting
itin g 6 Cos t Accounting 6 Man agemen
Bud getary Accow1ting 6 Tax Accoun t AcC OtU1ting 6
ting 7 Accounting Information Sys tem
Accounting 7 Not-for-pro fit Accoun 7 Inte rnational
ting 7 Social Accounting 7 Accoun
AccOtU1ting and lts Relation with othe ting lnstruct ion 7
r Disciplines 8 General Manageme11t
Adv ertis ing 8 Finance 8 Law 8 Econom 8 Mar keting and
ics 9 Real Estate 9 Engineer and Archite
Accoun ting 9 Double Ent ry Sys tem ct 9 His tory of
9 Effect of Indu stri a l Rev olut ion
Org aniz atio n 10 Inco me Tax 11 10 Cor po rate
Gov ern men t Infl uen ce 1l Ima ges
Accounting as a lang uag e of busines of Acc oun ting 11
s 12 Accounting as s historical reco
Acc oun ting as cur rent economic rd or doc ume nt 12
real ity 13 Acc oun ting as an Info
Accounting as a com mod ity 13 Acc rma tion Sys tem 13
ounting as an ideology 13Th~ AccotU
Pub lic Accoun ting 14 J>rfva te Acc 1ting Profession 14
oun ting 14 Not-for -pro fit Acc oun
Principles 15 Sep arate enti ty / Bus ting 14 Acc oun ting
iness enti ty/Ec ono mic e ntity prin
Me asu rem ent Con cep t or Mo neta cipl e 15 Mon ey
ry Uni t Ass ump tion 16 Goi ng con
Accoun ting pel'iod concept o r Time cern con cep t 16
peri od assu mpt ion 17 Cost Con cep
Aspect Con cep t 17 Matchin g of Cos t Principl e 17 Dual
t and Revenue Con cep t 18 Objective
20 Full Disclosure Principle 21 Prin Evidence Principle
ciple of consistency 21 1\v o Accoun
conserv atis m 21 Materiality 22 Internat ting Constraints :
ional Accoun ting Stan dard 22 Ethi cs
Acc oun ting 24 Dis tinc tion betw een in Business and
Book-keeP-l!:lg and Acc ow1ting 25
Gen eral ly Acc epte d Acc oun ting prin Som e Rele van t
cipl es 25 The Con cep t of Sep ara te
Pro prie tors hip 26 Par tner ship s 26 Um Entity 25 Sole
ited Com pan y 26 Monetary Uni t Ass
principle 27 B~sic Accounting Equatio umption 27 Cos t
n 27 Nat ure of the Accow1ting Equatio
28 A~sets 29 Uabilities 29 Ow ner 's Equ n 28 Transaction
ity2 9 ln\'estme11t by' own er 29 Dra wi11
29 Exp ense s 30 Effect of Transac gs 29 Revenu es
tions 30 Financial Stat eme nts 34 The
The O"m er's Equity Sta tement 35 [nco me Stat eme nt 35
The Balnncc Sheet 35 The stat eme
Relationship amo ng the four stat eme nt of cash flow s 35
nts 36 Self Tes t 50 Questio ns 51 Sho
Exe rcise 53 rt Exe rcise s;·
Clulllter 2
The Rec ord ing Pro cess
Intr oduction 62 The Account 62 Dou 62 114
ble Entry Sys tem 62 Adv anta ges of Dou
64 Analysis of Transactions 64 Ocl>its b le Entr y System
and Cre dits 65 Effects of debits and
Ow ner' s Equity 66 O wne r's Drawin cred its 65 For
gs 66 Rev enu e and Expenses 66 Exp
Equation 67 Step s in the Record ing ansi on of Basic
Process 67 Source Doc ume nts 68 The
jou rna l68 Hel p or
vi
Contribution of Jo umal to RecordiJ1g Process 68 Joumalising 68 Simple and Compotmd
Entry 69 The l edgg.J 70 Posting 70 Char{ o f Accounts 71 Types of Commonly Used Accounts
71 Assets Accow1ts 71 liabilities AccOW1ts 73 Owner's Equity Accounts 74 Operating cycle
o f business 75 1l1e Trial Balance 89 Main purpose of Tria l Balance 90 Limitations of Trial
Balance 90 Errors that cannot be d etected by trial balance 90 Difference Between Balance
Sheet and Trial Balance 91 Locating Errors 92 Correcting Errors 91 Self Test 105 Questions
106l3rief Exercise 107 Exercise 108
Chnptt>r 3
The Adjusting Process . 115- 163
Introduction lli!i, Ae.c,Qw_Jijh_,.g p~riod 115 Revenue recognition and matching principle 116
Cash basis accoW1ti.ng. versus Accrual basis accounting 116 The Adjustment Process 118
Types of Adjus\irtg" Entries l'L9. PreP.aJ'meJll~ 120 Adjusting entries for prepayments 120
Prepaid Expenses 120 Jtiumal En try 1'21 Suppiies 121 Re11t prepaid 122 Insurance 122
Depreciation 1.23 Need for Depreciation Adjustment 123 Statement Presentation 124
Unearned Revenues ~25 Adjttsting Entriep for A,cc(Ua]~ 126 ,Aci;roea RC¥enues 126 Accrued
Expenses 127 Accrued Interest 127 Accrued Salaries 128 Summary of Basic Relationship 129
AJtcma tive treatment of pr~paid expenses and Wlearned revenues 130 Prepaid expenses 130
Unearned Revenues"l\31 An Adjt1sted Tri al Balan& 140 Tl\e lmportanc;e Cif AC:Ijustrnents in
Accounting 141 Princi_P.al _Situations Reqlliring Adjustments 141 Self Test 152 Questions 153
Brief Exercise 153 Exercise '154
Chapter4
Completion of the Accounting Cydes 164-187
·Introduction 164 AccoW1ting Cycle 164 Analysing Business Transactions 164 Joumalising the
Transactions 165 Posting tq -Ledger Accounts 165 Preparing a Trial Balance 165 }onmalising
and Post Adjusting Entries 165 Pr.eparing an Adj\!sted T~ial Balance 1651'reparmg Financia l
Statements 166 ]ournalising and Post Closing Entries 1.66 Preparing a Post closing Tria l
Balance 166 Steps ill [email protected] at a glance 166 [r/;Je Work Shee t 167 Steps in preparing
a work sheet 168 Closing the Books..168 Preparing f0r GfosiJ1g E'ntries 169 Required Closing
Entries 170 Closing the Rev.equ~ccou~1ts I? In£ome Summary 1.70 Closing the Expe11se
Accow1ts to the lncome Summary 1.:70 i::;losing' ilie Income Summary Account to the Capital
Account 17i Closing the withdrawal Accotmt fo the capital Account 171 The Accounts after
closing 171 The Post-closing Trial Balance 171 Alternative Entries to close books 173
Reversing Entries 179 Correcting Entries 181 Self Test 183 Questions 183 Exercise 184
ChapterS ·
AccountiJ.1g For Merchandising Operations 188- 288
Introduction 188 Difference between service en terprises and merchandise concerns 188
Operating cycles 189Revenue from sales 189 Gross sales 189 hwoice 190 Determining Gross
sales when there are trade discollilt 191 Purpose o f trade discount 191 Recording deduction •
from gross sale 191 Sal es discounts 192 Sales Return and allowances 193 Income Statement
showing sales discounts and returns and a.llowa.nces 194 Methods of recording sales and
L
vii
purchases whe n a b usiness grants cash discount 194 Purchase discount 195 Recording
I process of credit card sale 197 Recording process o f Value Added Tax {VAT) 198 Cost of
Goods Sold 200 Cost of Goods Purchased 203 Purchases of goods {merchandise) 203
Deductions from purchases 204 Purchase discounts 204 Purchase Return and Allowances 204
Transportation Cost 205 Responsib ility of transportation cost a nd risk in transit 207 Debit
Note and Credit Note 208 Merch<mdise inventory system 209 Perpetual inventory system 209
Advantages of perpetual inventory system 218 Adjusting inventory based on a physical
count 218 Special point on inventory losses/ damages 220 periodic inventory system 221
Special features of periQtlic invet110ry system abou t inventory losses 222 Differences between
perpetua l and pe~iodk' inventory system 223 Inventory errors and its effect on the income
statement 224 Special items for merchandise organisation 231 Bad Debt expenses 231 Special
Journals for merchand ise concerns 240 Maintaini ng a separate account for each credit
customer 241 Maintaining a separate record for each account payable 243 lllcome Statement
Presentati on 2!16 Closing entries (or merchand ising organisations 264 Self Test 277 Questions
278 Short Exercise 279 Exercise 280
Cllnpter 6
WorkSh eet 289 386
lntroducti on289 Purpose'/Advant.1ges of wo•·k sheef289 Format usea to pn!pare work sheet
190 Types of work sheet 290 Preparing work sheet 291 Work sheet for Merchandise concern
303 Preparing financial statement from work sheet 313 Questions 365 Exercise 365
Chapter 7
Financia l Stateme nt 387- 498
Introducti on 387 Elements of Financial Statement 387 Compone nts of Financial Statement
388 Income Statement 388 Pwpose of Income Statement 389 Content of the Income Statement
389 Pom1 of the Income Statement 391 Statement of Owner's Equity 395 Balance Sheet 397
Classification of Assets and Liabilities 397 Advantages of the balance sheet 402 Limitation of
balance sheet 402 Statement o f cash flows 403 FinaX1ciaJ Statemen t of joint stock company 443
Schedule Xl. Part !- Balance Sheet (Horizontal Form) 445 Balance Sheet {Vertical Form) 454
Schedule Xl, Part U- Requirements as to Profit and Loss Accottnt 455 Self Test 466 Questions
466 Short Exercise 467 Exercise 468
Cilnpter 8
Cash Flow Stateme nt 499-551
Introduction 499 Uses of Cash Flow Statement 499 Sections of the cash flow sta tement 499
Operating activities 500 IJwesling activities 500 Financing activities 500 Non·cash financing
and investing events 500 Determination and ana lysis of cash flows from operating activities
501 Ca uses of addilions and deduction to net profit 506 Determination and analysis of cash
flows from investing activities 510 Determination and analysis of cash flows from financing
activi ties 511 Cash inflows and o utflows at a glance 513 Flow chart of a cash flow 513
Sbtement of cash flow format of three sections together 515 Questions 538 Exercise 539
viii
\ Cflllpter 9
Rectification of Errors 552- 593
Introduction 552 TYPeS of Errors 552 Errors of omission 552 Ermrs of commission 553 When
errors ma.y be discovered <md rectified 553 Procedure ior correcting errors 554 Rectification
of errors before the preparatioJt o f trial balance 554 Rectification of errors after the
preparation of the trial balance but before the preparatiOll of financial statements 556
Rectification of errors after the preparation of financial statements 557 Self test 586 Ques tiol1S
587 Short Exercise 58'Z· fix~rcise 588
Chapter 10
Control of Cash.. 591i- 648
introduction 594 intemal ContJ;ol of C<1~1\ 594 Features of a system of cash conh·ol 595
Double record of'cash 596 rDll)rest system of petty cash fimd 59tiUse of a Bank 598 Making
Ba11k Deposits 599~>\lriting cheques 599 Ban~ statement 599 Debit Memorandum 599 C redit
MemoraJtdum 600 :ReeiprOGa l relatiOn M Cash Book and Bank' Account 600 Reconciling the
Bank Accou11t 600 Ne~d. for Bru~Re,cc;mciliation Statement 600 Causes of difference between
casl1 book and bank •pa$5 !Jeok balanees :G01.Items arising .;iue to time 'l;lg 601 Transaction
within brulk 604 Errors 605 Recoflciliation p rocedure. 605 Forms of Reconciliation Statement
606 Corrected/adjusted ca$1) billllpce mei):lod,6ii6 Balapce to balance meU1od of reconciliation
statemeJtt 608 Amended cash method 610 Four c0hunn recontiliati<m statement 611
Questions 635 Short Exercise 635 Exercise 636
Chapter 11
Accounting Iniormation System 649 692
introduction 649 The .Sub-s ystems of an Accounting in!armation System 649 PriPciples. of
Accounting information Sys;tem 650 E'as~ l;>enefit J?rinciple 650 Corttrol principle 650
Compatibility principle 650 Useful outpqt 651 'Flexioility; p£inciple 651 Developing
Accotmting InformatiOJt System. 651 ~lanuai,.Acco!mting System 652 Special Journals and
Subsidiary Ledger 652 Special Joumals 6.52' Ad,..antages ·o£ special joumals 653 Subsidiary
l edgers 654 Advantages of subsidiary ledgers 654 Types of special journals 656 Sales journal
656 Advantages of the sales journal 658 Cash Receipt journal 658 )ournalising cash receipt
transactions 659 'l11e posting of the Cash Receipts Journal 650 Purchase journal 662 Cash
payments journal 666 General journal 667 Flexibility of sp ecial purpose journal 667 Sales
Return and Allowance ]oumal 667 Pu~chase Return and Allowance Journal 668 Electronic
Accountillg System 680 Computers 680 Computers store information in two ways 680
Hardware 681 Software 681 Data processing m e thod 682 Batch processmg 682 On-line
p rocessiJ1g 682 CompariJ1g manual and electronic system 683 Self Test 683 Questions 684
Brief Exercise 685 Exercise 686
L
· Cha pte r 7
FINANCIAL STA TEM ENT
Intr oduc tion

The state ment that comm unicates economic infor matio
n of an organisation to indiv idual
and institution s resid ing outsi de the orga nisat ion
is calle d finan cial state ment . Financial
state ment s are prep ared at least annu ally and are
directed towa rd the comm on infor matio n
need s of a wide range of users. A comp lete set
of financial state ment includes an income
s tatem ent, an owne r's equit y state ment , a balan
ce sheet, state ment of chan ges in finan cial
posit ion and those notes and other statem ents and
expla nator y mate rial that are an integral
part of financial state ment. The users of financial state
ment are present and poten tial investors,
lende rs. empl oyees. supp liers and other trade credi
tors, custo mers , gove rnme nts and their
agencies and the publi c. Some of these users may
requi re, and have th e powe r to obtai n,
infor mation addition to that contained in the finan
cial statements. However, many 'users have
to rely on the financial state ment s as their main
sourc es of financial infor matio n. There fore
finan cial s tatem ent should be prep ared and prese
nted with user' s need s in view . The
man agement of an en terprise has the prim ary
resp onsib ility for the p repar ation and
prese ntatio n of the financial statement of the enter
prise .
ELEMENTS OF FINANCIAL STATEMENT
Finan cial state ment s repo rt the financial effec ts
of trans actio ns and other even ts by
class ifying them into broad grou ps in accordan ce
with their economic ch aracteristics. These
broad grou ps are terme d the elements of financial
state men ts. The elements are directly.re lated
to the meas urement of performance of an accounting
perio d and to the measurement of finan cial
pos~tion at a specific date.
The elements direc tly related to the meas urem ent of
performan ce are income and expense.
Thes e are defined as follows :
Income : The definition of income encompasses both
reven ue and gain. Revenue is the
econo mic bene fit associated with opera ting the busin
ess. An increase in assets or a decrease in
liabil ities that resul ts from the norm al operating
activities of the busin ess triggers its
recognition. It is refer red to by a varie ty of diffe
rent. name s includ ing sales , fees. inter est.
divid ends , royalties and rent. Gains repre sent other
items that meet the definition of income
and may or may not arise in the cours e of the ordi,n
ary activities of the business. Gain represents
incre ases in economic benefits and such are not differ
ent in natur e from reven ue. Gains induc ie.
for example, those arising from the disposal of non-c
urrent assets.
388 BASIC ACCOUNTING
process of genera ting

Expen se : An expense is an economic sacrifice that is incurre d in the
from an effort to produc e.
revenu e. A decrea se in assets or an increas e in liabilities that results
of sales . salarie s. rent.
revenu e trigger:s its recogn ition. Examp les of expens es are cost
deprec iation etc.
positio n are assets,
The elemen ts directl y related to the measu remen t of financ ial
liabilities and equity . These are define d as follows :
as a result of past .events
Assets _: Assets are economic resourc es contro lled by the busine ss
, for examp le.
and from those exp.ect ed to benefi t future activit ies. Many assets
er. physical
proper ty, plant and equipm ent. buildin gs have a physical form. Howev
trade marks and
form is not necessary to the existence of an asset. for examp le patent,
flow from them to
copyri ghts are assets if future ecqnomic benefit s are expect ed to
the busine ss and if they are controlled by the business.
to non-ow ners. These are
Liabili ties : Liabilities are econom ic obliga tion of the busine ss
in an outflow
arise from past events . the settlem ent of which is expect ed to result
from the business of resources embod ying economic benefits.
ss after deduct ing all its
Equity : Equity is the residu al interes t in the assets of fhe busine
equity.
liabilities. In other words excess of assets over liabilities is called
COMP ONEN TS OF FINAN CIAL STAT EMEN T
enterp rise. These arise
Four genera l purpos e financial statem ents are used by busine ss
statem ent are as follows :
compo nents of financial statement. The four compo nents of financial
(a) Income statem ent
(b) Statem ent of owner' s equity
(c) Balanc e sheet
(d) Statem ent of Cash flow
INCOM E STAT EMEN T
revenu es earned and
The mcome statem ent is a financial statem ent that summa rises the
report the income or loss
expens es incurre d by a business during a specific period of time and
es. The income statem ent is
resulti ng from operat ions and from certain other define d activiti
and loss or statem ent of
alterna tely titled the earnin gs statem ent, the statem ent of profit
es from the sale of goods
operati ons. This statem ent measu res the difference betwee n the revenu
s and operati ng expenses. If
or services and the cost of goods sold or expenses for provid ing service
ing service s and operat ing
revenu es are greater than cost of goods sold or expens es for provid
income (profit). If the cost of
expens es. the difference betwee n these two elemen ts is called net
es exceed the revenu es the
goods sold or expenses for provid ing services and operat ing expens
owner 's capital account in
difference is net loss. Net income (profit) or loss is transfe rred to the
or to the retaine d eamin~
single proprietorshi p, the partne rs' capital accounts in a partne rship
accoun t in a company.
FINANCIAL STATEMENT 389
Purpose of income stateme nt
The purpose of income statement is to reflect the income or loss generated by the business
during the accounting period. It is vital for both internal and external users to comprehend the
components of reported profits.
The income statemen r fulfils the objectives of financial s tatement by disclosing
information about the earnings of the business for a specific period of time that current and
potential investors and creditors use to asses the future earning potential of the business. Such
assessmen t of earnings also provides informati on that allows external users to evaluate the
amounts, timing and uncertainty of future cash flows from dividends or interest on investments.
The income statement provides importan t informati on about changes in the business's
resources (assets) and claims to those resources (equities) due to the operating activities of the
business. Investors and creditors use this type of past operating results to predict the future
performance of the business.
For the limited company income reporting is necessary because limited companies are
separate legal entities and, therefore generate taxable income.
The income statement that reports the earning performance of a business for a period of
time is important to both absentee owners and creditors for evaluating the company.
The periodic income statement made it easier for owners to buy and se11 their shares
because interested parties could assess the current operating performance of the company as part
of negotiation process.
Content of the income stateme nt
The income statement gene!ally consists of series of sections to determining the net income
or loss for an accounting period. Major sections or groups included within the normal operation
section are :
(a) Sales revenues or revenues from services; .
(b) Cost of goods sold or expenses of providing services;
(c) Operating expenses :
(d) Other revenues and gains;
(e). Other expenses and losses; and
(f) Income tax on profit from normal business operation.
(a) Sales revenue : Sales revenue means total sales to customers during the accounting
period. This total should not include addition to invoices for value added taxes that the
business is required to collect on behalf of governme nt. Sales discount, sales returns and
allowances should be deducted from gross sale to determine net sales revenue. If the sales price
is increased to cover the cost of freight-out and prepare invoices accordingly. freight charges
paid by the company should also be deducted from total sale to determining net sale.
Sales revenues are reported in income statement as under :

