If you want to get accurate profit and loss account for your business, you need to pass correct journal entries. Wrong journal entries or any other error will also make incorrect profit and loss account. There may be also other problems which we have to solve, let's see practical problem of one of my student.
Problem
Sir I have taken a unsecured loan on 26-05-2010 and started my business.....but I have started recording my transaction on cash book by 1 dec 2010...I have lost track and forgotten that at what purpose or nature of work I have made the expenditure 1 lac rupees in my business needs....so, where should I write off that 1 lac rupees as what type of expenditure in cash book to get a accurate p/l account of my business?
Solution
1. First of all, give pressure on your brain and try to remember for what expenses, you had paid 1 Lakh Rupees?
2. Check your all old vouchers, from where, you can find any clue of expenses.
3. See all the asset, it may be possible that you have bought any asset.
4. Ask your wife, I think, you may give him as gift, then it will be drawing. No, need to show it in profit and loss account.
If you forget, it means, I think, you lost Rs. 1,00,000, then there is no need to show expenses in cash book and it should be written in the debit side of profit and loss account by you. In end, if you find correct expenses, then you can pass rectify entry. OK.
Problem
Sir I have taken a unsecured loan on 26-05-2010 and started my business.....but I have started recording my transaction on cash book by 1 dec 2010...I have lost track and forgotten that at what purpose or nature of work I have made the expenditure 1 lac rupees in my business needs....so, where should I write off that 1 lac rupees as what type of expenditure in cash book to get a accurate p/l account of my business?
Solution
1. First of all, give pressure on your brain and try to remember for what expenses, you had paid 1 Lakh Rupees?
2. Check your all old vouchers, from where, you can find any clue of expenses.
3. See all the asset, it may be possible that you have bought any asset.
4. Ask your wife, I think, you may give him as gift, then it will be drawing. No, need to show it in profit and loss account.
If you forget, it means, I think, you lost Rs. 1,00,000, then there is no need to show expenses in cash book and it should be written in the debit side of profit and loss account by you. In end, if you find correct expenses, then you can pass rectify entry. OK.
these views are really helpful to me
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