Book keeping
| Philosophy of Social Sciences |
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Textbook
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Additional References
How the topic is discussed in NCERT Books
NCERT Class XI has 'Financial Accounting - I' text book, which gives much more detailed explanation of Accounting. Chapter 1 provides an introduction to accountancy and chapter 2 discusses basic accounting concepts which is very much required to understand the subject.
Class XI - Financial Accounting - Chapter 3 and Class XI - Financial Accounting - Chapter 4 deals with recording of transactions, in much more detail. It provides images of vouchers, books which can help get a better understanding of book keeping. Chapter 3 also has 20 sums for recording Journal transactions
Chapter 6 discusses preparation of Trial Balance. Teachers will find reading the NCERT text book useful since it is discussed in far more detail with many examples for easier understanding
Click here for NCERT Accountancy text books
Useful websites
Wikipedia page on double entry book keeping gives a detailed explanation for this method. It includes solved examples of recording transactions using double entry method and preparation of the financial statements.
http://www.samarak.com/bookkeeping-center/bookkeeping-dictionary.html has a brief explanation for terms used in book keeping.
[site provides a simple explanation of the process of double entry book keeping
Reference Books
Tamil Nadu text book for Class XII gives a very good and detailed explanation about Book Keeping and Accounting.
Other popular authors in this topic include 1. T.S.Grewal – Double Entry Book Keeping. 2. R.L. Gupta – Principles and Practice of Accountancy 3. T.S.Grewal – Introduction to Accountancy
Teaching Outlines
Please describe the key ideas to be conveyed in this section. Also broken down in details by each idea
Key Idea # 1 - Introduction to Book Keeping - Double Entry System
What are the key ideas to be covered
Double Entry Book keeping is a scientific way to maintain financial records. In this system, every transaction will have two aspects- debit and credit. The sum of the debit will always = sum of credits.
Learning objectives
Understand double entry book keeping system
Notes for teachers
It is a bit difficult to understand double entry - most common doubt is that "if debit always = credit, then how will business make a profit, since one must be more than the other.
The key point is that Book Keeping keeps records for the business and treats the owner(s) as distinct/different from the business.Hence any profit made will be treated by the business as a 'liability' to the owner. Hence while profit (or loss) will be recorded, it will still be on a basis of debit = credit. Simple example provided below
Business 'Biscuit Mane' purchased 10 biscuit packets for Rs 100 on credit from 'A' and sold it for Rs 120 on credit to 'B'. A profit of Rs 20 is made, though as shown in the entries below, debit =credit
1. Entry for - Purchase of 10 biscuit packets for Rs 100 Particulars Debit Credit Biscuits Purchased A/c Dr 100
To A 100
2. Entry for - Sale of 10 biscuit packets for Rs 120 B A/c Dr 120
To Sales Account 120
The Trial Balance will show as follows Particulars Debit Credit A 100 B 120 Purchase 100 Sales 120 Total 220 220
On preparing the profit and loss account, we will have Profit of 20 (sales 120 less purchase 100) and in balance sheet we will have net asset of 20 (120 due from A less due to B 100) on Asset side and on liabilities side a 'suplus' of 20. Thus profit is treated by accounts as a liability to the owner.
Activity No # 1 Solving NCERT Text Book examples
has 20 cases of preparing the journal entries and recording in Books of Accounts from page 80 to 90.
- Estimated Time - several periods
- Materials/ Resources needed
NCERT text book (soft copy), pen, paper
- Prerequisites/Instructions, if any
- Multimedia resources
- Relevant local connections - people, places and materials
- Website interactives/ links
- Process
- What questions can you ask
- Assessments - incorporating elements of CCE
If debit = credit, how can a business make a profit or a loss? If we term debit as credit and credit as debit would it make any difference?
- Question Corner
How do large organisations with thousands of transactions manage to maintain books of accounts?
Activity No # 2 - Book keeping using software application
In the Ubuntu public software system, we can freely download simple financial accounting software such as gnucash. Students can follow the tutorials on gnucash and learn the basics of book keeping. Of course, learning a software application does not replace learning the concepts, but rather allows practice in book keeping.
- Estimated Time
Difficult to estimate
- Materials/ Resources needed
Computer with Internet for downloading gnucash. Once downloaded and installed, gnucash can be used/learnt without needing Internet.
- Prerequisites/Instructions, if any
Available in the user guides
- Multimedia resources
There are several videos on gnucash such as
- Relevant local connections - people, places and materials
- Website interactives/ links
https://en.wikipedia.org/wiki/Gnucash
- Process
- What questions can you ask
How is using a computerised accounting application different from manual process of recording
- Assessments - incorporating elements of CCE
- Question Corner
Key Idea # 2 - Book keeping is the keeping of (many) books
What are the key ideas to be covered
Double entry Book keeping uses many 'books of accounts' to record transactions
The simplest form of book would be the Journal, in which every transaction is recorded. The accounts that are affected are entered, and the amounts - debit for some and credit for others are written with a brief explanation called 'narration'.
However,over a period of time, transactions were 'categorised' and for those which occurred often, special books were created, one per category, such as
- Purchases of goods (purchase day book)
- Sales of goods (sales day book)
- Purchase returns of goods (purchase returns day book)
- Sales returns of goods (sales returns day book)
- Cash and Bank Book (for cash and bank transactions)
- Journal
- Purchases Ledger
- Sales Ledger
- General Ledger
When books are manually written (by pen on paper), there is a big advantage in splitting the books since different sections in the accounts department can write their own book - sales section can write sales book and sales returns book etc.
Learning objectives
Understand the different books of accounts and their purposes
Notes for teachers
Nowadays mostly books of accounts are maintained in computerised systems. In this case, the transaction information is entered and stored in 'transaction tables'. Both the Journals as well as the ledgers can be simple reports from this database, so the splitting into different books etc is no more important.
However even in computerised systems, different transaction types will have different input screens since the data being input will differ.
Activity No # 1 Study different books formats
Each book of account has its special / unique format. The differences in these formats and their reasons can be discussed. Wikipedia page on double entry book keeping has the formats of different books
- Estimated Time - two periods
- Materials/ Resources needed
- Formats of the different books of accounts
- Prerequisites/Instructions, if any
- Multimedia resources
- Relevant local connections - people, places and materials
- Website interactives/ links
- Process
Analyse the formats of the different books and discuss why they are different?
- What questions can you ask
A cash book is said to be both a Journal and a Ledger. Why?
- Assessments - incorporating elements of CCE
- Question Corner
Are there books other than the books of accounts discussed, which a business / entity needs to maintain? Such as staff records (staff information), fixed assets information, inventory information etc?
Project Ideas
If a local business will accept then students can go for brief internship to write the books of accounts. To start with, they can just analyse and study the originating documents like cash bills, invoices, checks etc. Later they can pass / write the journal entries in their own books. this will give them hands-on experience.
Community Based Project
If there is an accountant in the community, he can be invited to the school to give a talk on how she/he maintains books of accounts in her/his company/entity.
Every grama panchayat also has accountant, she/he can be invited also to give a talk to students