Comprehensive project synopsis
Question:
On 1st April 2024 JSMR started a business with cash Rs 20,00,000.
March 3 Cash deposited into the bank Rs. 15,00,000.
March 6 Goods purchased for cash Rs 5,00,000 at 20% trade discount .
March 8 Machinery Purchased Rs.2,50,000 and installation expenses paid Rs.
50,000. Amount paid by cheque.
March 12 Computer Purchased paid by cheque Rs. 30,000.
March 16 Goods sold for Cash Rs. 6,00,000 and deposited in to the bank same
day.
March 18 Carriage paid Rs. 10,000.
March 20 Goods Sold on credit to Mohit & Brother Rs.2,00,000 at 25% trade
discount .
March 25 Furniture Purchased for office use paid by cheque Rs. 50,000.
March 26 Cheques received from Mohit and brother Rs 1,00,000 and deposited
into the Bank the same day.
March 27 Cash withdrawn from bank for office use Rs.40,000.
March 28 Advertisement Expenses paid by cheque Rs. 20,000.
March 29 Commission Received Rs. 10,000.
March 31 Bank charges charged by bank Rs. 5,000.
Comprehensive project synopsis
1. Journal
FORMAT:
Date Account Title Particulars Debit (₹) Credit (₹)
dd/mm/yyyy Account Name (Dr) To Account Name (Cr) Amount Amount
dd/mm/yyyy Account Name (Dr) To Account Name (Cr) Amount Amount
Definition: The Journal is the first book of entry in accounting where all financial transactions
are recorded chronologically. It captures each transaction's details before they are posted to
individual accounts in the Ledger.
Purpose:
● To record transactions in a systematic and chronological order.
● To provide a detailed record of all transactions with explanations.
Key Components:
● Date: When the transaction occurred.
● Account Titles: Names of accounts involved.
● Debit and Credit Amounts: Amounts to be debited or credited to accounts.
● Description: Brief explanation of the transaction.
Example: If a company buys supplies for cash, the journal entry would be:
● Date: 01/01/2024
● Account Titles: Supplies (Debit), Cash (Credit)
● Amount: Supplies ₹1,000, Cash ₹1,000
● Description: Purchased office supplies.
Comprehensive project synopsis
2. Ledger
FORMAT:
For Account Name
Date Particulars Ref Debit (₹) Credit (₹) Balance
(₹)
dd/mm/yyy To Account Name J1 Amount Balance
y (Dr)
dd/mm/yyy By Account Name J2 Amount Balance
y (Cr)
For Account Name
Definition: The Ledger is a collection of all accounts used by a business. It provides a detailed
record of each account's transactions and the balances after each transaction.
Purpose:
● To summarize all transactions recorded in the Journal.
● To track the balance of each individual account.
Key Components:
● Account Title: Name of the account.
● Date: When the transaction occurred.
● Particulars: Description or reference to the transaction.
● Debit and Credit Columns: Amounts debited or credited.
● Balance: Running total after each entry.
Example: For the Supplies account:
● Date: 01/01/2024
● Particulars: To Cash (Credit)
● Amount: ₹1,000
● Balance: ₹1,000 (debit)
3. Trial Balance
FORMAT:
Comprehensive project synopsis
Account Title Debit (₹) Credit (₹)
Cash
Capital
Sales
Purchases
Total Total Total
Definition: The Trial Balance is a summary of all ledger accounts’ balances. It is used to ensure
that the total debits equal the total credits, which confirms the mathematical accuracy of the
books.
Purpose:
● To check the accuracy of accounting records.
● To ensure that the books are in balance before preparing financial statements.
Key Components:
● Account Title: Name of the account.
● Debit Balance: Total amount debited to the account.
● Credit Balance: Total amount credited to the account.
● Total Debits and Credits: Sum of all debit and credit balances, which should be equal.
Example: If the Cash account has a debit balance of ₹2,000 and the Accounts Payable has a
credit balance of ₹2,000, the trial balance will show:
● Total Debits: ₹2,000
● Total Credits: ₹2,000
4. Financial Statements
Format:
Particulars ₹
Sales Revenue Amount
Comprehensive project synopsis
Less: Cost of Goods Sold Amount
(COGS)
Gross Profit Amount
Less: Operating Expenses Amount
Net Profit Amount
**a. Income Statement (Profit & Loss Statement)
Definition: The Income Statement summarizes the company's revenues, expenses, and profits
over a specific period. It shows how much money the company earned and spent.
Purpose:
● To assess the company's financial performance over a period.
● To determine the net profit or loss.
Key Components:
● Revenues: Income earned from sales or services.
● Expenses: Costs incurred in earning revenues (e.g., salaries, rent).
● Gross Profit: Revenues minus Cost of Goods Sold.
● Net Profit/Loss: Gross Profit minus operating and non-operating expenses.
Example: If a company has sales of ₹10,000 and expenses of ₹6,000, the Income Statement
would show:
● Revenue: ₹10,000
● Expenses: ₹6,000
● Net Profit: ₹4,000
Format:
Assets ₹ Liabilities and Equity ₹
Current Assets Current Liabilities
Comprehensive project synopsis
Cash Amount Accounts Payable Amount
Accounts Receivable Amount Short-term Loans Amount
Non-Current Non-Current Liabilities
Assets
Equipment Amount Long-term Loans Amount
Building Amount Owner's Equity
Total Assets Total Total Liabilities & Equity Total
**b. Balance Sheet
Definition: The Balance Sheet provides a snapshot of a company's financial position at a
specific point in time. It lists assets, liabilities, and equity.
Purpose:
● To assess the company's financial position and stability.
● To understand what the company owns and owes.
Key Components:
● Assets: Resources owned by the company (e.g., cash, inventory).
○ Current Assets: Cash or assets that will be converted to cash within a year.
○ Non-Current Assets: Long-term assets like property or equipment.
● Liabilities: Obligations the company owes to others (e.g., loans, payables).
○ Current Liabilities: Debts payable within a year.
○ Non-Current Liabilities: Long-term debts.
● Owner's Equity: The residual interest in the assets after deducting liabilities.
Comprehensive project synopsis
Example: If a company has total assets of ₹15,000 and total liabilities of ₹10,000, the Balance
Sheet would show:
● Assets: ₹15,000
● Liabilities: ₹10,000
● Owner's Equity: ₹5,000
