Smart Accountant Training for beginners Day 2.pdf

Understanding accounting concept in simple way

1. Welcome to Smart
Accountant class
200
Hrs
60
Hrs
140
Hrs
Chart of Accounts
3 Months, 200 Hours
60 Hours of Class
140 Hours of Practicals

2. RegisteredOffice
M-51, Ramakrishna Vihar, IP Extn. Patparganj,
New Delhi –110092
Registered Corporate Office
Office No. 404, 410 & 411 DevikaTower,
ChanderNagar, Ghaziabad –201011
Contact
0120-4113633
9560054515
7840054515
www.virtualgroup.in
3 Months, 200 Hours
60 Hours of Class
140 Hours of Practicals

3. •Chart of Accounts
•Importance
•Liabilities
•Assets
•Income
•Expenditure
Chart of Accounts
Liabilities
Assets
Importance
Chart of Accounts
Income
Expenditure

4. Chart of Accounts
Achartofaccounts(COA)islistoftheaccountsusedby
abusinessentitytorecordandcategorizefinancial
transactions.COAisusedtoorganizethefinancesof
theentityandtosegregateexpenditures,revenue,
assetsandliabilitiesinordertogiveinterestedpartiesa
betterunderstandingofthefinancialhealthofthe
entity.
Theaccountsarelistedintheorderofassets,liabilities,
owner'sequity,revenue,andexpenses.Thechartof
accountsestablisheshowthebusinesswilloperate,
whatinformationwillbecaptured,andwhat
informationwillsubsequentlybereadilyretrievableby
thesystemforreportingandotherneeds.
Liabilities
Assets
Importance
Chart of Accounts
Income
Expenditure

5. Chart of Accounts
Haveyoueverwonderedafterhearingsuchphrases
fromaccountantslike"It'snotinthechartofaccounts.
Wedon'tknowhowtoenteryourtransaction"or"We
can'tprocessyourinvoicewithoutanaccountnumber."
Incaseofnewgeneralledgernothingmovesforward
unlesschartofaccounthasbeenfinalized.
Whilemanynon-financialmanagersfeelsthattheclient
isunnecessarilyslowingdownpaymentbydiscussing
chartofaccountstoomuch.That'snotreallytheir
purpose.Anyonewhohassomefinancialunderstanding
knowsthatthisstructureneedstobefinalizedfirst
beforeotherdiscussionscanstartsinceithasaserious
impactontheentiregeneralledgerdesign.
Liabilities
Assets
Chart of Accounts
Importance
Income
Expenditure

6. Chart of Accounts
Theentirerecordingprocessofanyaccounting
systemrequiresabasicorganizationofdataso
thattheaccountingdatacanbeclubbedinto
meaningfulaccountsandrepresentedinaway
usefulfortheusersandstakeholders.
Forexample–purchasesoncreditfrom
vendorsthroughinvoicescanbelater
summarizedandreportedwithsomeclarityas
towhatwaspurchased,whyitwaspurchased,
whatorganization(s)benefitedfromthose
expenditures,andwhatistheunpaidliability
onaccountofallthosepurchases.
Liabilities
Assets
Chart of Accounts
Importance
Income
Expenditure

7. Chart of Accounts
Importance
Assets
Chart of Accounts
Liabilities
Income
ExpenditureGroup Head Ledger's Name
Type of
Account
Debit / Credit in
Voucher Entry
Proprietor's Capital Account Real Credit
Partner's Capital Account Real Credit
Share Capital Account Real Credit
Drawings, Household Expenses, Self Insurance Policies Real Debit
Liabilities
Chart of Accounts
Capital
Account

8. Chart of Accounts
Importance
Assets
Chart of Accounts
Liabilities
Income
ExpenditureGroup Head Ledger's Name
Type of
Account
Debit / Credit in
Voucher Entry
General Reserve Real Credit
Capital Reserve Real Credit
Investment Allowance Reserve Real Credit
Surplus of Income over Expenditure Real Credit
Surplus of Expenditure over Income Real Debit
Chart of Accounts
Liabilities
Reserves and
Surplus

