COMBINED OR COMPOUND ENTRY - Definition

COMBINED OR COMPOUND ENTRY

So far we have seen transactions which involve only two accounts. Some times, a transaction may involve more than two accounts.Some time , there may be more transaction of the same nature taking place on the same date.In such situations, such transaction may be recorded by means of single journal entry, Instead of passing separate  entries. Such an entry called “Combined”or “Composite”or Compound journal entry, It may be recorded in the following three ways

1 . By Debiting one account and crediting two or more accounts.

2   By Debiting two or more accounts and crediting one account.

3   By Debiting two or more accounts and crediting two or more accounts.

SALES JOURNAL

SALES JOURNAL:

In this book are recorded all goods sold on credit. If there are cash sales they are recorded in cash book.

Sale of old assets is not recorded in this book.

Such transactions are passed through the journal proper

Invoice :

When goods are sold on credit.an invoice is given to the buyer, the seller generally has a bound invoice book.it contains consecutively numbered  invoices in duplicate. Original copy is given to the buyer and the duplicate remains in the book itself. The entries in the sales books are made with the help of the duplicate copies which are duly numbered.

DATE	NAME OF CUSTOMER	OUTWARD INVOICE	L.F	AMOUNT

1 The first column records the date of transaction

2 The second column sets out the name of the buyer and his address

3 Third column is written the number of the outward invoice number.

4 fourth column points out the page in the ledger where the buyer accounts is debited

5 The “ amount “ column specifies the net amount specified in the invoice.

POSTING :

The sales book is periodically totaled and the entries there from are posted to the ledger accounts under

Debit customers account with the individual amount against his name as To sales a/c with the date of sale

Credit sales account with the periodical total as By sundry debtors with the date when the book is totaled. is written the number of the outward invoice number.

LEDGER BALANCING (IE) EXAMPLE

LEDGER BALANCING IE EXAMPLE

FOR OLD BUSINESS

The following are some of the balancing appearing in the ledger of trader on 31-12-1995. Compute gross profit taking and closing stock as Rs 12000.

Opening stock 1-1-95                                             - 6000

Purchases                                                                - 48000

Purchases returns                                                    - 4000

Sales                                                                        - 63200

Sales returns                                                            - 1600

Wages                                                                      - 4000

Solution :

Cost of goods sold = Opening stock + net purchases + Wages – Closing stock

= Rs.6000 + 44000 + 4000 – 12000

= Rs 42000

Net sales = Sales – Sales Returns

= Rs 63,200 - 1600

= Rs 61,600

Gross Profit = Net Sales – Cost of goods sold

= Rs 61,600 – 42,000

= Rs 19,600

Balancing – Meaning

Balancing

After the ledger posting the next stage is “balancing” the accounts , we have seen that account is debited whenever its receives the benefit of the transaction and is credited when ever it gives the benefit of the transaction,Generally both the sides of account will not be equal.Either the debit side total may be more than the credit side total or the credit side total may be more than the debit side

total.An account is said to show a debit balance if debit side is heavier and is said to show a credit balance if the credit side is heavier.The process of showing the debit or credit balance of a particular account ' or ' striking the balance '

The difference between the total debits and the total credits of an account is called the balance.

'ie',,,, the net result of debits and credits in an account is the balance.

Balancing may be defined as the process of finding the difference between total debits and total credits of an account and writing of the difference in the lighter side so that the total of two sides becomes equal.

book keeping merits in audio format

book keeping introduction merits of bookkeeping

BOOK KEEPING

Book keeping is the system of recording business

activities for the purpose of providing relaiable

information to the owners and mangers about the

state and propects of the business concern

 Merits of book keeping

 Merits to business man
 Merits to goverment
 Merits to employess
 Merits to consumers
 Merits to management
 Merits to investors

For business man

 It helps in acquiring main information about

business

 It helps inbuying and selling of business

 It facilitates comparison of the accounts of

various years

 It helps in obtaning loan

 It helps valuing good will

 It helps in controlling empolyees\

To goverment

 Financial help is given by the goverment on the

basis of accounting record

 Country industrial progress cab be judged on its

basis

 It helps making assesment

 It helps in providing licences

Merits to management

 Its on basis of accounting record that the

management makes new polices alters

excisting methods and formulates new scheme

To empolyees

 Accounting records help the employees in all

matters relating to their wages salaries bonus

etc.

To consumers

 Correct cost price and selling prices are fixed

on basis to accurate accounting record there

fore consumers can get manufactured articles

at reasonable price

To inverstors

 Prospectiveinverstors are geager to know the

past and present position of the unit concerned

he also makes an interpretataion about the

future of the business unit he does all this on

basis of accounting record