Sale (excluding VAT)
. xxxxxxxx
Less: Sales discount xxxxx
Sales returns and allowances xxxx XX XX XX
XXX XXX
Less : Freight out (if included in total sales while invoicing) xxxxxx
Net sales xxxxxx
{b) Cost of goods sold: When merchandise is acquired from outside for reselling. the costs
of goods relating to sales of the period must be determined. The cost of goods relating sales for a
specific period of time is known as cost ofgoods sold. The cost of goods sold can be determined at
the end of an accounting period or each time sale occurs. If a firm uses periodic inventory system,
the firm determines cost of goods only at the end of an accounting period.
Accounting procedure to determine cost of goods sold at the end of an accounting period is as
follows:
1st Determine cost of goods purchased. Cost of goods purchased = Invoice price of goods ·
purchased- (Purchase discount + Purchase returns and allowances) + Freight or
other transportation costs incurred by the purchaser to ship the goods from the
supplier to the purchaser's place of business.
2nd Add beginning inventory with cost of goods purchased. This total is called goods
available for sale.
3rd Deduct ending inventory from goods available for sale and the result is cost of
goods sold.
Cost of goods sold is reported in income statement as under :
Beginning inventory xxxxxxxx
Add Cost of goods purchased :
Purchases (excluding Vat if included in total purchase) xxxxxx
Less Purchases discount xxxx
Purchases return and allowances XXX xxxxx
Net purchases xxxxxxxx
Add Freight-in/Transportation-in xxxxxxxx
Cost of goods purchased xxxxxx
Cost of goods available for sale xxxxxx
Less Ending mventory xxxxxx
Cost of goods sold XX XXX X
(c) Operating expenses :The expenses incurred to perform the business acti_v ities are
operating expenses. The operating expenses may be classified under any desired number of
headings and subheadings. But it is usually satisfactory to subdivide operating expenses into
two categories. They are (i) general and administrative expenses and (ii) Selling and
distribution expenses.
FINANCIAL STATEMENT
(i) General and administrative expenses : Expenses incurred in the general

opera!XI n ~
adminis trative purpose of the business is classifie d as general and adminis trau'e
a~
Example s of these expense s are office salaries. repairs to office equipme nt. depreda
bon oi
office equipme nt. office supplies expenses . general insuranc e. heating and lighling
expense s.
taxes. miscellaneous general expenses etc.
(ii) Selling and distrib11tio11 v:ptmses : Expense s that are incurred directly
and entirely in
connection with the sale of goods are defined as selling expenses. Examples of these expenses
are
sales salaries, advertis ing. store supplies expense s. deprecia tion on store equipme
nt.
deprecia tion on delivery equipme nt. bad debt expenses, transpor tation-ou t, etc.
0 Tire process of evaluating customers and approving them for credit usually
not
is
assigned to the sellin,~ department of a business . Otlrerwise, given the primary objective
of
increasing sales. tire selling departmmt mig/11 11ot use good judgement in approving customer
for
credit. Because the sales department is not rrsponsible for granting credit, it should not be held
responsible for bad debts expenses, therefore bad debts expense often appears on the irrcome
statement as an administrative expense instend of selling expense.
(d) Other revenue s and gains : Revenue s from sources other than the normal
business
activitie s are classifie d as other revenue s or other incomes . These incomes include
interest
income. rent. dividend -receive d etc ; profits resulting from sale of plant assets are
treated as
gains.
(e) Other expenses and losses : Expenses not incurred to perform normal business
operation
are known as other expenses . Examples of such expenses are interest on bank loan.
interest on
notes payable, interest on mortgag e loan. Losses that arise in the disposal of planf
assets are
s hown in income statemen t as other tosses.
(0 Income tax on profit from normal busines s operatio n : Sole-pro prietors hip or
partners hip has no separate legal entity for 'i ncome tax purpose s. So income tax expense
s on
profit of s uch entity. should be treated as a personal expense of propriet or. If the tax
is paid by
the business then it should be treated as withdraw al. If the income tax on profit is payable
by
the business then the amount of tax should be treated as drawing and the amount of
income tax
payable is a liability. But joint stock compan y has a separate entity. so income tax on
profit is
an expense of business and should be deducted from net income to determin e income
for the
owners.
Form of the income statem ent
There are two widely used income statemen t forms. They are-
(a) Single s tep income statemen t and
{b) Multiple step income statemen t.
(a) Single step income statemen t :Single step income statemen t reports the calculation
of
net income in one step, consistin g of total revenues and gains less total expenses and losses.
Total
revenue s and gains. minus total expenses and losses equa ls to net income (loss). Its
primary
benefit is simplici ty of presenta tion. This format is common ly used in publishe d statemen
ts.
Single step income statemen t does not show the various compone nts of net sales and cost
of goods
sold.
Following is an example of a single step income statement :

Single step income statement (Using imaginary figure)
,, Service enterprise Merchandising concern
MISHU ErqERPRIS~ MISHU ENTERPRISE
Income statement Income statement
for the vear ended December 31. 2002 for the vear ended December 31, 2002
Tk. Tk.
Service revenue 50.000 Sales revtmue (net) 5.34.000
~Ope< aling expenses: Ltss Expenses : .
Sal:trics expenses 18:000 CostofgQQdssokl 3.45 •.000
General and administrative expenses 12.000 Genera! & adm.inistrJtive exps. 50,000
Supplies expenses 4 500 SClliilg expenses 45 000
. 34.500 4.40.000
Nf':t inc-orn.t 15.500 Ntt income 94.000
~
(b) Multiple-step income statement : The Multiple-step income statement classifies

revenues and expenses by category and reports the calculation of net income in several distinct
steps. It is called Ml!ltiple-step income statement because cost of goods sold and the expenses are
subtracted in steps to arrive at net income (loss). This format' of income statement is alSo called a
classified income statemenr because its items are .c lassified Into significant groups.
This format presents net sales first. The next step is cost of goods sold. wli.ich is
deducted from net sales to obtain gross profit. Then operating expenses often categorised as
·selling and distribution· and "general & administrative· are subtracted to determine operating
income. Gains as well as losses are shown in a separate section of the multiple step income
statement and are often categorised as other jtems.
Following is an example of a multiple-step income statement (.In summarised form).:
A Multiple ·Step Income Statement
PEUKY SALES SERVICE LIMITED
· ~ JnC.ome Statement ··
For the vear ended December 31. 2002
Tk, Tk.
NeJ sales 4.32.000
Ltss Cost of goods sold 2.34.000
Gross profit 1.98.000
Ltss Operating expenses:
Sellling expenses 40,000
General and administrative-expenses 78.000 ' 1.28.000
Operating income 70.000
Other income (expenses);
Gain on sale of plant assets 15.500
Interest income 6,700
lnte<est expenses (4.200l 18.000
Net income before income taX 52.000
Income tax expenses (say 30% on net income) 15.600
N et income 36;400
.LUSTIVoTION 71
A comparison between M u ltip lt step a.nd Single step in come statt.met\t
Follo wing is a ran dom list o( selected acrotLOt b alances for Metallic Comp;1ny llt December 3 1. 2002.
Net sales Tk 4.50.000. Cost of goods •old Tk. 2.34.500, S.,lling expcns•• Tk. 5-1.000, Gcneml ond odrrunistr•li\'•
pe.,... Tk. 47.800, Gain on sole of fu~ilure Tk. 2.090. Interest income Tk. 7.010, Interest expenses Tk. 2.300 and
..,"''((tne tax is assu.med@ 30% on net lncome~
Propare incQme slatrmonl using mulliph! step .mel oingle step fonml o( incQmO >lalomenl
>O LfJTlON:
Metallic Com p any Metallic Company
Multiple Step lnccu:ne Statement S ing le Step Income S t at~men t
Fo r the year endtd Dec. 31. 2002 For the year ended Dec. 31 . 2002
n. n. n. n.
ts..les 4.50.000 Revenues:
- Cost ol goods sold 2 ,:H,!l!l!! Net Sales 4.50.000
;_*05$ rYWgin 2.16.000 Gain on s.Ue of fumitu.,. 2.090
"" Op"'ating expense : Interest income 7,010 4,59, 100
S:lling expenses 54,000 Expenses :
~nern l & .,dmin.ist:rotivc cxp. ~ 1,Q1.aoo Casto£ goods sold 2.34.000
:j)'\:tJtil'\g income: 1.14,200 SclJing CXpCN<'S 5-1.000
~~'IV income (exponses) : Cencr.tl & administrative exp. 47.800
Cain on sale of fumitwo 2.090 lnteres't expenses 2.300
Interest income 7.010 Income tax expenses 36.300 3.74.400
Interest expenses (2.300) 6.800
"'l't income bt!fOre tax 1.21,000
·,'Ome l•x expenses (30% x 1 .2 1.000) 36,300
'cl lncomt 84,700 Net income 84.700
LUSTIVoTION 7'Z
Presented beloh• is i.ncome statement lnform11tio n related to Pubali Corporation for the yeilr ended
:«ember 31. 2002
n. Tk
Olfkor's salaries 39.000 Purchase dis<ounts 10,000
Drpr«iorion expenses bllilding 28.500 Pu rcha$es return 23.000
Offtoo suppUes expenses 9.500 Inventory (boginning) 1.20.000
Inv•ntory {ending) 1.37.000 $..lles rerum and aUowAn~ 30.000
Purchases 6,00,000 Store supplies expenses •),000
Sale'S 9·,30,000 Sales .saJaril'S 7 1.000 M
Transportation-in 14,000 Depreciation expe:n:,c~toru c.oquipments 18.000
~~ rrtd:
(a) Prep.:ne a muJtipte-itep inrome s.tatemcnl for the year 2002.
(b) Prepare a :;irtgfl...a.H~p income statemet\t (or the year 2002.
=.:SU ACCOIII! ting- 50

396 BASIC ACCOUN TING
Following is an exam ple of the Statemen t of Changes in Partner's Capital :

TH£ JANET TRADER S
Slotemen t of C hanges in Partner's Capital
For the year ended D ecember 3 1, 2002
Akber Humayu n Jahangir

Tk. Tk. Tk.
Capital balance t/1/'02 2.34.000 4.32.000 1.23.000
Add Net Income 56.000 76,000 23 .000
Addition to caplt>l
Sub total
- 74.000
2.90.000 5.08.000 2 .20.000
Less Drawings 60.000 48,000 20.000
Capital balance 31/12/'02
2.30.000 4.60.000 2.00,000
limited compani es : Limited compani es present a statemen t of retained earnings inslead
of statemen t of owner's equity. The sta te menl of retained earnings shows only the changes
that
occurred in the Relained earnlngs account during I he period. These changes arise from
three
sources. They are :
(a) nel income or loss
(b) cash or stock dividends declared and
(c) prior period adjustments.
Statement of retained earnings first states the retained earnings balance at the beginnin
g
of the period , !hen shows the increase (decrease) due to the period's net income (loss)
and any
adjustm ent that is needed to prior period's error correction. Finally. the statemen t p resents
the
amount ofdiv;dc nds deducted in detennin ing the ending balance in retained earnings .
Followin g is an example of U1e Statemen t of Re tained Earnings :
MARKS & ALLEYS LTD.

Stat.,men t of Retained Eornings
For th e year ended Decembe r 31, 2002
Tk. Tk.
Retained earnings 1 / 1 /'02
32.45.00 0
Correctio n of error, net of tax (if any)
(23,000)
Adjusted balance of retainei:l earnings
32.22,000
Add Net income
16.78.00 0 49.00.00 0
Less Dividend declared :
Preference share
90,000
Ordinary share
3.20.000
4.10.000
Retained earnings. Decembe r 31. 2002
44,90.00 0
FINANCIAL STATE MeNT 397
BALA NCE SHEE T
The financial statem ent designed to show the assets. liabilities and owner
's equity of the
business at the end of the period covere d by the income statement is
called balance sheet. The
balance sheet provides inform ation about a business's assets. liabilit
ies and equity and their
relationship to each other at a particular point of time. It provid es a
list of econom ic resources
(i.e. assets) that the business has available for its operating activities.
In addition. it display s
the claims on those resources. When a business presents curren t and non-cu
rrent assets. curren t
and non-current liabilities and equities as separa te classifications on
the face of the balance
sheet. the balance sheet is called a classified balance sheet.
A summ ary form of a classified balance sheet is as follows :
ABC COMPAt'IY
Balance Sheet
.
As on Decf!Dlbtr 31 2002
Assets liabilit ies and owner·s equity
Current assets Curren t liabilities
Non-current assets: Long·t tnn liabilities
Tangib le assets/ Plant assets
Owner's equity .
lntnngible assets
Fictitious assets/ other as.o;ets
CLASS IFI CATIO N OF ASSET S AND LIABIL ITIES
ASS ETS
Assets are economic: resources controlled by the business as a result of
past events and from
those expected to benefi t future activities. Many assets. for examp
le. proper ty. plant and
eq uipme n t. buildin gs have a physica l form . However. physical form
is not necess ary to the
existence of an asset. for example patent . trade marks a,nd copyri
ghts are assets if future
economic benefits are expected to flow from them to the business and
if they are controlled by
the business.
Assets are classified into two major groups . They are (a) Curren t assets
(b) Non-current
assets.
Curren t assets: An asset should be classified as a current asset when:
(i) It is expected to be realised in. or is held for sale or consumption
in. the normal
course of the business's operating cycle or
(ii) It is held primarily for trading purposes or for the short-term
and expected to be
realised within twelve months of the balance sheet date or
(iii) It is cash and cash equivalent that is not Iestricted in use.
Accordingly current assets may be defined as cash and other assets that may reasonably
be expected to be realised in cash or sold or used up usually within a year or less of the balance
sheet date. through the normal operation of the business. Current assets also include inventories
and trade receivables that are sold. consumed and realised as part of normal operating cycle •
even when they are not expected to_be realised within twelve month of the balance sheet date.
Example of current assets is cash. cash at bank. notes receivable. accounts receivable. supplies.
prepaid ex penses. inventories {finished goods , work-in-pr ocess. material). marketab le
securities If expected to be realised within one year of balance sheet date. Classification of
current assets is necessary to assessing the business's ability to pay its short-term debt.
Non-Curre nt assets : All other assets that are not to be included in current assets are
classified as non·current assets. Non-Current assets may be classified into three groups such as
(i) Tangible assets
(ii) Intangible assets and
(iii) Fictitious assets
Tmrgible assets: Assets that have physical form. long lived. and are used to produce or
sell of goods and services and not intended for sale are called tangible assets. Tangible assets
include land. building. plant assets. furniture. motor vehicles. office equipment etc. Tangible
assets are alternately titled as plant assets. fixed assets or property. plant and equipment. We
like to use these types of assets in balance sheet as tangible assets.
Intangible assets : Assets that are invisible {have no physical form) but futu re economic
benefits are expected to flow from them to the business and if they are controlled by the business
are called intangible assets. Their value comes from the privileges or rights granted to or held
by owner. Examples of such assets are goodwill. patents. trade marks. copyrights and
franchises.
Fictitio11s assets : Assets that are invisible (have no physical form) and ownership of
which is not transferable to others or of which past sacrifice is to be matched with fu ture
period earning are called fictitious assets. These types of assets include preliminary expenses.
underwriter commission. discount on issue of share and debenture. These also include deferred
revenue expenditure . Many accountants feel better to classify fictitious assets as other assets
and it is last asset classification in balance sheet. We shall also use other asset classification in
a few Illustrations .
However. all businesses do not use same classification of assets. Altemately assets are
classified as :
(a) Current assets.
(b) Investment.
(c) Plant assets or plant and equipment,
(d) Intangible assets and
(e) Fictitious assets.
Investmen ts : Investment in shares, debentures, bonds, Govt. securities the conversion of
which into cash is not expected within one of balance sheet date fall into this classification.
Also such long lived assets like land held for future expansion but not now being used in the
business activities appear in this section.
Plant assets/pla nt and eq"uipment : Earlier, we described pla.n t assets as tangible long
lived assets that are used to produce or to sell goods and services and not intended for sale.
LIABILIT IES
Liabilities are economic obligation of the business to non-owners. These arise from past
events, the settlement of which is expected to result in an outflow from the business of resources
embodying economic benefits. The liabilities are classified into two major groups. such as current
liabilities and long term liabilities. There is another type of liability called contingen t
liability that is Mt a direct element of balance sheet.
Cttrre11t liabilities : Obligations due to be paid or liquidated within twelve months of
balance sheet date, through the normal operation of the business. are called current liabilities.
Examples of current liabilities are accounts payable, notes payable, wages payable. salaries
payable, tax payable, dividend payable, interest paya ble , unearned revenues. Also, any
portion of long term liability due to be paid within twelve months of balance sheet date is a
current liability. Paying out current assets normally satisfies current liabilities.
Long tenn liabilities : Liabilities payable after twelve months of balance sheet date is
classified as long term liabilities. Long term liabilities include mortgage payable, bonds
payable, long-term notes payable. Employees provident fund, Employees savings fund etc.
OWNER'S EQUITY
The format of equity section of the balance sheet depends on whether the enterprise is a
single proprietorship, a partnership or a joint stock company.
Single proprietorship : If a business is a single proprietorship. the equity section consists
of a single line showing the owner's equity as of the balance sheet date.
Partnersh ip :·If a bus iness is organised as a parlnership, separate equity accounts are used
~or each partner. The balance sheet shows the equity of each partner in a fomiat like this
:
Partner's Equity
Tk.
Akber 2.30.000
Humayun 4,60,000
jahangi r 2,00,000
Total partner's equity 8,90,000
Joint stock company : Company's total owner's (Shareholder's) equity is divided into
paid in capital and retained earnings. Paid in capita l is created by shareholder s' investment s
and retained earnings are created by the company's profitable activities ..The components of
owner's equity are usuaUy shpwn on a, balance sheet like this:
Owner's Equity
Tk.
Paid capital- Equity share 50.00.000
Retained earnings 12.50.000
Total owner's equity 62:501000
Contingent liabilities
Some events. such as lawsuit or claims by customers for damages or defective goods or
services may affect the business negatively. However. in some cases the actual events that
create the specific losses have not occurred at the end of accounting period, such as a judgement
for lawsuit that is filed but not settled. These potential losses are called contingent liabilities.
which J:epresent events that could create negative financial results for a business at some future
point. Businesses must actually record losses when the related ev~nt is considered probable and
when the business can estimate its monetary effect on the financial statements.
Even when business cannot estimate the impact of the events or whether the likelihood of
such events is less than probable. they must disclose the existence of contingent liabilities as
part of the notes that accompany the balance sheet.
Alternative Balance Sheet format

Different business firms choose different formats for their balance sheet. Generally two
formats of balance sheet are widely used such as
(i) account form balance sheet
(ii) report form balance sheet.
(1) Acco~tnt form balance sheet : A balance sheet that places the liabilities and owner's
equity to the right of the assets is called account form balance sheet. According to the Company
Act 1994 of Bangladesh liabilities and owner's equity should be placed to the left of the assets.
(ii) Report form balance sheet : A balance sheet that places the assets above the
liabilities and owner's equity is caUed report form balance sheet.
Both forms of Balance sheet are p resented below :
(i) Account form balance sheet
BUTIERFLY MARKETING COMPANY

Balance sheet
as on December 31 2002
Assets Amount Li01bilities a.n d owner's equity Amount.
Current assets : Tk. Tk. Curre nt liab ilities : Tk. Tk.
Cash 34.000 Accounts payable 60.000
Accounts receivable 76,000 B.1.nk o verdraft 60.000
Inventories 90.000 Unearned revenue 2.400
Supplies 3.000 Expenses payable 1 .600 1.24.000
Prepaid insurance 1.200 Long terrn liabilities:
Total current assets 2.04 .200 Mortgag e Joan 3.00.000
No.n-<:urrent assets ; Notes payable 2.05.000 5 .05.200
Tangible assets:
Land and buildings 3.00 .000 Owner's equi ty :
Lease hold property 2.89.000 Capital 2.25.200
Office equipment (net) 11.000
6.00.000
intangible assets :
Goodwill 45.000
Trademarks s:ooo 50.000 Total liabilities and
T ota.l assets 8.54.200 owner·s equity ·8.54,200
(ii) Report form balance sheet
I!UTIERFLY MARKETING COMPANY

Balance Sheet
.
as on December 3i 2002
Assets Tk. Tk.
Current as..o:oet:S:
Cash 34.000
Accounts receivable 76.000
Inventories 90.000
Supplies 3.000
Prepaid insurance 1.200
Total current assets 2.04.200
Non~current.~ssets :
Tangible assets :
Land and buildings 3,00.000
Leasehold property 2.89,000
OIJice equipment (net) 11.000
6.00.000
Intangible assets :
Goodwill 45.000
Trademarks 5.000
50.000
Total assets 8,54,200
Contd.......
Basic ACCOII!llillg - 51
Balance She<t (Contd.)