9. Chart of Accounts
Importance
Assets
Chart of Accounts
Liabilities
Income
ExpenditureGroup Head Ledger's Name
Type of
Account
Debit / Credit in
Voucher Entry
Bank Term Loan against Machinery, Building, Equipment etcReal
Bank Car Loan or any other loan secured on any asset Real
Money received from Directors and its Relatives Real
Advances received from Customers Real
Bank Overdraft Real
Bank CC Limit Real
At the time of Disbursement of Loan Credit
At the time of Repayment of Loan - Lumpsum / EMI Debit
Chart of Accounts
Liabilities
Secured
Loans
Unsecured
Loans

10. Chart of Accounts
Importance
Assets
Chart of Accounts
Liabilities
Income
ExpenditureGroup Head Ledger's Name
Type of
Account
Debit / Credit in
Voucher Entry
Leave Encashment Provisions Real Credit
Gratuity Provisions Real Credit
Income Tax Provisions Real Credit
Audit Fee Provisions Real Credit
Legal and Filing fee Provisions Real Credit
Chart of Accounts
Liabilities
Provisions

11. Chart of Accounts
Importance
Assets
Chart of Accounts
Liabilities
Income
ExpenditureGroup Head Ledger's Name
Type of
Account
Debit / Credit in
Voucher Entry
GST Real
VAT Real
Sales tax Real
Service Tax Real
Excise Duty Real
At the time of Liability Creation (Generally Sales) Credit
At the time of Discharge of Liability Created (Generally Payment) Debit
At the time of Input Credit Creation (Generally Purchase) Debit
TDS - Contractor, Professional, Rent, Commission etc.
At the time of Deduction of Tax Credit
At the time of Discharge of Liability Created (Generally Payment) Debit
Chart of Accounts
Liabilities
Duties and
Taxes

12. Chart of Accounts
Importance
Assets
Chart of Accounts
Liabilities
Income
ExpenditureGroup Head Ledger's Name
Type of
Account
Debit / Credit in
Voucher Entry
Suppliers who sale goods to us on Credit terms Personal
At the time of purcahse on Credit Terms Credit
At the time of making payment to Crediotors Debit
Chart of Accounts
Liabilities
Sundry
Creditors

13. Chart of Accounts
Importance
Assets
Chart of Accounts
Liabilities
Income
ExpenditureGroup Head Ledger's Name
Type of
Account
Debit / Credit in
Voucher Entry
Salary, Wages and Bonus Payable Real Credit
Expenses Payable Real Credit
Employee Benefits - PF Payable Real Credit
Employee Benefits - ESI Payable Real Credit
Credit Card Bills Payable Real Credit
At the time of Payment of Current Liabilities Real Debit
Chart of Accounts
Liabilities
Current
Liabilities

14. Chart of Accounts
Importance
Assets
Chart of Accounts
Liabilities
Income
ExpenditureGroup Head Ledger's Name
Type of
Account
Debit / Credit in
Voucher Entry
Different Locations / Branches are covered here Real
At the time of receipt of Material or Services from Branch Credit
At the time of sending of Material or Services to Branch Debit
Chart of Accounts
Liabilities
Branch /
Division

15. Chart of Accounts
Importance
Liabilities
Chart of Accounts
Assets
Income
ExpenditureGroup Head Ledger's Name Type of Account
Debit / Credit in
Voucher Entry
Building Real Debit
Computers Real Debit
Furniture and Fixtures Real Debit
Fire Fighting Equipment Real Debit
Office Equipment Real Debit
Generator / Invertors Real Debit
Land Real Debit
Plant and Machinery Real Debit
Printers / Photocopiers Real Debit
At the time of sale of any Fixed Assets Credit
Chart of Accounts
Assets
Fixed Assets

16. Chart of Accounts
Importance
Liabilities
Chart of Accounts
Assets
Income
ExpenditureGroup Head Ledger's Name Type of Account
Debit / Credit in
Voucher Entry
Shares Real Debit
Debentures Real Debit
Bonds, Govt. Securities Real Debit
Mutual Fund Real Debit
FDR's Real Debit
Share Applicvation Money given Real Debit
Infrastructure Bonds Real Debit
At the time of sale of any investyment Credit
Chart of Accounts
Assets
Investment

