To explore further Do you think the presentation of final accounts is the same for all forms of business? Mr. Abhinav started a small shop of selling dairy products. He wanted to maintain proper books of accounts.
But, he had very little knowledge of accounting. He maintained only three books – purchases, sales and cash book by himself. He bought some dairy products and a refrigerator to store the milk products for which the payment was made by cheque but recorded the same in the purchases book. He also spent for the transportation charges and paid some money to the person who unloaded the stock.
He recorded the same in the cash book. He made both cash and credit sale for the next few weeks. He entered the entire sales in the sales book. In the middle of the month, he was in need of some money for his personal use.
So he took some money, but did not record in the books. Now, discuss on the following points: • Do you think Mr. Abhinav needs an accountant? Why do you think so?
• Does he maintain enough books of accounts? • What other books do you think that he needs to maintain? • What will be the impact on the profit, if he records the purchase of refrigerator in the purchases book? • Is it important to record the money taken for personal use?
Will it affect the final accounts? • Identify some of the accounting principles relevant to this situation. Reference . M C Shukla, T S Grewal and S C Gupta, Advanced Accounts, th ed., , S.Chand Publishing, New Delhi.
. R L Gupta and V K Gupta, Financial Accounting, th ed., , Sultan Chand and Sons, New Delhi. . S P Jain and K L Narang, Advanced Accountancy Vol – I, , Kalyani Publishers, New Delhi.
. Dalston L Cecil and Jenitra L Merwin, Financial Accounting, rd ed., , Learntech Press, Trichy. . Fundamentals of Accounting, , The Institute of Chartered Accountants of India, New Delhi.