Liabilities and owner' s equity Tk. Tk.
Curren t liabilities :
Accounts P"yable
60.000
Bank overdra ft
60.000
Unearned revenue
Expenses payable
2AOO
1.600
1.24.00 0
Long term liabilities:
Mortgage Joan
3.00.00 0
Notes P"Yable
2.05.00 0
Owner' s equity: 5.05.00 0
Capital
2.25.20 0
ToW liabilit ies OJ'Id ownu' s equity
8.54,200
Both fo mrs are w idely used, and m:ither is conside red morl! useful
tl1au tire otlu~r.
Advantages of the Balance sheet : The Balance sheet is an import ant
financial statem ent
for financial reporting. The differe nt interes ted parties may derive
d ifferent information for
their own use. Generally the following information can be derived from
the balance sheet :
1. The balance sheet provides information about the nature and amoun
ts of investments
in business resources. obligations to creditors. and the owner's equity in
net resources.
2. The ba)ance sheet provides a basis for computing rate of returns on
(a) total assets invested,
(b) owner's equity. and
(c) capital employed.
3. The balanc e sheet provides inform ation to assessing the liquidi
ty and Oexibility of
the business.
4. The balance sheet is helpful to evaluating the capital structure of
the business.
5. Balance sheet allows statem ent reader s to assess lhe busine
ss's prospe cts for
profitability and future cash Oows.
6. The trends of working capital of the business can be determ ined
by comparison of
balance sheet of successive years and corrective measu res can be
taken. where
necessary.
Limita tion of balance sheet : The limitations of a balance sheet are as
follows :
(a) The balance sheet does not reOect curren t value because the accoun
tants have
adopted, a historical cost basis in valuing and reporting assets and liabiliti
es.
{b) Judgem ents and estimates must be used in prepar ing a balanc
e sheet. The
collectibility of receivables and the useful life of long-te rm tangib
le and
intang ible assets are difficult to determine,
(c) The balance sheet omits many items that are of financial value
to the business
but cannot be recorded objectively. for example human resources, custom
ers base,
management s kills. and reputation are certainly significant to the busine
ss. bul
these are omitted in balance sheet.
ANANCIAL STATEMENT 403
STATEMEN T OF CASH FLOWS

This statement is directly rela ted to other three statements. Net income comes from
income statement. lnvestmel\t and withdrawals come from the statement of owner's ~quity and
other item in the statement represent changes in Balance Sheet items like accounts receivable.
supplies. accounts payable. land and buildings and other items. The statement will be c:lis<:ussed
in more detalls in a later chapter. The headings of the statement should identify the company
and name of the statement and the period for which it is prepared. Date is stated as "For the
month ended 31 December" or "For the year ended December 31. 2001.. etc.
ILLUSTRATION 7'3
The trial b•lonce for thel.egal 5<rvicc pointof Mr. Sikdu os ol ~ 31 "02
LEGAL SERVICE POINT
Trial 81..1.lnce
O<tob•r 31. '02
Orbit Cr•dH
N.ame of J.ccounts Tk Tk
Cash 95.000
Account!> rcc:ei ..•able 81.000
Lond 2.40,000
Building 4.00.000
Ac<ounts payable 11.000
Loon p•yobk (Due on June 2006) 4.00.000
Mt.Sikdtr. Capital 3.66.000
Mr. Sikdtr. Drawings 7.000
law Service revenue 81.000
S.,_lartes expenses 27.000
~tisalbn<OUSe><pen><S
8 ,000
Tol..tl 8.58,000 8.58.000
Adjustments ;
1. Depreciation on building ror U\c month Tk. 2.000
2.. Accrued sa.Jaries at the end of the month ar~ Tk. 1.000
Rtquired:
(a) Prepare om l.ncome statement for the month ended October 31, '02
(b) Prepare il ste'ltcment of owncr'5 ~quity /or the month ended October '31, "02.
(c) Prep•rc o balance •h ..t •• of October 31.'02.
SOLUliON:
(.) Working ;
S.1larles expenses for the month :
S.1loriCll paid Tk. 27.000
Md Accrued Tk 1.000
Sal&rios e><penS<S Tk 18.000
BASIC ACCOUNTING
LEGAL SERVICE POINT

Income StO"tem~nt
For the month ended Octobe-r 31, 2002
Amount Amollnt
Tk. Tk.
Service "'~·\•e-nuc 81.000
l..t•ss:
Salarie$ expenses 2B.OOO
O.,pre<iotion 2.000
Misc. •xpcnses 8.000
38.000
Net income
43,000
LEGAL SERVICE POINT

Sbtement of Owner" s Equ..ity
For lht month t:ndcd Oct·ober 31, 2001
A1nount
n
Mr. SW!or C.pital 3.66.000
lldd Net income lor Octol><>r 43.000
Total 4.09.000
t.Ls.s Ora winS" 7.000
Mr. Sil<der. Capital October 31.'02
4.02.000
LEGAL SERVICE POINT

Ba_lance Sheet
October 31 2002
Amount Amount Amount
Assets
n n n
Current assets:
Cash 95.000
1.76.000
Fixed assets :
Land 2.40.000
Building 4.00.000
L•ss Accumulate d depreciation 2.000 3.98,000 6.38.000
Total assets
8.1.4,000
Uibilities and owner's equity
Curren! liabilities:
Accounts payable 11 .000
Sal•ries payable 1.000 12.000
Long terrn liabilities :
Loan payable 4.00.000
Owner's equity 4.02.000
Toto I liabilities and owner's equity
8, 14,000
FINANCIAL STATEMENT
/LLUSTl!ATION T4
n..I1JUI<Ijusl<d trial balano:e of Auto service cenln! as of Don>mbor 31. 2002 i:; a.< lniiO'<S.
A l!rO SERVJCE CENTRE
Trial Balanct
December 31 2002
D ebit Crodll
Name o( acc.o unts
Tk. Tk.
Cosh 15.500
Prepaid insurance l AOO
Supplies 24.000
Equipment 28.000
Accumulated deprodatio~uipmenl 6.500
C•pital 37.000
Withdrawals 5.300
Servic:e revenue 52.900
~laries expenses 42.000
Rent expenses 10.200
Total 1.26.400 1,26.400
Adju$tments :
(a) Expiz<d i.nsurance Tk. SOO.
(b) Unused supplies invenooryTk. 5.100.
(c) Eslim.>leddeprodationo l oquipmen!Tk. 1.300.
(d) Salaries earn«! but nol paid Tk. 500.
Rtquirtd'
(I) Income statement lor the yeor ended De<ernber 31 . 2002.
(2) .Jlolonce sheet os on Don>mbcr 31 . 2002.
SOLUTION:
(1) AUTO SERVJCE CENTRE
Income Statcmtnt
For the yeuendtd D«tmbcr 31,2001

Tk. Tk. Tk.
Service S2, 'I()()
Las O]?erating t'!xpensC$ :
Insurance expenses 500
Supplies 2A .OOO
Lm Unused 5.100
15.900
Depreciation 1.300
Salaries expenses ~2.000 .
Add Due 500

42.500
R~nt expenses 10.200 73.700
406 "BASIC ACCOUNTING
(2) AUTO SERVICE CENTRE
B~lance Sh~tt
Dteembt'r 31 2002.
Au ets
Tk. Tk. Tk.
Currc1ll assets :
ca...h 15.500
Prop.tid insurance (1.400- 800)
600
Suppli<'s 5100 21.200
Fix\.'CJ :t."i5Cts :
Equlpmcn t 28.000
Lm Accumul•t oo d<pr~•tion- "!llipment (6.500 + 1.300) 7.800 20.200
Tol1l use~
41.400
Liabilities And owner's equity
Cmrcnt UabiJit:ies:
Sol.vi<S payable . 500
0.'1ncr's equity :
Capital
37.000
lldrl Net p rofit
9 .200
~6.200
Lm Withdrawo liS
5.300
40.900
Tot.1.l liabilitie.s ~.nd owner's equity
41,400
ILLU5TRII TION 7'5

Following is the.>djust<d trial balanreof Arnold Company .. on l:lea!mbcr 31. 2002 :
ARNOLD COMPAN Y
Trial Bah.n(t
Ot<emb~r 31, 2002
Title of a«ounts Otbit Cr<dlt

Tk. Tk.
Cash 81.500
ln•entory 01.01.02 1.70,450
Purchase 7.35.000
Ccnenl ex:pensts n.soo
Selling expens<S
91 .550
lnterest expenses 5.700 I
Oro wings
50.000
Accounts t«eiv•ble 13.100
Futed assets
2.50.000
S.Jes discount
8.600
$1\les return And allowt\nc.m
9.200
AccumuJatcd depreciatio n
30.000
Salaries pay•blc
3.100
A<oounts payable
~2.500
t..oan
1.00.000
Sales 9.98,000
Capital
3.00.000
Pun:hase discount
14.000
Toh•l
14.87.600 14,87.600
FIN ANCIA L STATEMENT
~07
\del• bona! d•lil : lrwentory •• on ~ber 31.2002 Tl<. 1,92.95
0
~ wrrt(l : ( I) Prepare income st~tcment for the ye.u
ended ~"'<~mbc r 31. 2002.
(2) 6ol.ncc s heet as o n that date.
SOLUT lON:
11) ARNOL D C OMPANY
lncomt S t• temcnt
Fo-r the: ytar en d ~ D« t1nbt r 31 2002
Name of accoun ts A m ount Amoun t Amoun t

Sales
Tl<. Tk. n.
9.98.00 0
U.S : S.les discount 6.600
S.1fcs retums & aUowanC'CS 9 .200 17.800
Net solos
U0.20 0
L«s Cost o r Sale :
Purcha se
7.35.00 0
Pwc.h.t:w d iscou.nt
{14.000 )
Net purd>ao o
7.21.00 0
Add 1nventOI)' (1/1)
1 .70.~50
Goods :.wailable for sole
8.91 .450
U.S Inventory (31/ 12)
1.92.95 0 6.98.500
G"""p rofit 2 .81.700
Operating ex-pen.~ :
GenerJ. I expenses
Sclling expenses
n .soo
91.550 1.64.05 0
Op~rating income
1.1 7.650
Less lntCre!it expenses
5.700
N tt itlcome
1.11.95 0
(2) ARNOLD COMPA NY
8 01l &Mt Shut
As on 0..t m b u 31 2002
Amount Amoun t
Tl<. Tk.
Assets
Curren t assets :
Cash 81.500
ln..,ento ry 1.92.950
A«<unl:$ receiva ble 13.100 2.87.55 0
F'u<<d aSS<!S
2,50,00 0
Less accu mulated d eprecia tion
30,000 2 .20 .000
Total Assets
5.07,55 0
liabilit ie-s And owner• s equity
C u rren! Uabillty :
S.U.UW. payabl<
3 .100
A«<Unts pay•ble
42.500 45,600
Lorm
owner' s tquity : 1.00.00 0
C>piLll :
Balance (1/1/02 ) 3.00.00 0
i\.dtl Profit during the period 1 .11.950
4 .11 .950 3.61.95 0
u.s drawiJlS$ 50.000
TolaJ Liabilit its and owner' s equity
5.07.55 0
408 BASIC ACCOU!'mNG
ILLUSTRATION 7"6
The un.\djusted tri.tl b•l•~ of Mottir Pool Parlour as of Do<ember 31. 2002 follows :
MONIR POOL PARLOUR
Unadjusted Tri,d B•1ance
December 31 2002
N~tmt o( ~ccounts Dtbll Credit
Tk. Tk.
Cil5h 11,000
Supplies 4.500
Equipment 1.50.000
Accumula.tOO deprrda tion~uipment 15.000
Une•nwd memb«ship (.., 2MOO
Notes payable 50.000
Monffs capital 58.250
Monir's withdraw.,L~
30.000
Fees received 90,000
Salaries expenses 38.000
IntcH."St expenses 3,750
Total 2,37,250 2,37,250
Addition•l da·b..:
(a) As of December 31. tmployce< have earned Tk. 800 but unpaid.
(b) The cost olsupplks on hand at Do<ember 31 is Tk. 1.800.
(c) ihe amount of unrecorded accrued interest at Dlumb<"r 31 is Tk. 1.250.
(d) An analysi~ of the uncam~ membership fees show" that Tk. \6,000 remains uncamed ac Dccen"tbc-r 31.
(e) In addition to the membership fees included in the revenue a«<Wlt balance. the company has earned
another Tk. 12,000 in fees that wUJ be coUected on January 211
(f) Depre<:ialion expense lor the ye.lr is Tk. 15,000.
Rtquired:
1. Ptep.u'C income stat(.'ment :md Jtatement of owner's. ~uity for the year ended Decernb<!r 31.
2. Prepare balan« shtoet as on that date.
sournoN :
(1) MONIR POOL PARLOUR
lnrome St.alem~nt
For the yur ended Dec~mber 31. %002.
' Amount Amount
Tk Tk
Fees earned :
Re<:oived during 1M period 90.000
Unearned fl!eS rtetived (24,000 - 16.000) 8.000
Fees eamtd but not r«eived u~ 1. 10.000
l..tss Operating expensn : ' ~
Salaries expenso (38.000 + 800) 38.800
Supplies expc""'-" (4.SOIJ- 1,800) 2,700
Interest cxpens.. (3,750 + 1,250) 5.000
Depreciation C"xpcAA'S ' ]~.!ll!Q 6 1,500
NetJncomt ' 1a.~2g
,..
!
RNA NCIA L STATEMENT

409
(2) MON lR FOOL PARLOUR
Bah.nce Shret
l i!i At 1t D«~mbt.r Jl, 2002
Amou nt Amount
Auet s Amou nt Amou nt
Tk. Tk. Li ~ bilities
Tk. Tk.
Curre nt assets :
Cune nt liobiliijes:
Cash 11 .000
1:: Acau od intere st 1.25()
Suppli<s 1.800 un.Am<'d r... 16.000
rees receivable 12.00 0 Ur>paUI ~L>nes
I· Equip ment 1.50.000
24.80 0 800
18050
Notes payob le
Accumulated depreciation 50.000
l'i JO.OOO 1, 20,000 Owne r's equity :
Capit al 58.250
I} Add Profit 48.500
Total 1.06.7 50
I:! ': Lns Withdrawals
JO.OOO 76.750
ToW Ass~b
~
TotAl Liiibilitie:s 1 .. . 11M
ILLUS TRAT ION 7"7 ..)?/

FoUowing batana-s are extr.1t ted from tfw ledger or
Nupur Comp.:.ny as at 30th june. 2002 :
TiUe of ACCOunts Tk. TiUt o£ a«ou nts Tk.
Capit al 2.80.0 00 Cash 30.000
Sales 3 ..70.00 0 lnvon tury (open ing) 14.00 0
puzm ...,ret ums 5,000 lnsura nce \ \ 3.600
Accounts p•yab lc 36.000 Olfice suppUes 2.800
Notes payab le (Due on O.C. 30,2002)
6.000 Rent \l"( 1.200
S.L>ries ~ "")
Purchases 3.20.0 00
6.400
Sales Returns 1.200 Drawings 1.800
Accowtts Rccelvl!ble
1.00.000 Advertisement
Fuml tuu 3.000
1.20.000 Delivery~
Olllce equip ment 7.000
82.00 0 Freigh t-in 4.000
The FoUowing adjust iN!nts are to be made on 30th
jWle. 2002
(o) Inven tory at closin gTk. 61.000.
(b) Unex pired insura~ Tk. 400.
I
(c) Accrued salori cs Tk. 1,600.
(d) Accrued rent Tl<. 1 ,600.
(e) Depredation is to be providtd on office equipment@
10% and on furniture@ 5%.
(I) Offic• suppl i'" in hand Tk. 800.
'
(g) The i.nvencory at the end includes goods worth
Tk. 1.500 ror whlch bills has neither been recclv(
accounted lor. .od nor
{h) Nupur took goods costing n . 2.50 for perSOnal
U!K" and no rocord or it was maint"ined
account$. in the books or
Rtquirrd :
1. An Income statement in multiple s tep form.
2. A bolonce sh""t
Bnsic Accomttittg- 52
•
410 BASIC ACCOUI'rrlNG

SOI.Il1JON:
1. NUPUR COMPANY
Income Statement
for the yur l!nded 30th June- 2002.