17. Chart of Accounts
Importance
Liabilities
Chart of Accounts
Assets
Income
ExpenditureGroup Head Ledger's Name Type of Account
Debit / Credit in
Voucher Entry
Bank Current A/c Real
Bank Saving A/c Real
Cash Real
Petty Cash Real
Imprest Advance' Real
At the time of Receipt of Funds / Cash Deposit Debit
At the time of Payment or cash Withdrawal Credit
Chart of Accounts
Assets
Bank Account
Cash-in-Hand

18. Chart of Accounts
Importance
Liabilities
Chart of Accounts
Assets
Income
ExpenditureGroup Head Ledger's Name Type of Account
Debit / Credit in
Voucher Entry
Stock in General Real Debit
Stock in case of Manufacturer
Stock-in-Hand - Raw Material Real Debit
Stock-in-Hand - Finished Goods Real Debit
Stock-in-Hand - Work in Progress Real Debit
Stock-in-Hand - Packing Material Real Debit
Stock-in-Hand - Fuel Stores Real Debit
Stock of Spare Parts and any other part generally in use Real Debit
Chart of Accounts
Assets
Stock-in-Hand

19. Chart of Accounts
Importance
Liabilities
Chart of Accounts
Assets
Income
ExpenditureGroup Head Ledger's Name Type of Account
Debit / Credit in
Voucher Entry
Interest Accrued on Deposit Real Debit
Tax Deducted at Source (Receivable) Real Debit
Tax claims Refund / Receivable Real Debit
GST Refund Receivable Real Debit
VAT Refund Receivable Real Debit
Service Tax Refund Receivable Real Debit
Excise SAD Refund Receivable Real Debit
Insurance Claim Receivable Real Debit
Chart of Accounts
Assets
Current Assets

20. Chart of Accounts
Importance
Liabilities
Chart of Accounts
Assets
Income
ExpenditureGroup Head Ledger's Name Type of Account
Debit / Credit in
Voucher Entry
Earnest Money Deposit Real Debit
Tender Deposit Real Debit
Deposits with Real Debit
Electricity Supply company Real Debit
Telephone service company Real Debit
Municipality Real Debit
Landlord against Rent Real Debit
Assets
Deposits (Assets)
Chart of Accounts

21. Chart of Accounts
Importance
Liabilities
Chart of Accounts
Assets
Income
ExpenditureGroup Head Ledger's Name Type of Account
Debit / Credit in
Voucher Entry
Advance against Salary to Staff Real Debit
Advance to Creditors / Suppliers Real Debit
Advance for Expenses Real Debit
Short Term Advances Real Debit
Chart of Accounts
Assets
Loans and
Advances (Assets)

22. Chart of Accounts
Importance
Liabilities
Chart of Accounts
Income
Assets
ExpenditureGroup Head Ledger's Name Type of Account
Debit / Credit in
Voucher Entry
Sales Nominal Credit
Sales Return Nominal Debit
Job Work Nominal Credit
Consultancy Fee Nominal Credit
Commission, Brokerage etc for Traders Nominal Credit
Sales
Direct Income
Chart of Accounts
Income

23. Chart of Accounts
Importance
Liabilities
Chart of Accounts
Income
Assets
ExpenditureGroup Head Ledger's Name Type of Account
Debit / Credit in
Voucher Entry
Sales Tax Refund Nominal Credit
Claims Refund Received Nominal Credit
Discount on Purchases Nominal Credit
Share Divident Income Nominal Credit
Misc. Receipts Nominal Credit
Interest received from Bonds, Bank deposits, Loan Given,
Deventures, Customer
Nominal Credit
For Traders
Chart of Accounts
Indirect Income

24. Chart of Accounts
Importance
Liabilities
Chart of Accounts
Income
Assets
ExpenditureGroup Head Ledger's Name Type of Account
Debit / Credit in
Voucher Entry
Sales Tax Refund Nominal Credit
Claims Refund Received Nominal Credit
Discount on Purchases Nominal Credit
Share Divident Income Nominal Credit
Misc. Receipts Nominal Credit
Interest received from Bonds, Bank deposits, Loan Given,
Deventures, Customer
Nominal Credit
Excise Duty Drawback Nominal Credit
Profit on sale of Assets Nominal Credit
Sale of Scrap Nominal Credit
Commission, Brokerage Received Nominal Credit
For Manufacturer
Chart of Accounts
Indirect Income