Tk. Tk. Tk.
1. Revenue :
Sales 3.70.000
U.S S.lcs Returns 1.200
Net Soles 3.68,800
Ltss Coot of goods sold :
Opening lnvtntory 14.000
Add C05t of goods purc:hosed :
Purcb..., 3.20.000
Unbillcd purchiiSe 1.500
3.21,500
L..tss Putchue returns 5,000
Net purchu< 3.16.500
Add F"'ight·ln 4,000 3.20,500
3.34.500
L:ss Goods with drawn for perSOnal u~ 250
Goods ovoU•ble for sale ' 3.34.250
U.S Ending Inventory . 61.000
Cost of goods sold 2.73.250
c,.. proflt 95.550
Ltss Op<T•ting Expenses:
S.lorics (Tk. 6,400 + Tk. 1.600) 8.000
lnsurnnce (Tk. 3,600- Tk. 400) 3.200
Rent (Tk. 1.200 + Tk. 1,600) 2.800
Advertisement 3,000
O.Uvory Expense 7.000
Oepreciotion :
Offico equipment 8,200
Furnitu~ 6.000 14.200
Offi"' Supplies (Tk. 2.800 - Tk. 800) 2,000
Total operatlng expenses 40,200
N et Income
55.350
2. NlJRPUR COMPANY
Bal•ncc Shret a5 a.t 30th june 2002
Tk. Tk. Tk.
Asut.s
Curr~n t ustts :
c..h 30.000
Accounts Rf<el\'lble
1.00.000
Offiw supplies ill hand
800
Un~xpired lnsurancoe 400
Ending Inventory 61 .000 1.92.200
Fixed Assets :
Fumitu.re \,20,000 •
Ltss Ac:cumW.tl!d Depreciation
Office eqwpnwnt
6.!1!!!! 1.14.000
82,000
Ltss Acrumulatl!d O.pretiation 8200 73.800 1.87.800
TotAl assets 3,80,000
Liabilities and o wn.er' s tquity
Curnnt liabilities :
Accounts payable fll<. 36.000 + Tk. 1.500 Un.Oill<cl putcllase) 37.500
Nares payablt 6.000
Salaries payable
1.600
Rent payable
Owner's equJty : l .li!l!l 46.700
Capital
Add Net Profit 2.80.000
~s ~~2
3.35.350
Ltss Withclraw•ls (1 ,800 ~ 250) 2,050 3.33.300
TotaJ liabiUtid and owner's equity
3.80.000
ILLUSTRAT ION 7'8
Ihelollowin g balanceoarc tak<n &om the books of o<rounll oiSurma Lld. on30lh)une . 2004 :
SURMA LTD.
8Aianot Shttl Aut 30th )unt, 2004
N.unt: of .c:counts Debit Credit.
Tk. Tk.
A«<unts Receivable 29.000
Purchases 81 .000
Allowo~nce foz Doubtful Accounts
16.000
-
lnventories
6.000
FUJ'T\iture _ '"]0,000
Accumulated Depredatlon- Fumitutc
4.000
Builclin~.
- 1.40.000
Acromulate d O.pn.'Ciatio n-Builclings
Cash 30.000
2.000
Bad debts• -
Salaries and Allowan«S
-- . -ti.OOO
20.000
r~·&~
4.000
Rent, Rates ond Tax..
' 6.0QO
Sales1ncn's Sollaries. - 2.000
FreJ!ht In 7.000
Oi •dend 15.000
Sil<s . 2.00.000
lntt:rest income
Bonds r•yable . 1.000
10.000
Capita 60,000 .
Rclllin«i Earning,;. Juno 30, 2003
7.000
Tot&!
31281222: la'l8a!!2
-
Adjustments on June 30. 2()().1 .m .-.quire<! .. follows :
(i) 1m•enlory on hand is n. 10.000.
(ii) (kpr<'ciation on fumitu~ is to be 10% a year.
(lii) Buildings are depreciated@ 5% per year.
(iv) The allowance rordoubtlul accounts is to·bt> l.ncn•asl'Cl to a b•lanceofTk. 19,000.
(v) Accrued salaries Tk. 2.000.
(vi) Accru ed inte.rcst o n bond5 Tk. 1.000.
(vii) Accrued selling cxpcnsl.'5 Tk. 1.500.
(viii) Income taxes are estirruucd to b~ SQ't., of the Lncome before income taxes.
Rt'lu{,d :
1' 2.1. Prepare a multip"' step ln<ome Slatement.
Prepare a BalaJ>tt 51\eel
SOLUTION:
1. SURMA LTD.
lncomt Stat(ment
For the year en ded Junt 30, 2.004
Amoun t Amount Amount

Tk. Tk. Tk.
Saks 2.00.000
Cost of goods sold :
Merchan<fue Inventory openins 6.000
PUTchase 81.000
Add Frcight·in .2:QQ9_ 88.000
Cost of goods available lor sole 94.000
Uss Ending inventory 10.000
Cost of goods sold 84.000
Cross profit 1.16.000
Operating expenses :
Selling""~""""$:
Bad debt txpenSe (Tk. 6.000+ 19.000 -16.000) 9.000
Selllng txpenSe 1.500
S.lesman salaries 2.000 U.500
General and <adminis trative :
Rent, Rates and Tax 6.000
S.1laries & Allowance (TI<. 20.000 + 2.000) 22,000
Depreciation expen.se-furnltu.rc 1,000
D<>prodo lion expens<'-build ing 7.000 36.000
Total operoting expense . 8.500
Operating income 67,500
lnte~l income 1.000
68.500
lntorost OXJ>Cf15<' (Tk. 4.000 + 1,000) 5.000
N~t inCOil\1! be:fore tax 63.500
Lt:ss Tax 50% 31.750
Net income after l:uc 31.750
FINANCIAL STATJlMENT 413
SURMA LTD.
Retained Ea.ming.s SU.tttntnt
lor the ynrended june30, 2004
Amount
Tk.
Balonce 01 I 07I 2003 7.000
Add Profit alttr lax during the p<rlod 31.750
38.750
l.m Dividend p.Ud 15.000
Balance 30 I 06 I 2001 23.750
SURMA LTD.
BAlance Sheet
Asonjune30 200~
Asuts Tic. Tic. Tic.

Cwrenta~t:
Cash 2.000
Account receivable 29.000
LGu Allowance for doubtful Ac;count 19.000 10.000
Ending Inventory 10.000
Total current assets 22.000
f.lxod A•sets :
Furniture 10.000
'-'" Accumul•tod dep.- Furnituro (4.000 + 1.000) 5.000 5.000
Buildjngs J.W,OOO
1.m A«utftulated dep.-Build.ing (30.000 + 7.000) 37.000 1.03.000
l.OS.OOO
Total a.ssrts 1.30.000
Liabilities and owner' a equity

Current liabilities :
541orics payable 2.000
lntcrctU Payable 1.000
Selting rxpenses payable 1.500
Toxpoyable 31.750
l.mlg torm liabilities:
36.250
Bonds poyable 10.000
Owner's oquity :
Capit•l 60.000
Retained earnings . 23.750
Total Liabilities and owner's equity 1130.000
414
lLUIST.ItATION 1"9
1lu: (k(rtnb« 3 1, 2001, ~tl'ld uf U.e :.nnu;,l•~vuntins JXflod b'loJ b:t bnce of tlw tedpr at MJ11mud
~.
Jr,tAJfMUO STORE
.
Soorw IIR' as
T.Ca l kll111n
-
N1111t of AuvuniJ
c..h
A.c'fW~· mm-.wc 1.(16.,0110
Mf'tt~ndlst ln'' t'tlttny 3.UO.OOO
l'ut'(:h.a~
•J.1.11).00U
J)r~pakt Ww.a.nn-
lS.OOO
Sto~~t f'CIWJ!®:ftl Ut.DOO
"'"'-"'t(d ~~ !Aott ~ 1.11.000
A~VIWI.t. ~y,a,blr
1,9(1,CltiO
M11hmud. Caph~tl ?.00.(1111)
Mnkmud, Or.t..,lnW' 2.21.J,UUI>
s."" ii.JO.CXI&
~t\'tllmf...cl .....~
I,SO,.ooct
Sale. diac'cll.anl n.wo
P••r<'Ntli f1:JU"1 •1\11 t llnwlln~-o 1.00,(1110
l'mth,un d iiWO\utl
flflll~l'lt>ll\ t,U.OOO ~·"""
Frt~to<>ut-
Ach~f'qlmM'l
- - --
Rrnl~n~~ 2.0UOO
5AIIIrk1i o:'llpc:1Utll 3,9S,tl00
C.twr~l "'"P'ltuel' 1.".000
Val t\lfffnC ii(((Jwd
TOO>!
Addlllcl,ulln(omu.tloft :
(A) Mttdumdh e ln\'l!nmt"y ~n h4Jid at Orctrl\bfif :n,
is T"- :1 ,9~.000
(b) )•ht1th.al'dlse bIn b•rvlt • I ()re.:tocnln:r l\, tOIICinj; Tk. S,OOO, whi<i'l wu shlpp.d
by .1 •upp~' Wld,c.r the
"'"""' f.O.a d\ippitw Jdat oU~G ~ .. ~but not lndudcd m m.s~nc ~ ·~·
(d IM•r~ecpi..~durtln$tlw period U.l\; 20JIOO
(d ) Sollrb "<'Cf11ed but nQI JW'fd l't.lO,OOO
(d Ul:pr«i.t.lion ~NnW. 11 ~ clt.trf;M dm1J111 tlw pcri!ld "''"' 'fk, IIO,OOO
(f) Cf1Wr11l t'.XpcNC:II ind•Nit'fk. IS.OCO for \llllltiw, ~ h: tobt tR• I~ u sdUI'IJ
._......,, t')Cpt~.
1. . Multiple su-p ifi('OII'It .UII':nml.

2. 0wMf 5 ~ty sttk'I'I'IC'II1.
3. 8;,l11n00 ~beef.
FlNANCIA~ STATa.IENT 415
f()l UTJON :
(1) MAH...\IUD STOll£
·~~;lt
t'n4td
." """
Amou.nt
. n. n. Tk
I( I) Sdtt.~:
'""'
"" SalMi tr.lun' lind •llow.11n m
Sall.'11 diMnunl ··~::
48.30.00 0
2,22.000
I( 1)
Nt1.S.In
CD~ of Coeds sold :
..........
lm'Ml0 '11t ISl J•nt~o~ry
3.<10.0011
Pt•r<tu•l e
33. 11>.000
Fti!l&l'lt•ln I.'U.UIXJ
31.32.000
Uu Pwdloe m.."' Mid -~
l'tml\l.<(' DIM'Ount L~:: l .li4.001}
3',65.1100
lt..e.) lnvf'ntoey •13ht Otccmb.rt (.'J.CJSlA1 • ,,000)
-4,00.UOU
c:... .~ .........
J l~
CMIIL' PrOf'!!
14.40.000
(~) 01~1:t111in~ 1111rmM'1- I
~~~~"IS 111~ follalribmltm 1
Fr•~ht>UuC
MvfliiWc "·"""
(4)
UdbDMMI~
lt.duW\I•It.atlvc.llf\d p.~twt•l"J(pill'l.~ I
·~:::: 1.4$.000
I!Attll f ll p.t111o
2.00,001)
s..t.Mn:~
l.'K.OOO
(.) ACttul'd Writl JI.OOO 4. .0S.ooo
1-l
C'ot"l'llll ll lpcTIIod
Ulili!W fll'pM~
r.s.ooa
15.000 l .$0.000
bllr.Jn t• ••
o..w-..."'1""" '
,..!'lift ,....,.
~
...cxo
Tt>l;11 npt'f"li"& f'Xpi'ltit'll'
Net Jnco!M
MAHM UOS'IO kf
Own.rr' s E1111111 Sta.tnt• AI
.
for tbt yur mdtd 31~1 ()ecll'tt'lb n 2001
Tl<. n. '
).W.w. i, apib.l
9JXl,(111D
A44 Nt11Mo mt foe the yen
l ..O.ooo
1l.4G.noo
~f }.-t.lunm.l. 0 Qwln3J:
2.10.000
Owner'• «!.~~!
IO.lii.OUD
- --
4!6 BASIC ACCO\]NTJNG
:)1AHMt10 STOR!
B.tl,jl.fU. ShHI
As "t31llt Ocumftt 1G01
'""'
_....,.....
~krd\.tlldiM' hl\'('11~
r/
P«"r•id 1N~o~rtf!Ce
(-} llu.u.tnl'e ~j)ftlj4!
TOU+I <'l.lfrt'l'ol ••t\
.Fh.t'd~ :
SW,.\'~uJpmtt~l
()'It' 1\«umu~tnl Dc-p. (1.70,1100 • 80.0001
TCittl Antll
l.l.tbiUUu a11d own••' • t q ul ty
(un~l'll ll.tblll tl~'tl t
Al"\V.Uttt .,..t11bW
s,,l.u'"-rllyoiblu
V" 'ltm,.\t .ti!OOUIU
1"oMt tm,..l\tll\bllltll'!l
M1tlmu.l' t C•pUotol
l'Olal tl.tbiUtiu .tl'ld &IIN!tt' • '"lllh}'
ILUIS'J'ItAnoN 7 'lt
AI llw md cd dw ~ J"(riod of~ ~u.J Sluorf!l- )I ~t l(I(J'J. lhf loOowln&
llppt'"Jft'd D ,... ol tli trW"'~
e«<P.
DIANA DEPARTML"''TAL STOilU
Tri.t ll•llnff
~.... ...-..
..-;
At 11 Ot<t.,.b" Jl, 100L
Ml_.
,,.
UII04j.W
""1-
A«OUitllfo ~flllolt
"'·
7fi,JOO
,~
7!1.,00 tnkmtrt)"'''" - "'

J,noo
Accuwm mt'l••ol11ot '10,)00 !iD.:tno 1111/'IU;I f'C\'e!IUC 4.,0011 .a,ooo
Att~~tnul<liN J~t<l•rion-1•1,11}.11nc 11.100 52.500 Mtrtlmmllw "''"''"-'?' 75,1)(111 1$,000
Atcurnullll"~"'""'ll•~-r.;t+~lt-•• 1'),(11)(1 42,\1110 M<lltfl• llc t'J.)'~blc liii,OOII 110,1100
I'M I.IIn!J t.91i.IXIO 1.9<1.00. <Wil~ 'Alul.., "'I~•~~ ~1.0{10 ) 1.000
l;l,IIO'J 1,~00
--
l'ftl)IJo.IIAWI~
"""'
l'lh"'"~t:•f!IWI
J\.nQil
l 116 ,W II l.10.60t r orpe11y 1.\U~pt!!~M
'Moilll
i .fOO
Coal of r;vW,,..,\ 1 ~ . l l ,7llll ~ . U,70t l"ffli'""'Y I.:.K t»yalllt ..&,100
llo:f!M:I.lllen ~pen.-O~till; - JO.~OO 5~ Mlllri" 76.000 70.000
'Dq!milltlvn "....,...-r.lult"''~'lll - 1:qoD
~·""'
6,!1J ,DIID 6,111,0011
flLIIU.. t)r~W--11 1 11.000 u.ooo ~ QCI!IIIIImilll\ I 1.000 IS.SOO
.............
~-~"'~
I,IG,Illltl
-
1,111.000
I'..tOO
~t'll~p.lyJbiC
~ murn .,.;&.t.Dow~
-
•.ooo .....
4.!00
~tt:OI."'I''IIe 1000 11.000 VIIIIMeorm- ti ,OUO n.-

AAlJytb '""*fw ~add;tim;,I cbQ:
L n.rMWt ~PfMH lftl1 •lil&s ~ ""''"'MilAsand 410'!1.wkllri&cnci\.._
1. T1t.10..«JJ)ola.anppp;apbk~du:bp=.ymmtnnt)'Ql.
l.
........
~tloftondw ~ud~ tu~ att ~•ll"f': ~boo dw~pentat
~.
...,.....,
FINANCIAL STATEMENT 41.7
(I) Pll"JMrt ).1iiJtipHt~p inmfl'llf' !it.llf'Met'll. uwnct'J: rqllity~tafe:ne-nt ~nd 1 $,~1.ftf.d b1krla- ~<brfot
(2) l~ltna.hst thl! .dlu.-ri"$ rntrl~ tbilt "'eno made"
SOI.U'I'ION:
"' .DIANA D£PAR'fM€N'rAL STORES

ln(llft\t StatcmH~ I
fottlu:y«u"""'~ :lbt'DH~r280'Z
Ill NdS•Id ;
S.l"
·--· ·-· .........
r~ n. l~
6.211.<100
!=i.alr!i r~um Mld o~:l.kmll liA:t:l li,21),1)(11l
Ill Ct~•l u f &OO<b .old I '·""' _!. 12.100
C"--VNi* 21.7.300
'I ~11"'1 ~·~.M't !
Drprf'dotrion "' f'qulpl'l\('l\1 1),)00
II'OIIIIIIWt' ~~~· (7.100 IC 1<1"'1 •U2U •
!j,1l~ ~l:ti'M'tl 1(.,0(16
UcUI!k" ullpm'lt:l (II .OIIOw MY~) &,6(1(1
& In ~o'Ofl\lnlMIAll\
-
t\,:\!;51
f$11N11lltwo.pnw:oa I, IS.72tl
Ill AdMJ!'btntJ~ It &tMr.t .,,.f\tof't I
.,.,............
Vlihlif!J(II,f!MI( 4CI'l')
..... ICUM
•UClO
J1u1~f111"11» O:),l>Cf\"-'11 (7,lil'llh ol0')(.)
2.&!111
OfA(t 1\1\l,lrlc!l \')I;P~•uw ~).1)01\
rrl'lj'lllrl)'l.lli
~
To~,~ol~ll t'.II'JS"''~ \.1.·'110 _1..7\>,200
Opdacirltllnc oav )1,100
. . .~.tilt$ Int-. («p.J
~Yli'll'ltf't~
h•iu~c "xp.
ftf"''MW ......
(11,0001 (7.000!
N~t lncom~
loii.J!IIt
DlANA UU AJt'ntiNTAL Sl:Oil.E

~r•a fqYiit'J' SbitaD.mt
few dlt ) C.U aMid Dft-«~~kf 31, 2eo:2
Diana. Upilod 1,76.60!1

t1ld Nql llto.:CoUnt 3tUOO l ,tx,,7f!D
ln$ 0r~wi~
~I)
o....·rla·~«~uitr 1.7A,1lJ{I
&ulc .Act'4rmling- 5J
Ot.-.NA DlPARTMi.NTAL STO"t
-
B.rl~n Shm
.
. ......
A:J ;at )bt ~uam- 1902
.....
".....
n.
,.. ........
n.
c..,...._,.
C•"' n.ero
ActOI.Inb ltt'ftivab~ ,.,)00
I'Itp.tlid lllfl.lfltl\('('
Mt·rduro.dbe Jnn ntory
TuiAit<tutniiQokli
"'"'
"·""' 1.5U.700
Flxl.'\1 ~~~·· I 1,9(1,('11'10
tlt,lltclll\,8
Ltfl ACl'IUYI\Ilatt'li <1.-)Hecl.llkln I -l!,l!l!!
I,37,SnD
lkautpmt nt l ,ICI.liiXI
J.I'U Atct1mulatcd dupn:dolltit)n 4).111'111 (o?, IIIO 2,04,6(11)
Tot•l An•h u:s.~o .
l.l•bUIUtt ll'ld ow•t•t'~ "'tully
c~11m'lt u..t~nltl'" ,
W.ur11W(.W P"Y""" 20,00il
Ml'OIItl., ,...,...,....
11\k-tnt ,.,..~..
!'Wirffty "'" ,.,..lc
.....
,.~.:100
<.800
S.lir't~pa,.-.W.. ~
1oUI ( llflf'H ~!~Mt 1.16..141
,..,.'""'~
. ......" 1"1- ~roo--
""""'' ..,...,.
......
1.1&.7110
T•t•lll•lllllldt:t 111'141 ,.._'ntl"'t .,q,11ity l.SS,l410
111
'lL
II) ~r«'l11~(•1'1111ipct1lil._ i Uuildlnt;)
A..:t:tll lllll.l«< ,1~1\'l!iA.I iOn (llull..i!l'!~)
"
IQ,.I(II'I
l l),fi)'J
II) f.IC'j)l crl~ 1Wlt'l cr,;prnli¢!.-(cquipi'Rff!t) 1~,XIO
A~\~\IUIII.IIIIttl df[!t~illltol'l (!:!)tll(!tf~J.>J'II) U,JO~
(;) h'l~uliUifll fll(Jirn~ ?,2(11)
('R'J)Aiol ll'lloiUIIIl~lii 7,200
'i4i bllfl't'l't f'lll'rnM"'C
lnc.trnt?t.tbtc
ti.OOO
8,001)
lSI t-'U)J.""Ilf lilY~~~:-.;,!. uoo
uoo
,., ......ny ""
5odn roo\lniMIOA
S.... eocr..rit!licn P'1~
..
- <.SOO
'.3<9
... _,(...
u.LUS'TRA.no.V 7TI
AI'«HY HHith~lll Ud..~it:Sboc:)(ticl ~~(lft 3().16.10(0. Fd~ ~... dw- ~bftno ~ f=n
_.,...,..
FNANCI.AL STAiEMENT 419
ANlOn tiEAJ.TH COMPLEX LTI).
'
Trbllblua<'f
At ol ,.. ». 210,}
•
N'rnt t~f AtCOWI~ D~il C~t
C~h Onl" n« l.lO.OGO
Accuunbl Recl'i\·,•blt - 3.36.000
tn.-dM y 01 Juty. X(Q
3.2.f.JXIil
-.s.p..... 8.000
OffiC'II $upplles • l.'lO()
Prepaid 11\.,Uf.lll<t
Sklcn fq~•lplnl'nt
A«......taJ IJrrr,!n"NtiOl\ ~ tq·~
.,,.,.
/ 12.500
2UOO
1..-nd 1,16,001)
Ollitct liq 1•lpm('flt
26.0111)
A(\\lliiUIIII~-d Oo::rlrti.!IIOf\ (Oiitd llq~•l pnwnU
~ ,., .,.
8.0W
• •• .1101
J.km~t.~P' Nok'& P.ty.-bko td . -:oo7)
3.00.VIXI
<:'11pltlll 2.M.(IIXI
s,,.,.
~ChMwnt ,...,. 12.3<1,000
s........ ..
I'Yf<:halll"
......
6....2.4011
P• ~tl:tum• lt11111tl\
J'I.OOO
P1.1rc:hawr t>l'«11111l
I).IIIXI
-~
OtottWf'l (\J"MM 'f
I.Zl.oo.t
...CIC)C)
• Jtt•nt l!•~
,....ouo
Fr~lsht·J"
Ofli(f'S..IMW
~r---~
......
111,(1111)
7.>0>
MJ~ C.::tr.c:r.l !!lo:pmM't
••1100
(.nln (lfl cl if~l uJ luMIIII
3.600
bUilmll C::ll)l~lt
T...t "·""" ,._.,__

,...,__
AdJv~lm•nt e~n June 30 ••• » fc.llowt • .
(11) Th~ ltwt~ntCif)' e~n lu.nd lk;, 2.,$),61),).
(b) SupplirH •l ll11nd t Olfituu ppliiti n.. J.lCO
(<) lrbva!O I' n;piin'd d~ """'Sctw:uo!>""
,,.:.. ,.,_ '·""
A!l~;.b)IIIO ~o:prlliK'f Tk. •.A~
All~~ tD SM'I~'rill•xpw~~l!tl 1\:. I.)(lil.
(d) P,q•ll(ll'llklllf M~ deprt'C!.ahNI IIt the r.ttcar Ulot;. ft7 11nnum
(d Acaw:d WU ul.ltli:S tL 2..300.
Ul A('('RIIfo6 oiliklr Mllrit$ n. 1,050.
(&) Atu'Oe'!d. ~ OA lhc-lnO!tp&" ftOlt!> p.y1btt- 1\:.., ZdUO.
(h) 1nt"<<II'M ~It ~ n'l:itNtr d 111 Sl"'- of the i.n('(lll'lt:.
PNpart U""'CM STII.tl!rnffll tn multiple &lq) Wrm &:! 1hf )'f At l'l!ded 01\ 30. 06. 21.'03.
B.J.kif'lt'C' Shftt IS at 30. 06. 2(0)..
420 BASlC ACCOUNTING
SOLUTJON: •
•• ANKH\' 1-f€,\l,t'J.l COMJ!LEX tTl).
J.nco~m Statement
fOI Ihit ptriod t.ndtd 30,06 2003
n. 11<. Tk. Tk
(a) Soles•eo.·enu(l .. . 12-JI),(X)O
(- ) S:.k !l db~'UW\t 27.000
ooJes.,etum ·1&.aoo <13.SOO
Nei~lt;t; II .66.100
(-) Ci~t of goodlr;wh.l:
'
Op~n~ t"''I!(I~QIY 3.2-I.C(ll)
( •1) P nrrh.:.<(' 6.92.400
t
(+) Fwi..hl·ill
{-) PvrTh;~r.c d ltcr>nnl 15,1100

- HI.OOO
7.1 U.ol00
rurcb11~ return
f':d vurthll&t' --
J?.UOO -l!·.~!&
~:l5.t>UU
Cooi.IJI<I.\'I'Il~l,lt> II$MloO
(- )Ciueilnj\llt«k
~lui """'"'l;!l(lo\J
I ~s,·~·d1lR(s
?.'ll),f,fli)
k~·~
1.1t>&!!Q
CIOHI I'mflt ...00.2110
Opc:r~tl•\8 u!)t:ntu 1
Stlll n~ rx~I\\CII !
S...lw w.lllll\'t' 1.2),U()U .
{ 1) 1\ccn•rd l.l!!!l 1.~5.~00
OI:Uv~:t_y\'.li~l\l~ )4,1.$(J
~6tf Joll~l AAf/'1"1\.'ll! (Q II'II}{II.('O:I - .1,~) ,,50<\
~r«iflt \)1\ llllf'o;Jiit\'J M\lh' II\I\ 1I)I IIW111l
IM\Irlll'lrc! C''lpt:l'l!lll ~-""'
.WM!l
TQW ~!tiS \·~I'"''~F 1.76,15(1
OW«> l,.t Mn1fnl ~tr.uh•n ltllp<'fl~
O(r\rc!Ub rif!ll 6!1,0110
("') AOCJ'utd ) 10!iU f>'l:oso
I Rtw ~rr.n«'t l -1.0011
Offlet: t-Jipt:n:.e 7,5011
Q{(jCi' !IIIPJ'IIfll f)(ptMe (l.')(l(l- 1.100} 1.800
ln,;ur.:anrc C:)(pt:Mc (ollie;()} 1,:\00
Ocpn:ciali~•\ cxpe~tje (ul(b:.: cquipm.:nt)
J-60Ct>llA~If; C:\'ll('UI I'll'flM~
Tabl<~pt:n~.lil\s ~·
.."'"'... ~)~
1..89.200
1,7l,f!OO
b«.'('uJ\t> fn:un <lp.-t.Hlon
Nan'<~pcr.lling expense:~ :
ltllt>(~ ~~~~5P J!l.OOO '
('t -l Acaucd 2..100 17.100 17,400
f-) Neon-opt>ri!.li.f\& lJ,OOOt.<:
(..:ain fmm d.i~l at :.~<;r,l5 3,600
Net non-upcr.Jting duut;t!! -- - -----~ - - ·- - - r-- - .......--JJ SOl)
- =~
N.:t lnOOf'n\' 1.57.WU
.lm r~mebx (!ii ~X
Nit incom e'.alln IA.I
1.57,20!1)
I
I
1ll;~ ·
Z8_,_60_U
l\ ·;
~ ANXIfl' llfALnl COMl"LEX Lm.

IWAN~t SliM
M •t )Q. .._ lOClJ
.
Aut-1!
. Amt~UI'II
n.
Am01otnl !\mouru
Tk.
Cwmt At$1ts:
C&'Jtl ol lumk
"'
1.20.001)
AI.'\\1\UII r~:wlvnblc.• 12,500 - U!iU- l.JOOt l ~"'(.,l)(ll)
M'tld\#lmli)'" Jnventury :z•.s:uoo
""''~"{J '"''""''"' - / '·~
OUkv> $<\!flitII~ l.U:O
Sawc '"1'1'1'" _ !!CO
To~l nlm'IIII.-..<Htf 7.11MO
.......1 , h.~ fMC'b :
Stfl,j\' t')UiJ"fl''~lt 8$.000

Arcum111.-W'd drpf\"CI11IIvn IU.SI'If) • MOO! )1,0011 !J;t,IJO(I
Office t'llulpment 2~.1!00
A«tunul11t\'IS dupfrtbtlt~n (~.oou • U IIO) ' !!li~ 1!1.~0(1
l.•nl'l
.IJ.IJIIIO
TUI;1) pl.IIU ;l~llf'lll
,.11 ..1 ....... ··~
~.06,,50
Ll<~~~lllliu • Owr~•t'• fct11lty

(.wM!It~
~-M"--
A('m.-1'1~ ~
1,11,001)
om.. l,:IM
S.b _ 1.1)5(1 :u'in
AWU\'Ii ll\l ~rntt 2,1100
l nt'OII\11 til)( ~)'~b~ _l!,t!OO_
Tmnl" •frtnt llilbllltl<'i> '
1.(.~.)S(l
t.o·~·kfln u~Miltlri:
M""~"IO' p.~yill'll<i' 3,0(1.00)
o,..,.,·.nau&y ! '·"'.J5(1
C'l"ul
s~~{a!wt.t~)
........
,._
r~~·s"'ffltr
T.ulll•.,llltln *- ......._t:r"• equity - -
) ,0 .6011
,,OU5CI
) 422 BASIC ACC0UN'I'1NG
IWISTRATIO N 1'U
flnuy Trolllkn~ • ._1.anb.ll. ZO::U
n.c-fot~~t-o.lndt<dfn:.d'IC'boobolC'1iloon
Nam.e of AttiMin b
1\.
2..23.8(11)
Clw..,•dh\try'll c11pllal
OIC!wdhwt~ d.r•.,.•lllp
1'\tnl.u .:l ~t.cH..:rT/
......
IJ,2()0
.....,..
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1\uo;hilsr
t.to.oon
I, ICII)
ltwoh•~ outwar d•
s.~ Sdwf,r. t - -- ll.lllO
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1,4 2002 44.0011
l\fll.l~un
- - 29.261>
......
C'•W\ 111. l!n_\:
lnvrn~rin 1. 4, 21X12
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ll.lClO
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-- -- -- --. -- - -- -r I.>tO
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bw~torW. en !.Latch 31, 2003.,...," nfllled u n. 72.~

1$.•00h ut h Wll3 J~nt R-Cor..t..'\lln ti'!e bllCt~ o~t\d nn
1. A new 1nac:hin1!" WAt> lnMt.alk!d ""' Oc•obfor 1, wt)1((1f,otinr TL:.
lo o((~ubry l t'OOI.II'It, ·- -.-
~ymMI w._r. 11-Ude fur IL W~g"' Til.. l .lOO p.,ld f&r ttw ~m:UOI\ Mv"' brin drbhcd
....
~ .alld f~ ptvpa ty"r ""-

) ~W Pbna •1'111 fv~by 2IJ"'o. Fur~ b1
ol, .
l.ncl!M: tool~! "''t:re \'lllu ti;l .111Tk. 1,76iJ 0(1 ) 1.:'1.100)
.
~ Mlli l'llili ft .. prt!YtiiOn of 5'!'. Sundry Odlllrlts b dot.lb+lfal dtbb.
lblfuirt rl;
L t.nconw: .&~~tl:'aWfLI for 1M )"'tier ~ Mudll 1, :om
2. &.lloln(lllhltll' .11$ lit ltut d.l\1?,

. /
I
FlN AN CIA t SfAT!;MENT
SOLUTION t 42:
L
OfOWJ)HtJ""RY lltADER.S
Jn C'Om.t St<~.loemfld
r., tt~r yu• "'''-"Mud! .n. 2001
.....
L<;t.t CU!It nr ~ ~ld :
~ JJwmtory
rurd~.UC"
.
.
Amou11t
n.
AmoloUII
l\.
...._,
.....
:18.50U
- "'·
2-Jt .U.O
L=A ftum > 1.10.000

f l'l!l,i:ht·l"
)~ .J\·Mbblrforw
ti'N Endfn~ trwrt\lvcy
tco
!-Jfl!l
..
1.(11~.'1011
,,,,:...,
1(10
,~ ,'NIQ
Zl-'9! _!1.1'!!!
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SdU "'O f"'N d:
511"'-mrn uun~
l,4{o,? tl)
.... .,••• (0\t<l • 6"1 13,2(11,1

/ l.llO
,\IM .-M tft fof "'""' dril h :
N!'\'1 nll"\"!lnl'C'.' ~'- (29,2r.O -61 .'0
li.H OW~...._.. 1.<00
}trl~hl•(llll .....JII!1 5l0
(',,...wr~ lfiCi -.bni•b.W,.tiw n _'! , 100 ltl-110
~:
Olllr n """'" ""' 31.1011
i.-u fe«ti~:~I'IOI INthltwry
<;au nd f1M4 ....!.!!!! ).&,1(!0
OU!.:v tl'pt'flk~
l'uo.'-'Af ..IIJ Ttffst,._..
1.,.. ,~
..,.
2,9)1)
l.)jfi N. llhll
1'u•otluwd~~
'·"".
.....
1.?60
DcJ'Iri''C\-U"" : I .JlO
...,..
111-tl l•nd n'lu.:hlnllty •
1u.tWintre ltt5 0
On hi"CI\nllt ~ru~ny 5!10
On l(lM f !lUI) (tl0 >-1761)) ),:)(10
Opu•tiftt r=afit ~ ~! RU JO
ln!Ni~l inM~ - ~
57,..1\30
AJ,jdU~t 1,)0 0
S tt ln(w n•
Wo rtfn p 1
>.300
-- 4,·100
i l,tlO
11) I..Npri'Cio~lion an ~Lidll~ry:

()ft4 9,@ ctll no b CN\c')'l':lf
.• ,..,.
)9,1100
~ (15,4()(1 • l.IOO)O 2~· ftK
~1/ ye.-r
- #~\
Tot»l drp. ti,4SO
11) In lcfU :l u.c .- ~
ht IJft l n.u~ to ou uea rt- 10 % x
ll'ltff'ett riC~ti.-cd
+&,0110 • ~...
lntr re:st du r
•
--LIID
>.300
•
•
424 8AS!C J\CCOliN!lNC
Oi0WOHURY TtlADtA S
!l.tbn( t Sbm n •I M.llrdat 31, 20QS
Anwun t
,.
Amount Am Mint
Tk.
AtltOUtll
n.
"·
Aucb
Cur:h!nt ~rh ~ 1.""'
Cuh In h.1nd 2'1,260 •
C'6!!!.111 Bank
At:tounts ff('C1Y.Mrk
i , : &d. d"b"''"'~ orr
...
l."Xl ~
2.'1.1<0
27.11'0
AUnw.ln~ ftor \Md dct!t
3.200
bwrstmcnt inlNrllt ~i'<'•hlc
n .... 1,)4,'/iV
lA~
\ 14'111n ttl ,_tt. A1tlrttf

"""'
I l' lnut 11~1• 1
l'lu~l ,t_nd INChilll' l')' Brgi~ 1~o~ l.t~
......
......
N.t: Nn<r W~~tAollbllon(IJ.tro • 1.100)
1. 15.500
Tnt.,l t•t.tnl .-nd tl\oK_ht.wry . 1M .~
flu At\'\ln\.,l• t~'tl Dllpr<'t'l.alil1.. ~!f--~1
'•wtdd '""""" '

.......
2.:100 U.700
l..aW A«un,lll:. t~'\1 O.>j\f« I.Hk•n
\ 1-umlturt- 5.SOO
<.YlO
tn.. ~~
"" - t.aq_ 1,4.1,460
~
I
"""""""
Ttit• l •ui!t•
l ,U •• lb
U •lloifiUH .a..td ewwtwf'• frCt'lkJ

C:u"rnt 611biLtift.t
4Q,SOtl
A~nb pa)'lll\le
P•)·•bk M fNI"ttin ay
IS,.tOO
.
"·""'
Owrwr'seq~•iry :
2.2&.1!00
c~pua.l
61.!00
AU Nc-c in.Doenr
2.'11J.7l0
tMOO 2.77.530
(..;-u \'/ithdril wn
T.W Ullbillri n and own~rr'• cqlility
.z,..,,.30
•
J'INANOAL STA'ruMENT 425
tlLUST RAnQ,\ ' 7'13
lbt~~~ tabn ffodhll'd~uiHfn

kotpriw~~~n~ ll.l..O:U
Title g f 11«'0tl.f\b AII'IOun b 11th• elf .KCinllllf Amuunl$
'1\
,....., ....
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Bod"""" 1011
ff f'Cl'W~'UII,'tll
mmulllt11~l dcjnCcl.tlilln~h>tll ~j uipmrot

"'-"""
5.001)
fumiturt"
"". . . .k. . ...,d··elhire 3,(100
...... toob
~""' R,.;e"'~ fan G.kii'Mib "'
11<0
.... ,tJ lbnk 1UoO kf'MWIU~
l.i60
w fWQ\ t'.O:J."<"fll~ I,'}!.It) Aqout•bi t«Mv•l.-111 ').500
"""dbl.vl.ll'll ~trltil\'d
..... ,_.,....,."
IIWef~fll._
6.500
<¢'~· (.{:.1>~
l"\'n"Wo no ( I l.ln_U,t
,. 111,6110 C11plt.ll
27,l.";CI
17.3'.1(1
-
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C.ub.n~l
.....,., ~ \'"'.~\ :u.uuo I OAn frvm All,..\
ldi\IIIIIIC \f duprrril ll\('11\- ft"IIWI)" ...~!\
'·""' lru••w••• Ull
(>) Wrll v (It( funl11•r 'l'k, :lUI) 4..1 ba11 OUt \tfll(ffl\ ltl hl h/Cillv:~bl\" ll.lld
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ti(\OWll:~ r'(Crinb llf'
t_4
('I ()..,.liJ~s ~arrur~t lind due nn hwn.lm mn. .ut I k.. 61fl. R111e1 l'•ld in A(h'lllllll:! lk.
100 al\ll """~ nwlt'l~ ~·
Tk, ol ~.
(<)
(d)
M nrlgl.tUIJ w~l uf f1•mhur~.
Pr.wkk> &x irltoniA ill"!'.. fl•. cAAtM ben tJbl'l• l l .200L
(t) lnmmf' 1;~, p11;.i 1\aJ ttt b(' t~•lt'\t ~ d r~t.....u.~ '
frplrd t
2. Owl\f'r'o; ('(J1.dty ,.14lefM'I\I.
Accoutlilns- 54
426
sotunO.V!
I. H. !N'T'F.Rr.Rt~"E
Income St.akmmt
F'o r tht '"1cnd.td 0E-C't•t~b er 31• to02.
Ar;,.unt Amount A~~unt A•nount
. ..... Tk
U IS.UOU
Sole>
IN Cmte/,.... :
~
/'JJ! hnk.nn
........, l7J50
1.57.0CO
Cllnillrf:" tn~ fd:t. _ l.g l
(;c.' "" .w lliloibh.· iuc Mht 1,85A70
t...'U End i"$in"III\IOt)' ~ .111.'9 _ l ,to0-'7\1
24.$30
"f'itJ.s(Mo profit
Qrm tm,~~; tll5lm.lod:
Sdli!~& f).pMI._,..
Show nJOm 6.1"tf. .
:
a.d dtt!4 r-~ tOO ,.JOO

( •) Allow...,. M W dtbc. __l.UI
4ClO
.... .
I
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- '·"7!10"
2 ""' ..0
.
I Oqm-dlltlOI\ I nn MOt U ~'q\llp1ntl\l
0.t)l l'f.loi11M u l\ i,l~I IV I!'ty VolI\
Cc!nc:tlll CIII' CI\WII I
\'1116<'1' ni:p.!IIIIV' (111,001) I <l50)
Rent 111nd l.al:n (1,48G-IIJQ)
I~ toollo (I,OOJ-
N'O)
-~)XIII '1,751)
11,1.-l!lO
1.)1:10
200
8,)111
~-fumi l~ Ja 11; 110

"'~
Of«~ 1"011• . ) .t>O
A.iM ouw. M"d\Wft
~In db~o.\"ltl' fofklllrd
IJM••t.~n.d IICCrw.'\l llt"l \IUif OA II\Vt{ltmunc _ Mit" --Ul.
•1.715
L'i$ Nc-n npNIIllnt:u~.,uuwt ;
httcr~ l c.-1\pvn~t~d
Net incomfl '""
.t.,46S
H. f NTEiti'IUS£
Owtw,l"• tq11.ity su'"'"f\4
for Ulc )' f ' l f lld.fd Detc:ril~r ll, lOOt
Am~ltll AnM~Urtl
1>..
'"'· _
oj 7,:W(l
,l ,ol!t5
SUi'iS
1.151 Dr.aw. ,...,.
.............
c.ioh
C.piUI ~I. I :L 2Im

..... ~
........
Depfffi ~ Uon 1
On t tort t qutr rn"At , .,., uo,oo>- s.ooo• • 1!6

On Delivt:ry Van o&O'Io (.~l.i•Xl - 7,500) .. s.ooo
On tlumlliiJt
Al10WUIC'tf /Of b•d dtblS :
5'!<1.)1( 3.000
'"'
. . 01'1 (9.500- 300.t : n. 1.$'0
~
I'INANCJAL S'rATEMENT
427
• •• H ENTERPRISE
IJ&It nt t.Shn t. Oeu:ml:f'r Sl, 2001
•
Autl $
~~~·
A-. 1
Li'"l lllln V~d Vtm tr'l f'I(Uit y ._., ., ~nt
c1urt.:l'lhi>C$m
Ca.'lh ln hand
:
.
'"'
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Cur.'t'ntll.-bi!iti~ t
J\(('l)u.""t.t!l- J<l).bior
CMoll .t&n lc 2.9.000
A~'tVvnK reCI!iv~tbiC'
16.XJD w~ f'I'YC.k-
lnten .,.t p.tyc\l1h: 1)11 lw.n •s•
.:.11
'J.SOO T obl <u~rrlll ~!loft
~ (W,d dlt 19.7\ '0
--'! ll l..oan from A.l:b
9,2111) 2.r.c'IO
L':' Alllw.:.tn.:e• Jr)r b.MI d<'bt ' ·'t'it.'ll nu:~n
_1..&111.. 7 .Jij()
lo-.d \PW.S
mp..kf r,d~
u.ooo
1(10
lrlk fC.U •lfCf\!e1l on lm·l,'~l nlent
Te~t.tl t um:n t .:.~tt•r. - l>lll
ln~l~
~
f'I.,IIII~M'1!:; •.a
S:urcTr•qtdptl\l!lli
lt!J• At't. ck-p,tdolliua
)lultw VM'I
ZO,OCI()
US!
"'.GilC!
.. ,.,
L·c~ A\C. depr~U••m 7.t.ou
f urnhutl! JUIIIL
IM Ac"-*J!fff~til.lft
>.0110
l.u.!lof:l .......,.. ~ l.:US
T(ll.11111 plant JC~I; - l"llt
~'
Tou lt4H b
ft.tU5 fkAT ION 7' 14 -