25. Chart of Accounts
Importance
Liabilities
Chart of Accounts
Expenditure
Assets
IncomeGroup Head Ledger's Name Type of Account
Debit / Credit in
Voucher Entry
Purchase Nominal Debit
Purchase Return Nominal Credit
In case we are not aware about the correct account of a transaction,
such entry is parked for the time being in Suspense account
Nominal Debit / Credit
At the time of passing the entry Debit / Credit
At the time we know the correct account of the transaction Reversal entry
Suspense
Chart of Accounts
Expenses
Purchase

26. Chart of Accounts
Importance
Liabilities
Chart of Accounts
Expenditure
Assets
IncomeGroup Head Ledger's Name Type of Account
Debit / Credit in
Voucher Entry
Packing Material Nominal Debit
Packing Expenses Nominal Debit
Commission, Brokerage on Purchases Nominal Debit
Freight on Purchase Nominal Debit
Handling Expenses on Purchase Nominal Debit
Labour and Wages Nominal Debit
Other Trading taxes which are non refundable like Entry TaxNominal Debit
For Traders
Chart of Accounts
Direct Expenses

27. Chart of Accounts
Importance
Liabilities
Chart of Accounts
Expenditure
Assets
IncomeGroup Head Ledger's Name Type of Account
Debit / Credit in
Voucher Entry
Packing Material Nominal Debit
Packing Expenses Nominal Debit
Fuel Consumed Expenses Nominal Debit
Laboratory Materail Nominal Debit
Consumable and Stores consumed Nominal Debit
Labour and Wages at Factory Nominal Debit
Freight on Purchase Nominal Debit
Octroi on Purchase Nominal Debit
Factory Power Expenses Nominal Debit
Material Purchase Nominal Debit
Loading / Unloading on Purchase Nominal Debit
Chart of Accounts
Direct Expenses
For
Manufacturer

28. Chart of Accounts
Importance
Liabilities
Chart of Accounts
Expenditure
Assets
IncomeGroup Head Ledger's Name Type of Account
Debit / Credit in
Voucher Entry
Salary and Bonus Expenses Nominal Debit
Staff Welfare Nominal Debit
Freight on Sales Nominal Debit
Incentives to Staff Nominal Debit
Depreciation Nominal Debit
Printing and Stationery Expenses Nominal Debit
Travelling Expenses Nominal Debit
Postage and Courier Nominal Debit
Rent Nominal Debit
Repair and Maintainance Nominal Debit
Communication Nominal Debit
Hire Charges Nominal Debit
Insurance Nominal Debit
Legal and Professional fees Nominal Debit
Audit Fee Nominal Debit
Advertisement Nominal Debit
Sales Promotion Nominal Debit
Conference Nominal Debit
Exhibition Nominal Debit
Interest on Loan Nominal Debit
Testing Expenses Nominal Debit
Bank Interest and Charges Nominal Debit
Misc Expenses Nominal Debit
Indirect Expenses
For
Manufacturer as
well as Traders
Chart of Accounts

29. Test
Liabilities
Assets
Importance
Chart of Accounts
Income
Expenditure

30. Chart of Accounts
1.Thechartofaccountsisa:
A.Listofchecksandchecknumbers
B.Listofaccountsandaccount
numbers
C.Listofinventoryitemsanditem
numbers
D.ListofCustomersandcustomer
numbers
Liabilities
Assets
Importance
Chart of Accounts
Income
Expenditure

31. Chart of Accounts
1.Thechartofaccountsisa:
A.Listofchecksandchecknumbers
B.Listofaccountsandaccount
numbers
C.Listofinventoryitemsanditem
numbers
D.ListofCustomersandcustomer
numbers
Liabilities
Assets
Importance
Chart of Accounts
Income
Expenditure

32. Chart of Accounts
2.Incomeaccountsinacompanyare
usedtotrack:
A.Costsofitemssoldtocustomers
B.Salestocustomersandother
revenueearned
C.Purchasesfromvendors
D.Coststhathaveexpiredorbeen
consumed
Liabilities
Assets
Importance
Chart of Accounts
Income
Expenditure