•••IJO T•ul liab lhd" ..w1 ..,.u ·• ,._..u, - -t1,8) 0
tl'lll Mllo'lwil•~ tt. d'll• Trl!!t 1$.11.1n(e v, RNt t r. tJe

lnetrN t!MM, bM fwwlO.lWJ.-
111.01 T1tA DI INT!. llNAT IOSA L
'l'rhl fttltn Cf, JY nf )0, 2003
N..-c af t«WI II..

U1bh C~ll
1\('Cfllllflt• Jl~).~~blt n. J>
..
MCOIIIliiii'«<"IYo\lllu
, ...,.
c.ptQ.I A(co,uu
l n~•lrMl(~
Cft\~:rnJ (ill J""IISb
t.doo o
~2.d50
II.M)
1).0011
7.Q),OCII)
Stbno:s • Wlll# ' 11).01!0

Equipment u •.F;OO
f1wML.1. L11fld 2.?5.1!00
flt&.llalt"S 1,011.001)
Jtntenmr1n June 30 1.00.000
C11rri~~ un fbl<'6 68,00 0
fua.<t 3l.OCO
~~tb.ftiwd •17.l{JO
J\lh.""il:.~ d Qcuu nt IMt 5,01)1>
S>i<s 6,800
CoA d~lldd. 9.81.1!00
C•sh o~t bal'lk -t,t6,l 50
C.uh i n hafll.l 21.30!1
5,400
V" cunc nt
Tou1 • 5.ollO
11,115 ,800 17.65,8<111
n .. ftllltwln.& •dfu,tmc:nb vii" to bll" madr :

•
(1) A pnll\'Mln b ~d duubllW. d,d.ts ~ to oea It 10 IN ~tf'ftl ttl SO\. <WI :.cNM.~ntJ R'C.'riv-..l:k.
(l,) ~~ Eq~Jnt"Utby 10%.
()) \!f.a(;f"\lltt.S.:•-ufTk.N.WOliJ.'ot'dCftW~olacyctr~b~.and~
c•• s.aurirt 1or o.:-.....v1 tCJne 2lV3 ~""" to n.1S.DOO Wn't' .,..w.
~ ~nq,__.ihcbb • ~«n 1.1tt<lf'.&(IIW ~' p>lcy. "'·~OI\Drrr<'lmbc• l1.ZWJ.
lt~VfWl.rtJt l
I. A n1vhlplr !lkp lt~tl"tmC!IItolh!mcnt

2. ~JAL.u..:t ttw« ;It on J •• :~C" :lit. 2003
sor.u·n oN 1 lt015 'fkAtltl 1N'rf.RNA1'10NAI,.

1. lnt ()Plf' 111.-lt n'fnl
r(l, lhll' yt..r(ndf'd Junf' 30, 2003
Amvun\ A nw unl Ant~,~\U,I At<nnulll

n.
~llal
"'· "'· "
o,a7,111Xl
, , ('Oll ..,r tfll"dt Mlrd ~~~~.ZSI
~of(M fl\llp i 'i.:71.o5CI
"" """.t&a Pl........ '

Stl~l"\f'M..,.,.
(".amar• "'~ ll.oot

\ A ......M"~m~ . _ b..ddtbt 7,2.51 )O.l>l)
r.mn;a.l .. ad:ll'linMotr.tn .. "'~

lO,CIClO
Cmn;d "·'""'"""
~f\n llliiJ W~~ 2•.51.11:0
/l+(,f S;.f,tlll'!ldUI' I $,UCo,l
2.6\I.UOO
I J:CII Wlltc~ fl)f C)'ell: ,d u:d a~~l!!!!• 2,>1 9,~1)(1
l fl,\11/l n~u MOO

1
t..oN 1 1~fJnW --!M!. S.ISO
~"·~t ..7.300
f).<opf'N"'IItlnn 1m m:~chincry 27.~ 3.~.1!i0 l,99.onn
~1tin~ pmlit 1,n.oso
r\414 S.Jn cl.bcvunl k.orkiiN 5.000
11'1111 ~ dUaJunl k!'lt

No t -
......
1.77.050
1.11.150
FlNAKClAl STATEMENT 429
... """
kOlJ nAD£ INTEJI.NATIONA.I.
Aaounl' "'"""--
""' ~~fur Wdttl4
tmrmtof,..
Plt(»W U.w-ao
v.t c\lntt'lt ~
rLlnt IU6('~ 1
F'l'f'4'hold l.<lnd
8ulldii'QJ
EllUipMI'I\1
Uo)1 Ol:prll~l{l!l(ll\
C)'d\'~hM
·rntal aueb
l.l•bllhlu •mll!Wtl~r'~ t-quhy
Cl•tt••nlll.,~llhi~'ll:
Al'i-\1\11\lf. r•lVIIhlfo
~~~~""' P"Y11bl11
C11pil• l t
lll'l(lnnlnK l•aJ11nur
Atf1f N~t rmllt
tl$1 WtiMtAWAI•
Toa111altllltlrt Mel_,.'"'., «t•lly
IUUSntAnt>w ns
,...,. ~of UttMt Tt~ ntJ....-d dw kllll-~ Trial~ • ~ lww :.. 2('10)
UTSHA8 ntAUfR<
Trbl l all.MC" M)
f!itli.f');l
SM., t"ill' IJ'IIlltl'lt
AC('Ufl\111 .111~ d c:p1tcl.1tl.un--offino ~oquipml!nl
/\«'U1nul~l.d lllll'lr«' !\IIOt\-'Piltl\ihlf<' ,,nd fittin~
1\i.'(UII'!Ut.litN drpwdllti(ln-Sklre cquipn~.l\1
l.cl;.n lwt•\ l••t111l t.912'«·1t't<'tef't
llllfn"fl l'.1ld nn abi,.'C
$111.,,;
P•1rtk11~.,.
1.1\V~I I~ll l,..
t.7,Ql
'""''"'"'~)(1.6..0)
flW!Utotlml"l\1t'XJl'f'MI$
Flrdght-IA
i'rri~t~'"''
e:-~oo~on-...
~~ "'""''~
............,.-
C.t\ "' 8do:.
Tobl
)
The .t«C>w\Un l Jua t~-d 1hr follow~ «mill bnl i~ willblc kl pMCct>d an~· further.
(;,) 1'o l.d lin6 amr1: 1n. blll\k. culumn nf P.'Ytl\i!n! :sidr. al C'11f.ll Bool whereby tlw (Qiumn war. und('rW!nll
l'<l by
TldOO.
(b) l"~unbn paW 'w"~~ ff!Cti'l&}l.t.tm JI.101Xl n .. ~50...-;uoritll'd _,~f'U"IIrd Sft thft.d91'f.
~ W;&S M furh'r JN'f'I'Ml uf itl~.
(c) ChiiTt(' d~J'tt'd.tlun Qn Eqltipn~nl e Ja'f• •l "'ld 01\ fumihlf'C! lind rillin-p. ' "
Kttllt•'rr•f:
1. rn:p;~.rr. nmect IJh• ll.-.ala.ncc .~o"S on h~nlt ~. 200.1.
z. rrq»l't" ~t.•llrtr M~tP ~ ..y~· 1cw,.. F'f'IO!i.
), l'repa:R" h:lbn(f .Jk'C'I•• Clfl ) 11 n~ ~ . !IXJ),
SOLUTIO N
•• U'rSIIAD ntAOioJlC ,
Trl.o~ l fl~lun ((Offf(tfd )
J••c- Jll. 20CU
TiOt. ot ~f<01ot"l' lhbit
(""'"'
Own~•r'~o C'o~~J•I I:.I
T"-
"'·
1.00.0111)
Qwlwor'!f \ ..'ithdr,Jwo~li
Office equip~ "·"""

......
~uMihU!IIImJ Flttln~
1.10<1
Sl\1~ 1\l)II!Jil!!<OI I . '2, ,1)00
/t«\l t~ml"''""' \l"'pn'lll.t "'"' ('JUl.;, \'~lllpnw:onl ......
A.tnlt'aliii.Wd d~P""......- r '""""'., ....t tittu~p
Arrum11l11t Nf dtpro:daliurJ ~to«' "luip1nr.nt
.....
7.500
1..(1.1!! (MfU J•Milnl U: 12,1. l ntNr~l
15,000
lntcn'!IC r11id 1'\n Ill~" (4.51) ' 45Cl)
..... 900
........
rurd!.l>~l'ti
1S.O..'lf)
hW\"n h)r~ 1.7.02 :!S,ootl
Esc"l'lul11rW'IU expm~ lS.L'OO
rn-~ .... ,...,
FrNI}II<CM;!I
1.000
Cumn'll•II'IM '"-"\'illt'\.1
l.lOll
Act!>I&Rbl f(lt'\"i\· .:.bl@
18, 100
Ce.h .11 \t.;aak OS.SOO - *> ,....,.
~p.,·.lblc-
IQ,atl()
ToW
l,.t.?.SIJO M 7,$0B
431
UTS IIA"D Tk i\t)fRS
Jncom\" S t.thtm<rnt
F •• It!# \'lr.U Crldotd I
'" JO.. 206:) ,._ .. ....... .......
- l..r:, : rct!il f'>( ~OOIHvld :
'*'~;in~Uill( lnvt:ntary
p,~htHt
Fcript·lr-
•
,._ 1L
l,,IILXI
7~ UI..'O
>,<!!Jt
-I.(IZ.IX!It
l ie
I.Ofi.Ut.'<l
l 1 « Fr.dhllj lu•n•l~•r}'
)~ _J_U.~
Gm...'l pMfll
~.utlt)
Op~~:t.6llnK t•o:pc~ :
~ ..w., ....~:
t-rdpHM II
I.IXJO
DrJ'n;~A iiOtl un •ton: rqulpm<'l\1 1,5(10 M OO
Admlnl~tr.tol h;(' "'"" !;tl~llll coo;prn<a t
£1'~\l llul uu~nl ~·.otpctul'll
15,WU
...,
Or;-pr..cl3dnn 1
Otll<• nt\IJtl~l 1.300
klmit••p
a,.-...........,. _ >;! .....!.t.!l' "':!!2
/ liM C~>n,mbr.lt~n Y'N'<'I~"I
' t<4•)•
17.115
Lbf t irlttllll~l CI.Mrtl'l~ (\11,.\1 • ...5(1)
I .1'ill
N•I II'IC'M'If
tJ.nJ
~""" ntAI)ttR .Ci
rt.tol.to 1r. Shu ·I ••• I J
' ,..,, JO.:till)
A :n~u
Arru~1111 1 A enuunt
n. ,._
1\!tlOIII\I
c,., ,nc ·~._ ~

C...M IIo&fll.
" u.ooo
~lit t«<rh':ob\e:
lUOCI
lnve>n!Cirl~ IUt tL\1
111....nl nn d )l:
.-Jl.llll ll
Olt'k.- e:r.•itllncnt IS.OM
A~:cutnu kd d t'prrci.ltlo n (6, 01.'0 .. 1'100) 7 S!M
~~~l
1.5..
:>......
·" ""-..c.ale"d
d~t~~~~n (1.500 .. l .SODJ -11!.00> IS.O:IU
f umuu,.. 11111J ft!rinX5 i', rtl).l
Accu m••l ~ tel'l derN'<'IIIIIvt' ( l,SM ~ 31!>•
1'(1111.1 .,,, •• -'·';o, 5W 2&,11$
...!.!16,.225
lb)l11tln Uld O"''t'M,•• ,.Wry
~rW.lril~ :
A«otmtt P"l'"bh: 10,0:11)
lntcn:'l on ln11n (t11e
:12U 10,45(1
1-(1;11\ frofn l.a•rud
Qo...·,~.c'l'·_, ~ooquity : 15JJLXI
C:: •t,d
P~b 1.00.000
11m
1.15.775
idll Wilhd"'w ili l.'5,00Q 90,775
TotAl ll•bllilie: ' and ownt r"f t-q.ui.ty
1.1&.225
BASIC ACCOUNllNC
IU.I.I)"l 'MTION 7'f~
r¥~ol Jcftlrl~nlnCW U..:W~ rrb1a

..~.,mJ~ll\. :zo::u.
J0H1Jit TRADfl l.ti
'f'rhl Babnct
• .10. 2llU3.
nu~ of .au.•••• ~: "'·

n.
~·neil~ C;~pll~l
1.00.1.100
Owner'!! Wltktll', lw•b
l.'),I).IU
OUice cqvtrmNU
l:UI,)IJ
Fwri"-" : UK~ Rtti"&S
MOO
S.ow ~~1iprr.tnt 15.0tl0
A~•'\llllii.!Atctl d1•rn:do~1 iot~lll"' " l ''it'•ncnl
b.t.\'(1
A«IIIII'V.A..ior.'\l ,~~tpft'n,;ltlott-tumlhur .a.t-.1 flU~
IJOO
Am.~1nU\I:..-d flrs~~!iM- ~·~ C"qUipm4"1tl
7.""'
-
lv11n hum Knm.~l ~ HI'/~ tr.h!'f'M'
1$,j).'l!l
lnh~ JloiJ\1VII nbtWCI-
1.125
t •.M-'00
'"'""""'
l•w~niQt lrt 1.7 02
1,a,.t'lr.(l
2!f.UIIO
t!Jt.lbUJ ltml'tl l II' pttWI.'tl tj,(MJ
ft~.. u.
Frt-1&lll-o~at
.....
f;..tc dlllt\"~un• fwf...llt'd '·""" ?...11:1~
...,..
/l.&~llll'l~ '""''"~1.11~:
l&..II.V
C•Jok .-i NAk
ACWun b p•y•blr
10,000
Pnf(II.M"t't>dhoi\OUI\1 Ins.!
Tout
~~
0111~1 ll\lnrm• liun :
a, Tht II!IJU11 1.1f ~nding ll'Wul'lllllf )' .a Qt\ jww]l) WJ~ 1'!1, , ,,200,
On Junr 31>. .. rt~r pl'i'potr\~ ~he- lri.:IJ IN!.It'" ar<l" :1\'dlt (•ll:lll'l « 'ftwn.
W"b Tk. J.llOIL
~ot n 1 fO t!ut t'OM k.l firm
S:ltt!>ll'ldudes gr.."'d In lt•lbil non Jww 30 Ill 1'\:, 5.UOJ, lt'rm or tlw.l »>u w,u
FOB dntinilt~n .lAd Uw lllllil fl.r
OJ:Ill' u.t tl\.&1 tOOo;lS w.:n: 1\', ~ ,(100.._
d. /
••
R.fJII<il' rt'lll
1. l"n:pUC' m\lltlple st~:p in.Mmutil!t:IN:flt IM lho: p:ricld.

2. Ptl!ptln" .,.bnce ~ .u Oft Jv.~~e .30. 1110).
FIKANCIA L SfATD.tb "'T 43l
sourno111:
•• 'OHUR TR.\OF,fi.S
lnCOIII<! Sl<' h:·menl
t'ot lh•_yc.n Nldtd Jwue JO 1111t."i.
s............
A.f'IW\lnt
Tk ,..
Amt1-.11,t Al::wunt
n.
1.30.7W
U.: RMum 11..1 f\Ot ~td l .l<JO
Gnod5 in tl".uv;it 5.000 6.!an
C..'NI Cut~t vf ,;•x•cb oold : - 1.2t..200
lk>cifl 1111\S> uw~·k·ty 25,1!00

l•~~.td!J..1C:5 1,05,(1(()
flt~-in
~000
W ins l n.,-mtof)'
NU : Cv~l tJf pld4 f<"hlllloN l!-lll JWl n..'R.m.-d
......
1.2M
1, \l.WO
Crut ol gov<b t11 lnu1111t

GMt~ ""'tWn
l..nt Ot)llt,.ling V.'l~ttlllnl l
•I,OOU
- ...~.'lllll
-92.SIXI
J l .iUI)
~U..Q{ l.!llpt:t'UI(
r,...k'*t
~Oftd!W f'llllllfiOiall
..... ,.,..
2.!0o
(".n\rnl II "'tt..W..UMJ\·t' upt::ni'M ;
latablhihMMif'l(!'"'nfoH
tJ.oon
I Np•...-,:t~UOtl : vltv..- 114utrunr.nt 1,500
r-un\ltiJI" )15 1&.1115 20.:;\i',
('tl'~r,llltl$ U~a,v1r11:
II.Jl-,
IJJ Nk..._ dh«<unt br.tw
~'
lnJ IM,.~1 ~J~ott-. (I l :f •l7S)
1'1.11!.1'-W d IIIMUI\1 .......,
.. ~ '"'""
N~l h tC!IIfl(
),400
- -1,\IIIQ
1.).~~~
1 IOI(Ult T kA. I)I!JtS

8..11 <lll(( Sheet
A• M )luw "· lOtJ
.o\Uf'l l AtNMfl.1 AJ~WW"I lbhlliUn m41 owtttt"J A.mtwM Arnii'WII
~~o~tt.r
I
r um:nt ~~r.l::' . "'· "' C11rrMt littbUilil:11 : " "'·
.o~~h 111 IIJ.I!.k 2t100 Aln.our.t:; r·l>'·'hl• lO.OOO
\n"I)IIIU4 r«tiv.lb~ '
~.,~ ..1\Mlh
i'llla1MfCU
ll.liOO
3'J .500 ...,. ...,..
lntl>r~t
~·,.cqUy.
d ue
"" IO,l7'S
ls.DOO
Qlfb oqllipmml lS,OlO ~pi tal 1.1».000

..._.,, /o\X\Imulllte d Dt-'P. 1.'i0t) ;.son M" Ptuti.t _.U.950
'"""' (\lllipMt>tll 2$,000 ' 1,3-'),•,!il)
"-nf A«umullm d n--p. IU.L'91!. l'i, l\00 ~ Witb\l ti'WI~
A ·""' llS.?SU
N miCUN And !iftitlp
.a. A(nllnubt.-- d d!p. ,..,.
7.WJ
s..zo
T-.1 APt'I:S l,U.,)):$ ToW umnt~tt u4 owner's eq11.1ty 1 .1:t:ii'i
S·1Sit Ar:t;OJlll fing-5~
Tk. Tk.
"Accounts recelv~ble: Ba1once i.n trial baLance 28.100
Less : M•rchandise returns 1.500
Merchandise in tran.o;it 5.000 6.500
Adjustt."CJ acrounts receivable 21,600
ILLUSTRATION 7'17
The following 1$ the schedule of ba1•o«s u on 31.12 2002 extract<d from the books of Afn1. who carries on
business unde< the'"'""'
namo iUld style Afnl•nd Sons, in Dhaka.
• AFZAL AND SONS
Trial B1.lmc~
December 31 2002.
Titlt of accounts Debit Credit
Tk. Tk.
Cashin hand 14.000
Aa:ounts re«ivable. 56.000
lnve51ories 1.1.02 62.000
Offic. equip~t 57.400
Bwlding:s
Motor Car
- 60.000
20.000
Accounts payable 43,000
12% Loon from Siddique1.02.02 30.000
AUowanccs for doubtful a«aunts 3,000
Purchases 1,40.000
Purchases returns 2.600
Sales 2.30.000
S.losRetums 4.200
Salaries 13.100
Rent for showroom 5.500
Interest on loan from Siddique 2.700
Soles discount 2.400
Purchau dlsrounts 1,600
Freight on purchaS<tS 1.200
C.rriagt o utwards 2.000
Printing and Stationery 1.800
Eltctrkity charges 2,200
Insurance premium s.soo
Baddoblll' 2.000
Bankchorg.. 4.600
Motor cu ~xpenses
Afnl's C•pitol
- 3.600
1.62.000
Afnl's Drawings 12.000
Total
4.72.200 4.72.200
Prepare Multipl~step income statement !or the year ended De«mber 31. 2002 and the &lance Sheet as at that
date afte-r .m.ak.Utg provJsion for the foUowi.ng :
I. Dopn.ocloto: (a) Building used lor busin,,.. by 5%; (b) Offla! equipment by IO'l'o
2.. Value of Inventories at the close of the year was Tk. 44.000 lnduding stationery Tlt 100.
3. Reserve for bad debts is to bt tn.tlntJined. at 5%of accounts ~ivable
-......... IJ\suranco premium indudos Tk. 4.000 paid towards proprieto r's life insur.mre poUcy •nd 1M balance ollhe
insurance charge cover the period from I. 4. 2002 to 30. 6. 2003
5. HoJf of the buildings ore used for residential purposes of Mt. Afnl.
FINANCIAL STATEMENT ~35
SOLUTION :
]. AFZAL AND SONS
Income S tatement
For the year ended Oect!mb er 31 2002
"
Amount- Amount Amount
- Tk Tk Tk
Sales 2,30.000
Salt'S returns (4 .200)
Sales di&COunts (2.400)
2.23.400
Less Cost of goods sold :
Beginning inveritorjes 62.000
Purchase u o.ooo
Purchase returns (2.600)
Purchase discount (1.600) 1.35.800
Freight-in 1.200
Goods available for s.tle 1.99.000
Ending inventory (Tk 44.000 -100) 43.900
1.55.100
Gro6S margin 68.300
Ltss Ofl"rating expenses :
Selling expenses :
Show room rent 5.500
C3rdage outwords 2.000
Bad dept CXpetiSe$: •
llad-<lebt written off 2.ooq
.
Add New provision (5% X 56.000) 2.800
l.tss Old provision

4-~~ v.
3.0 1.800 9.300
General & adminish:ative expenses :
Salaries 13.100
Printing and stotionary (Tk. 1.800 -100) 1.700
Electricity · 2.200
Insurance (Tk. 5 .500- 4.000) x 9/15) 900
Motor c:ar expenses 3,600
Depredation :
Bullding(l/2X 60.000x 5%) 1 .500
Office eqwpment 5.740 28.740 38.040
Less Other expenses :
Interest on loan (2.700 + 600 due) 3.300
7.900
Bank charge 4.600
Net income 22.360
Working'
(i) Interest on loan due :
Total interest Payable 12% x ~! x 30,000 3,300
Interest paid • 2.700
(U) lnsur,ant.e expenses:

Insurance Premium
Due =
~ 5,500
- 600
L~; Premium for personal Uf~ policy • 4000

Premium for busintss ~ 1,500
Expired~ 9 month
Total period 1. 4. 02 to 30.6.03 • 15 month
9
, , Inarance Premium - expenses1.,500 x 1 5
' I
AFZAL AND SONS
Balilnu: Sheet
As on Oen.m ber 31, 2002.
Ass ~ts
Amount Amou nt
Tk. li:abil ities and ownr r's equily Amou nt Amou nt
Tk.
Tl<. Tk
Current a:;s.e~ :
Current liabilities :
Cosh in horul 14.000 Aa:ounts payab le 43.000
Acco,mts r{'C(IivabJ~ 56.000 [ntercst on lo11n due
lns Allowance for
600 43.600
Loan
Doubtful debts 30.000
2.SOO 53.200
Merchom<l.fs(:
43.900 Owner• oquity :
Sllltionery 100 Cap ital 1.62.000
Prepaid insurance 600 Add Profit 22.~
Tob.l curren t assets l,lt,SOO
1.84 .360
Plant assets-: u.s Dr• ...ings (12.000. 4.000) 16.000 1.68.~
Buildings 60.000
l.Lss Accumulated dep 1.500
58.500
Offioo oquipmcnt 57.400
Ltss A«Um ulated dep. 5.740 51.660
Motor c.u 20.000
Total plant :assets 1..10,160
Total assets 2,41,9 60 ToW liabil itiu and owne r's equity
(1.11.8\lO + 1.30.160 2.41;960
ILLUSTRATION 7'16 ~
The follo wing figure s h.itv~ been credit ed from
the Ct"C''rds or Variet y Sto res. a proprieto~ hip conce rn as at
O.C:.,mber 31 2002 ·
T i tle of acc.ou nts Tk. TiUt o( ICCOu.ntJ;
Tk.
Furni ture 15.000 Insurance
Proprietor's Capit.1l Accou nt 6.000
54.000 Show room rent
Ca.sh in hand 22.000
3.000 A«oW lts receivable
Beginning Ln\'cn torics 60.000
50.000 Sal""
Premises ' 6.00.000
34.600 Ad v~rtisemcnt
Dl'awi .'lg< 10.000
5.000 Post.tg e .and Telep hone
Prov~i on ror bad debts 3.400
3.000 Bad O.bto
Cosh at bonk 2,000
10.000 Printing and stationery
PurchaSL"'S 9.000
3.00.000 Gcnt.'rAI charg es
5.l1lries 13.000
1.19,000 Accou nts payab le
C.rria gcout wards 40.000
~1.000 Advo\n ces from custom ers
6.000
Addll ional infun nat:ion :
I. The endin& "'' 'en tory as on o.c:..mber31 , 2002
w•s Tk. 40.000:
2. Merch andise worth Tk. 2.500 have been destro
yed by fire. a claim to the exten t of Tk. 2. 100
odmitted by the inouran<e company : has been
3. Ch('l.rge d cpn.ri atio n On (urnit ure 011 10%;
4. Thcro was an outst>nding liability for rent of Tk.
2.000:
5. An advance of T1<. 4.000 paid to an emplo yee againo
t his salary of January 200~ h.\d been debited lo
Salary Account. the
6. The office premises were sublet from D<cember 1. 2002 fo r a monlhly rental of Tic.
1.000. but IN rent !01
Dtamber hu not been reccived.
7. Reserve for bad debts is to be maintained i'lt S% of acroWlts rt'('('ivable.
Rtquited:
l. Prepare multiple step income s t:.tement lor the period.
Z. Prepare bala""" sheet as on December 31. 2002.
SOLUTIO N:
1. VARIETY ST ORES
Inco me Statement
For the vur t nded Dt-eembc r 31. 2002.
. Amount
Tic.
Am ount
Tic.
Amount
Tic.
Saks
6.00.000
u.s Cosl olsale:
lkgih.nJng inventory 50.000
Pwcllo..,. 3.00.000 3.50.000
u.s Oosing inventory (40.000)
F~.re kl§
(2.500) 3.07.500
Gross profit
2.92.500
u.. Opera tins ""P""'<' :
S.llins ""J"'N''5 :
Showroom rtnt (22.000 + 2.000)
24.000
Carriage O\IIW3rds 41.000
Bad debt expens<s :
Bad dt'bt written off 2.000
A.dd new Jordoubtful dcst Provision 3.000
5.000
lt5s Old proo.•ision
3.000 2.000
~dvertisement expenses
Advertisement and gcnoral exp('nscs : --- 10.000 77.000
S.\Luics 1. 19.000
l.Lss AdY.mce 4.000 1.15.000
l tiSUtNCC
6.000
Pos t;~gc & Telephone . 3.400
Printing & s tationery 9,000
General ch.trges
13.000
Depredation on furniture 1.500
Fire loss (2.500 - 2.100)
·IO!l 1.48.300 2.25.300
Operating income
67.200
Add Rent income
Net income ---
1.000
68.200
-
BASIC ACCOUNTING
:z. VARIETY STORES
Amoun t
••
B• Iance Sh t as on D teemb tT 31,, ;,2002.
Auets Tk. Tk. tiablJiUes and owner's equJty Tk. Tk.
Current assets Current liabilities :
Cash In hand· 3.000 Accounts payable 40.000
I~ Cash at ban!< 10,000 Rent dU~ 2.000
l..t:;s ProVision for doubtful 3,000 57,000 Cu.stomers advanceS 6.000 48,000
lnve.ntories 40.000 Owners equity:
Rent receivable 1,000 <:apital 54,000
Salaries advan~ 4.000 Add Profit 68.200
lnswance company-
claims ad.mitb.'Ci 2 .100 ' 1,22.200
Total cUrrent a.o;.set 1,17,100 l..t'S$ Withdrawal-; 5.000 l.l7.200
Plant assets:
Furniture 15.000
uss : Accum~foted Dcp. 1.500 13 .500
Prerroses 34.600
Total plant asnb 48.100
Tot"l assets 1,65,200 Tot.al Jiabililirs and 1,65,200
11.17.100 + 48.1001 owner's eauity
ILLUSTRATION 1'19
Abdul Malek has extracted the foUowing Trial Balance for his business Sun-moon TraderS as on Marcl\31. 2003 :
SUN-MOON TRADERS
Trial Billance as on Muc.h 31 2003
Name of aC"Counts Debit Credit
!Tk.) (Tk.)
Drawings 16.000
Cash 5.260
Equipment 30.000
Accumulated d~prec:iation-Eq~pment 10.000
Beginning inventory 50.000
Ollire salAries 12.000
Soles salaries 40.000
Bank 21.000
Capital 34,000
Rent 9.000
Ele<tricity 6 .000
Motorcar 10,240
Advertising 9 .000
Accounts payable 35.000
Purchases 4.02,500
Postage artd tcJcphonl!' 3 .000
Sales 6,10.000
Discount on sale 11,400
General charges 4 .000
Miscellaneous expenses 9 .600
Tot.tl 6,89,000 6.89,000
.I
Mjmrmmts :
(a) Inventory on M:uch 31, 2003 at market value was Tk. 80.000 (Cosl Tk. 75,000). The inventory indud.es
goods C"OSting Tk. 5.000 lost in transit The lo.<s was not covered by insurance.
(b) Dlsco\.U\t allowed to customer amounting to Tk. 1.000 had been po:tled to the credit of accounts payabll'.
(<) Cash withdrawn (tom bank for business use Tk~ 4.000 had not been entered in tha bank a«c>unt but
wrongly postc:d to acco\U\ts recelv01blt.
(d) Sole on •cro!U't Tk. 4.000 had not yot boon l'l'<Orded.
<•> Te!ophoncbiU fa<Tk.I.OOO rem.tin unpaid.
(f) Depreci31e : Equipment by n. 4.000 and motor car by Tk. 2.000.
(g) Estimated b•d debt <'1<penses for the period to be Tk. 2.500.
(h) Advectising includes cost of a <'amp.-.l~ run during the year Tk. 6.000. 1t is expected that the cflect of this
campaign wUil>c lett for at least three years.
(i) On Mouch 30. 2003 merchandise that cost Tk. 10.000 was 5ent to an Qpetted customer on SAl(' or return
basis at a price o£Tk. 15.000 whkh WM r«<rded as normal salt:-. Conli.nn.atiori' of sale not yet reaived.
Rtqulrr-d:
(I) Prepare • multiple step income st•tcmenL
(2) P,parc • clusified balance shect.
SOI.IJTION:
Workings
m Salt: Tk.
Soles as per trial b•l•nce 6.10.000
Add Soles not yet l'l'<Orded 4.000
6.14.000
lLss Solos on sale 0< return basis 15.000
5.'19.000
las Sales disoount 11.400
Net sale 5.87.600
.(ii) Ending inventorltl :
Balance as pe.r n."Cord 75.000
Add Goods on "'lo Of return basis 10.000
Inventories boron. adjustment of loss 85.000
lLss Goods damaged in transit 5,000
Adjusled end_ing invenlory 80,000
(Iii) Bank balance
As per trl3l ba.l:mcc 21.000
Less Withdrawn but not posted to bank 4,000
Adjusted bill&nct' 17.000
(iv) Accounts p01yablt
Balance as per trial bala.nre 35,000
lLss: Wrong posting for dlsrountaUowed 1.000
Adjusl~ ba.lanc« 34,000
(V) Accounts recei vable
&lance as per trial bAlance 50.000
Add Unrecorded 601C 4.000
Add Wrong ctedll for withdrawal/rom banlt 4.000
58.000
1Lss Unl'l'<Orded discount 1.000
Sale on sal~ or ~Nm ba..~ 15.000 16.000
Adjust~ accoW\t-. reuiv.ablt-
42.000
SUN-MOON TRADERS
Income· Statement
For the year ended March 31, 2003
Amount AmC>unt Amount
Th. Th. Tk.
Sales (Working-i) 5.87.600
U~"'S Cost o{ S.lle-:
Beginning inventory 50.000
Add Purchase 4.02.500
Total 4,52,500
Less Ending inventory before loss adjustment (working-ii) ' 85.000 3'.67.500
Groos prolit 2.20.100
Lt'ss- Operating expenses :
Selling and distribution expenses
SaJes '!'.11ruies 40.000
Advertisement 9.000
Bad debt 2.500 51,500
General and i!dministmtive C);pcnscs :
Offi~ ~Jarics 12,000
Rent expense_ 9.000
Elcdtidty 6.000
Telepho~c expense (3.000 + 1 .000 due) 4.000
General e~pense ~.000
Misccll"ncolts c>c.penscs 9.600
Depr~iciation expense- Motorcar 2.000
Equipment 4.000 50.600 1.02.100
Operating income 1.18,000
Ltss Non-operating expense:
Mcn:hoo\di.s<> Jost in transit (not covered by inswance) 5.000
Net income 1,13,000
2. SUN-MOON TRADERS
Balance Sheet
as on March 31, 2003
Assets Amount Amount UabiUUes and owner's t-"quHy Amount Amount
Tk. Th. Tk. Th.
Current assets : CtuTent liabilities:
Accounts_payable 34.000
Ca•h 5,260 1.000
Tolophono bills payable 35.000
Accounts recei\•i.\ble 42.000 Ov.•ner's equity:
Lm Estimated bad dcbr 2.500 39.500 Capital 34.000
Bank 17.000 Add Net prom 1.13.000
Inventories- ~ 1.41.760 1,47.000
Fixed osset ' Less Drnwings 16.000 1.31.000
Equipment 30.000
U:ss Accumulated dep. 14.000 16,000
Motorcar 10.240
u-ss Accumuloted dep. 2.000 8.240 24.240
Tot.tJ 'Assets 1.66,000 Total liabilities a.nd owner's t-qulty 1,66.000
FINANCIAL STATE.~'T -141
ILLUSTRATION no
The Trial balance orFashion Centre contAins the foUowi.ng Actonntsal rkccmber 3l . 2000.
FASHJON CENTRE
T ri~ Bab.nc~
As on Dece.mbu 31. 2000
Debit Credit
Accounts n;ame and titles
Tk. n.
Cash 16.700
Accounts r~eivable 33, 700
Merchandise Inventory 31.12.2000 50.000
Store supplles 5.500
Store equipment 85.000
Aa:umulatccl depreciation (Store equ.ipm~nt) 18.000
Delivery oquipmmt .;8.000
Acxumul>ted depreciation (O.livery equipment) 6.000
~ore. payable 51.000
Accounts payable 48.500
Capital 1 .10.000
Onwin&> 12.000
Soles 7.46.600
Sales return and allowance 4,200
Cost ol goods sold 4,91.800
Salaries •xpense 1.40.000
Adv<rtisinS expense 26.400
Utilities ••P""'"' 17.000
Repair expense 9.100
Delivery expense 16.700
Rentexptnst 24.000
ToW 9.80.100 9.80.100
\.o:Sd itlo n~l