33. Chart of Accounts
2.Incomeaccountsinacompanyare
usedtotrack:
A.Costsofitemssoldtocustomers
B.Salestocustomersandother
revenueearned
C.Purchasesfromvendors
D.Coststhathaveexpiredorbeen
consumed
Liabilities
Assets
Importance
Chart of Accounts
Income
Expenditure

34. Chart of Accounts
3.Whatareassets?
A.Resourcesthatacompanyowns
withfuturebenefit
B.Amountsowedtoothersandare
futureobligations
C.Networthofacompany
D.Amountspaidtoowners
Liabilities
Assets
Importance
Chart of Accounts
Income
Expenditure

35. Chart of Accounts
3.Whatareassets?
A.Resourcesthatacompanyowns
withfuturebenefit
B.Amountsowedtoothersandare
futureobligations
C.Networthofacompany
D.Amountspaidtoowners
Liabilities
Assets
Importance
Chart of Accounts
Income
Expenditure

36. Chart of Accounts
4.Whichoneofthefollowingchoicesis
notusedtomodifythechartof
accounts?
A.Addingnewaccounts
B.Deletingunusedaccounts
C.Deletingaccountswithbalances
D.Editingaccounts
Liabilities
Assets
Importance
Chart of Accounts
Income
Expenditure

37. Chart of Accounts
4.Whichoneofthefollowingchoicesis
notusedtomodifythechartof
accounts?
A.Addingnewaccounts
B.Deletingunusedaccounts
C.Deletingaccountswithbalances
D.Editingaccounts
Liabilities
Assets
Importance
Chart of Accounts
Income
Expenditure

38. Chart of Accounts
5.Thechartofaccountsisalistingofthe
accountspresentlyhavingbalancesin
thegeneralledger:
Liabilities
Assets
Importance
Chart of Accounts
Income
Expenditure Someaccountslistedinthechartof
accountswillNOThaveamounts
recordedinthem,especiallyifitisearly
intheaccountingyear.

39. Chart of Accounts
6.Someaccountingsoftwarewillclassifysome
accountsas"income"accounts,while
accountantsmightrefertotheseaccounts
as"revenue"accounts.
Liabilities
Assets
Importance
Chart of Accounts
Income
Expenditure
Manypeopleusethetermincomewhen
referringtosales,servicefeesearned,
contributionsreceived,etc.

40. Chart of Accounts
7.Thedigitsoftheaccountnumbersassignedto
generalledgeraccountsoftenhavesignificance.
Forexample,anaccountnumberbeginning
witha"1"mightsignifythattheaccountisan
assetaccount,a"6"mightsignifyanoperating
expense,etc.
Liabilities
Assets
Importance
Chart of Accounts
Income
Expenditure
Generally,thelargerandmoresophisticatedthe
company,themoredigitsintheaccountnumbers.For
sortingtheaccountsintomeaningfulreportsthe
variousdigitsdosignifyaspecificcategory.

41. Chart of Accounts
8.Theaccountsshowninthechartofaccounts
canbebroadlyclassifiedintotwocategories:
balancesheetaccountsandAssetsand
LiabilitiesAccount
Liabilities
Assets
Importance
Chart of Accounts
Income
Expenditure
CorrectanswerisBalanceSheetaccountandProfitand
LossAccount

42. Chart of Accounts
9.Everytransactionwillaffecttwoaccounts
Liabilities
Assets
Importance
Chart of Accounts
Income
Expenditure
Twoistheminimumnumberofaccounts
requiredtorecordatransaction;however,
manytransactionsinvolvemorethantwo
accounts.

43. Chart of Accounts
10.Inadditiontothestandardchartof
accountsforaspecificindustry,youwill
likelywanttoexpandand/ormodifythe
chartofaccountstofityourbusiness.One
toolthatwouldbehelpfulindetermining
theaccountsforyourcompanywouldbe
yourcompany'sLineofBusiness
Liabilities
Assets
Importance
Chart of Accounts
Income
Expenditure
CorrectanswerisOrganisationChart

44. Thank You
Liabilities
Assets
Importance
Chart of Accounts
Income
Expenditure