dat;a :
(o) Store supplies on hand total Tk. 2.000.
(b) Depredation ls Tk. 9.000 on the store equipment and Tk. 7.000 on delivery equipmont
(c) Interest o( Tk. 11.000 is ac<n><d o n noteo payoble.
'
(d) Physic•! count shows that achlal mcn>hond ise inventory on hond at 31.12.2000 is Tk. 45,000. Also found that
the CilU$~ ordHference Ls a sale orTk. 7,000 that cost Tk. 5.000 but inventory w~s: not updated.
(e) Tk.. 30,000 no«.'t' payable due for pllyment in next y('ar. -=
(1) Multi pit step income s~tl!menl
(2) a...uified balonce she<!t.
- Accountiug- 56
SOLUTION:
(1, FASHION CENTRE
Income Statement
For the year ended Dtctmbt.r 31,2000
Sales
. Tk. Tk.
7.%.600
Tk.
Less : Return and aUowances ~.zoo 7.42.400

l..tss: Cost ol goods sold UI.SOO
Omitted !tom record
Gross tru~.l'},rin
aoo 4,96,800
2.45.6<10
tess : Opemting cxpcn..;;~:
Selling ~xpenSlls :
Advertisc.mentr expenses 26.400
Delivery ecpenses 16.700
Store supplies used (5500- 2000) 3.500
Deprt'ci.ltion on delivery equipment 7.000
Store eqwpment 9 002 62.600
General and 1\dministrative ~pens<.•s :
Salaries experlSCS uo.ooo
UtUities ~x p(!M~ 17.000
Repair expon$0$ 9.100
Rent CXpu!Sti 24 000 I l!Q, JQQ 2.52 iQQ
Operating"'" 7.100
Add : ln..,.,.,
oxpenses 11.000
Ntt lou 1.8,1.00
(2) FASHION CENTRE
Babnce S heet A!i on December 31, 20()0
Amount Amount Amount AmoW\t
Assets liabilities and ownh'.s- .equity
Tk. Tk. Tk. Tk.
Current a$$Ct$: Cunentli.lbilili<$ :
Cash 16.700 Acrounts p•y•blt ~8.500
Acrounts rcceh·~bltt 33.700 NolES pay•bit 30.000
Merchandise lm•entory• 45.000 Interest payable 11.000 89,500
Store supptics 2.000 97.400 Long tcnn.o; linbllirics:
Plant assets : NolES pay•blc 51.000
Store eqwp"""'t 85,000 Ltss Treated M cune:nt liabilities 30.000 2I.OOO
U..: A<rumu!ated o.p. ~ ss.ooo Owner's equity :
Delivery eqwplN.'nt 48.000 Capital 1,10,000
U.s Accumulat<d Oep. 13.000 35,000 93.000 l..tss Draw"'&s 12.000
98.000
U.. : NeliOS$ 18,100 79.900
Total assets 1,90,400 Total llabilllics and owner's equity 1.90.400
MtKhandi$e lnve.ntory:
Inventory as per rt'CO«< 50.000
L«s Sales but cost ha••o not been updated 5.000
Actml in\'cntory 45.000
FINANCIAL STA n:MENTS OF JOINT STOCK COMPANY
There is no statutory obligation upon sole proprietorship or partnership firms to prepare
final accounts. but companies have a statutory obligation to prepare financial statements
{Balance sheet and Profit and Loss account) as required by section 185 of the companies
Act. 1994.
The gene ra l pr inci ples o f p reparing U1e financial statements of Joint Stock Company are
the same as in the case of the sole proprietorship o r parbwrship firms. Butin addition to these
princip les. a joint s tock company m ust conform to certa in legal provisions as given in the
Companies Act 1994 in respect of forms and contents of balance sheet and profit and loss account.
!t may be remembered that the provisions of the Companies Act 1994 relating to forms and
contents of balance sheet and profit and loss accounts are not applicable to insurance. banking.
railway, gas and electricity companies which are governed by special acts relating to such
companies.
Legal position regarding ba lance sheet and p rofit and loss accounts of Limited com panies:
Section 185. Forms and contents of balance sheet and profit and loss account :
(1) The balance sheet of a company shall contain a s ummary of the property and assets
and of the capital and liabilities of the company giving a true and fair vie"' of
affairs as at the end of the financial year. and it shall. subject to provisions of this
section be in the form set out in part-1 of schedule 1. Or as near thereto as
circumstances admit or in such other Jorm as may be approved by the government
e ither generally or in any particular case; and in p repa ring the balance sheet due
regard shall be had. as fa r as may be. to the general instructions for p reparation of
ba la nce s hee t under the heading "Notes" a t the end of the part:
P rovid ed that nothing con tained in this sub-section s hall apply to any
insurance or banking company or any company engaged in the generation or supply of
electricity or to any other class of company for which a form of balance sheet has
been specified in or under the law governing such class of company.
(2) Every p rofit and loss account of a company shall 'give a true and fair view of the
profit and or Joss of the comp any for the financial year and shall. subject as
afore sa id. comp ly wi th the requirements of Pa rt 11 of Schedu le XI so far as
applicable thereto :
P rovided that nothing con tained in this sub-section s h a ll apply to a ny
insurance or banking company or any company engaged in the generation or supply of
electricity or to any other class of company for which a form of profit and loss
account has been specified in or under the law governing such class of company.
(3) The Government may. by notification in the official Gazette. exempt any class of
companies from the requirements of Schedule XJ if. in its opinion , it is necessary to
grant the exemption in the pub lic interest; and any such exemption may be granted
e ither unconditiona lly o r subject to such conditions a s may be sp ecified in the
n otification.
ILLUSTRATION 7"21
the registe«d c.>pibl of AB limin.d is Tk. 5,00,000 consisting of 50000 equity shues of n .10 .. ch. The folio
was IN! tri.-11 b>Llncc of AB limin.d •• on o.cember 201ll.
AD LIMITED
Trial Balance
De<embtr 31, 2001
Title of accoun ts Debit Amount Cn:dit Amo unt

n. Tic.
Investment in shares, 50.000
Purchases 4 .90.000
Selling expenoes 79.100
Inventories 1.1.01 1.45,700
Salaries and wag~ 2.000
Cash in hand 18.000
Discount on issut of DcbC'nturt 2.000
/ Prel.imirulry expense.; 1,000
.. Accounts t(occtvable 91.600
Interest on b.. nk overdraft 7.800
interest on dttbcnture upto ~ 3,750
Audit fee$ 5.000
income tax pa.id in advance 10.000
Fteehold propmy at «>«t 3.50.000
Tedlinical know·how f«!S at C<>«t paid durinJI IN! 'jNr 1.50.000
Furniture 50.000
Accumulated deprec:iation-Fwni~ 15.000
Accounts payable 87,850
Equity share co pit• I fully paid up
5% Mortgage debenture
Sal.;-
Dividt.!nds
Retained earnings l.l.OI
&n.k overdraft
~ - ~
------ 4,00,000
..----..,..50,000
6,70,350
4.250
28.500
1.50.000
Total 15,05.950 15.05,950
Additional data :
1. lnventori.cs wns valued n 1.4.2.000.
2. Purchase l.ndudes Tk. 5.000 worth o£ metchandise diJtributed among valued customers.
Salarius <'lnd wAges lncludc Tk. 5,000 bting wages incurred for instalfuUon of clcct'rica) fittings on july 1,
2001. which were ft.~Otded Under "furniture".
4. Depreciation on fu.miture to be charged at lOo/n on its co:;t.
5. Tk. 1.000 ordiscount$ on issue of Debenture IObe written o££.
6. Provide Provision for taxotion Tk. 4,000.
7. T«hnJG>l know-how fees is to be written off ovor • period of 10 years. Tk. 500 of prttiminary eocpenses is to
be written ott.
s. Acrounts rec<'ivablc include Tk. 16.000 debts duo for more than six months.
Rtquirtd:
a. Income statement (or year ended Dc«o:mOOr 31. 2001.
b. Statement of retained earnings.
c. Balance sheet •• December 31. 200lae<ording to company Act 1994. (Use Horizontal form).
RNANCIA L STATEMENT 461
SOLUTION :
AD LIMIT£0
lncomt Statrment
_for tht year tnde-d Oec:tmbu 31. 2001
- Amount
Tk.
Amount
Tk.
Amount
Tk.
Sa los (net) 6.70.350
Uss Cost ol goods sold :
B<ginning inventory 1.45.700
Add Pucchascs ~-
- - -·
, __,-
4.90.000
6.35.700
1.tss distribut<d among valuid customer
5.000
Goods avaUable forslae 6.30.700
Less ending Inventory 1.42,500 4.88.200
Grtl6S matgin
1.82.150
Less Opu•t!ns expenses :
Salaries and wages
52.000
Ltss WB~ for in.-.tallation of electrical fittings 5.000 47.000
Selling<><!"'"""' i9.100
Advottisoment- distribution ol goods
5.000
Discount on issue or debenture written off
1.000
Preliminary exp<nses written off 500
Interest on bnnk overdraft 7.800
Interest on debenture (3.750 + 1.875)
I
5.625
Audit left 5.000
Technical know-how foes
15.000
Dcpreciotion on lumitwe iO% (50,000) '+ 10% (5.000) (1/2) 5.25Q
Provision for taxation 4.000 1.75.275
I
'Itt ep<rating profit
M d Dividend rt«ivtd
Net income
6.875
4.250
11,12.5
AB llMIT!lD
Rtl•intd e.ami_np sUitmtnt
.For thr year end~ December 31. 2001
A mount
Tk.
Reuintd tarnings bol.lnao 1.1.01
28.500
Md Net lntome during 2001 11.125
Bolanee 31.12.01
39,625
AB UMITED
ll&llliK't! ShHI u Oft DHtmbor 31, 2001
Amount Amou.nt
Liabilitiet Ao.. ~
n. n.
SN"'e>pital : Fix«!- :
Authoris<d : 50000 shaNS otllr.. 10 ead> 5.00.000 Frotholdptopmy 3.50.000
' .
...ucd. Subsctib<d. ailed up and p.lid up : Fumitu.re 50.000
40000 shalt'S orTk. 10 eoch 4.00.000 Md Ell'Ctrical installation 5.000
R<oerve and surplus: 55.000
Rcuined eamings 39.625 Lm Accumulated depl'\'clation 20.250 34.750
Sec~ lo.1ns : Tccknlcol know-how 1.50.000
s..-.
Mortgogoloan 1.50.000 t.Ns Written off 15,000 1.35.000
lntereot on debenture outstanding 1.875 lnYl"fitment :
Unsecured loon : lnvc.-stment ln shares 50.000
&nk overdraft 1.50.000 Current asseb. Loans & advances :
c"'""'' U.bllltlcs t. provision:
87.850
A. Current Assets
Jnvrntortes 1.42.500
A. Accounts payable
B. Provlolon lor tax.ation 4.000 A«ounts rt<ftvables 91.600
CAlh in hand 18.000 2.52.100
a Loon t. Ad•&ne\'5
Adva ~ tu 10.000
Misc. "'J>"''5<S (not yet •djusted)
Prtliminaty <><pmses 500
Obcount on issue o(debenturo 1.000 1.500
Total llabllltia &.33.350 Total - to &.33.350
ILLUSTJV.TION 7'22
Colin Powel Ltd. submits you the following Trial Balance as of O.C.mbet 31. 2001
COLIN POWI!L LTD.
Trial Balancut of P«cm ber 31 2001
Name of accountt
. D•blt c..dlt
Tk. 'Tk.
Cashin hand 20.000
ln"estment 70.000
Accounts r«<ivablo 3.02.000
Inventory 56.000
Pr<p>id <><.,......,.. 54.000
Lond 1.60.000
Plont t. equip"""' I 11.67.000
Other •-ts (norK'IIf1'ml)
A«<WWts payable
15.63.000
1.40.000
Wages. lnton!St and laJu!'S payable 2.22.000
Une.uMd revenue" 33.000
Deb<nturn 12.00.000
Othof U.bUltles 3.36.000
Common otoc~; 1.90.000
Retained ••ming:s 11.08.000
Sal<s 27.95.000
lnlotest n.'Venue 23.000
C. in on C<>ndemnotion of land by govt. 2.00.000
C0<1t of goods !!Old • 15,65.000
S.Utn,e;.genoroland adminlstt•liv• expen... 6.40.000
LOOf m ddal bo"' charg<! to Cl\lttogong Branch 1,50,000
lntl:ftltexpeme 70.000
lncome t.tx expense 2.73.000
Opt>radng laos on dlscondnucd operations 57.000
Dividends 1.00.000
ToW 62.47.000 61.47.000
FINANCIAL STATEMENT
463
~tion.1.J infoi1I'Lition :
I. tnv<ntory tncludes opolled ;and unsloble pds wonk T1r.. 6.000.
z. Soiling. gt'n«a land administrotive eXf"'I\SeS incor=tly Includ
e Tk. 15.000 for olfico furnitu re pun:lww!s
(other OSS<!ts). The pun:hasesw.,..
made on Decm!ber 30.
3. The prepaid """"" '"' w..;, paid on Soptomber 1 and relate
to a 3 year inouranl'<' policy that w~t into
effe<:t on Soptemb<r I.
4. The une:.amed revrnue: relates to rent.lt of an unused portion
of the corporate olfices the Tk. 33.000
received on Aprill and represents paymtn t in advance (ot one
year's rental
5. Plant •nd <qulpm cnt indud .. n. tO.OOO for <quipm
ent repairs th>t wore errone ously rtrotde d ••
equipment pun:hases. The repairs were made on Oecembor
30.
6. Other .....ts include T1r.. 8.000 for misallaneous olfi<1t suppU.
.S. which W<tt purciw ed on mid Octob<>r. At
the <nd of yenr count reve•JJI that only Tk. 6.500 of offiro suppli<
s remoin.
~rt d:
(a) Adjust ing entries to record the abovt additionallnlormatio

n.
(b) A classified irlcom<> Stotem tnt for tt..- yoar mded Otcem
btf31. 2001.
(c) A classifK'd Balanco Sheet as on December 31. 2001. (The verooa
l format given in schedu lell. of companies
Act. 1994).
$iXIIT !ON:
( a) COUN POWEL Lm.
Adjua tins Entrin
Debit Credit
11<. 11<.
(I) Cosl of good$ ooid
6,000
Inventory
6.000
(2) Other Ao;octs
15.000
Sollin3. genoral and administtttivc "'f''O'M
15.000
(3) 4
Ex~ 36 x 11<.54.000 6.000
Prepaid expmo et
6.000
(4) 9
Uneorned ~""""' 24 .~
12 x 11<. 33.000
Rental incom<
24.150
( 5) Rtp;oirS<xponse
10.000
Plant I< <qulpt ntnt
10.000
(6) S..pplics Expense (T1r.. s.oro -n. 6.SOO)
1,500
Other Assets
1.500

Basic Accounting by S.A Hasib - S.E Kabir

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Basic Accounting by S.A Hasib - S.E Kabir

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Clw pte r 1

Int rod uct ion

Intr oduc tion

process of genera ting

Sales revenues are reported in income statement as under :

(i) General and administrative expenses : Expenses incurred in the general

Following is an example of a single step income statement :

(b) Multiple-step income statement : The Multiple-step income statement classifies

(a) Prep.:ne a muJtipte-itep inrome s.tatemcnl for the year 2002.

(b) Prepare a :;irtgfl...a.H~p income statemet\t (or the year 2002.

=.:SU ACCOIII! ting- 50

Following is an exam ple of the Statemen t of Changes in Partner's Capital :

Akber Humayu n Jahangir

MARKS & ALLEYS LTD.

CLASS IFI CATIO N OF ASSET S AND LIABIL ITIES

Alternative Balance Sheet format

BUTIERFLY MARKETING COMPANY

I!UTIERFLY MARKETING COMPANY

Balance She<t (Contd.)

STATEMEN T OF CASH FLOWS

LEGAL SERVICE POINT

LEGAL SERVICE POINT

LEGAL SERVICE POINT

Amount Amount Amount

Add Due 500

ILLU5TRII TION 7'5

Title of a«ounts Otbit Cr<dlt

Name of accoun ts A m ount Amoun t Amoun t

RNA NCIA L STATEMENT

ILLUS TRAT ION 7"7 ..)?/

410 BASIC ACCOUI'rrlNG

Amount Amount Amount

Amoun t Amount Amount

Amount Amount Amount

Asuts Tic. Tic. Tic.

Liabilities and owner' a equity

1. . Multiple su-p ifi('OII'It .UII':nml.

7!1.,00 tnkmtrt)"'''" - "'

~tt:OI."'I''IIe 1000 11.000 VIIIIMeorm- ti ,OUO n.-

"' .DIANA D£PAR'fM€N'rAL STORES

DlANA UU AJt'ntiNTAL Sl:Oil.E

Diana. Upilod 1,76.60!1

Ot.-.NA DlPARTMi.NTAL STO"t

T...t "·""" ,._.,__

{-) PvrTh;~r.c d ltcr>nnl 15,1100

~ ANXIfl' llfALnl COMl"LEX Lm.

Stfl,j\' t')UiJ"fl''~lt 8$.000

Ll<~~~lllliu • Owr~•t'• fct11lty

M""~"IO' p.~yill'll<i' 3,0(1.00)

r.n. 1111\1 r,,f,

~lot Dnlllbth.J ~ ...

bw~torW. en !.Latch 31, 2003.,...," nfllled u n. 72.~

~ .alld f~ ptvpa ty"r ""-

~ Mlli l'llili ft .. prt!YtiiOn of 5'!'. Sundry Odlllrlts b dot.lb+lfal dtbb.

2. &.lloln(lllhltll' .11$ lit ltut d.l\1?,

L=A ftum > 1.10.000

""' 0 1'\'rntlnr, f 1!pcnWfJ 1

.... .,••• (0\t<l • 6"1 13,2(11,1

11) I..Npri'Cio~lion an ~Lidll~ry: