BASIC ACCOUNTING

WHAT IS BUSINESS ?
Raw material
Commodity
ULTIMATE OBJECTIVE OF
BUSINESS?
•Profit Earning .

• How Do We Calculate Profit?

•Profit/Income = Revenue – Expense.

OTHER OBJECTIVES OF BUSINESS

• Creation of customers.
• Providing goods and services at
• Reasonable price
• Creating demand
• Increasing productivity.
• Employement generation
Pre – Requisites to Start a Business
Budget
Net income
Financial resources
Assets
Liability

That business owe to outsider.

Depreciation
Net Worth
The one from whom the business The one to whom the business has to
receives money. pay.
Bad Debt
Profit/ Loss
Transaction
VARIOUS FINANCIAL TRANSACTIONS

1.Purchase:
A process through which a person gets the ownership of some
goods or properties transferred in his name from another , on
payment of money.
• Purchase : Cash Purchase
(Cash Paid Immediately)

Credit Purchase
(Cash Will Be Paid Later)
2. Sales:
• A process through which the ownership of some goods or
properties is transferred from one person (seller) to another
person (buyer) for a price.
Sales: cash sales
(cash receive immediately)

credit sale
(cash will be received later)
3.Receipts:
• A written acknowledgement that something of value has been
transferred from one party to another
• Receipts Shows transactions of how much an organisation or
business entity receives in cash or bank from sales or any other
source during an accounting period.
4.Payments:
Are type of expense that is done in either cheques, cash or any
other mode
BOOK KEEPING
The process of recording your company’s financial
transactions into organised accounts on a daily basis.
FEATURES

•Method of recording daily transactions

•Only financial transactions recorded
•Specific period
•Based on rules and regulations
OBJECTIVE

•Keep complete record

•In systematic, orderly, and logical manner
•Permanent record
•Know the profit and loss
•Know the activities of businessman
IMPORTANCE
•Record
•Financial information
•Decision making
•Controlling
•Evidence
ACCOUNTING
•An art and science of recording, classifying and
summarising the financial transactions of the company
and interpreting the results and communicating the
information to various users of company
USERS
• INTERNAL: • EXTERNAL:
• Owner • Banks
• Managers • Creditors
• Investors
• Employees
PROCESS OF ACCOUNTING
1. Identification of transactions
2. Recording in books of original entry (journal)
3. Posting to ledger ( classification)
4. Preparation of trial balance (summarising)
5. Preparation of financial statements
OBJECTIVES
• Keep systematic record of business transaction
• Calculate profit/loss
• To ascertain financial position
• Check the progress of business
• Provide information to various parties
ADVANTAGES
• Maintenance of business records
• Comparison of results
• Decision making
• Evidence in legal matters
• Provide information to related parties
LIMITATIONS

• Record only monetary transactions

• No future assessment
• Historical cost
• Accounting can be manipulated
• Ignore the inflation rate
BOOK KEEPING VS. ACCOUNTING
• Scope
• Financial statements
• Skills and knowledge
• Person involved
• Nature
(clerical , professional)
BASIC TERMS IN ACCOUNTING:-

•Assets:
• A resource with economic value that an individual, corporation
or country owns or controls with the expectation that it will
provide a future benefit.
TYPES OF ASSETS
• Current assets :
- Short term assets (1 year)
- Can be liquidated quickly
- Used for company’s immediate need
- Cash , inventory, debtors etc.
• Non- current assets :
- Long term (more than 1 year)
- Cannot be liquidated quickly
- Long term investments, fixed assets,
• Fixed assets( non current)
• Assets which are purchased for long term use and not likely
to be converted into cash. ( land, buldings, equipment etc.)
Tangible assets Intangible assets
• Physical assets that can be • Assets that cannot be
Seen, touched and felt Seen, touched, and felt
• Machinery, land , building, • Copyrights, patents, goodwill
vehicles etc. etc
DRAWINGS;
• Amount of cash or goods which is withdrawn by the owner of
the business for his personal use.
• Drawings reduce the capital
LIABILITIES
• Are debt or obligations a person or a company owes to someone
else
TYPES OF LIABILITIES
• Current liabilities:
- That are due and payable within
- Short period (1 year)
- Also called short term liabilities
- Short term loans, Bills/ accounts payable,
Accrued expenses, bank overdraft etc.
• Non current liabilities:
- That have to be clear after 1 year or more
- Also called long- term liabilities
- Long term loans, debentures, capital lease etc.
• Contingent liabilities:
- Are separate category of liabilities that may or may not arise,
depending on a certain event. (potential lawsuit, product
warranties etc.)
DEBTORS:

•Individuals or businesses that owes money whether to

banks or other individuals.
CREDITORS

• Individuals or entities that have lent money to another

individual or entity
OR
• One who owns money
CAPITAL:
• Is the money used to build, run or grow a business.
• Money invested in the business by the owner of the company
PROFIT:

• Financial benefit realized when

• Revenue generated from a
• business acitivity exceeds the expenses.
• Profit= revenue - expense
LOSS:

• A business loss occurs when

• Your business has more expenses
• Than earnings during an accounting period
• Loss = expense - revenue
GOODS AND SERVICES:

• Goods are tangible items, as goods

• Have a physical presence and
• They can be seen and touched
• While services are intangible
• As we cannot see or touch it.
CAPITAL EXPENDITURE:

•Those expenditures of business

•That provide benefits to business
•For a long period that is a
•Period of more than one year
• In other words,
• Money spent by a firm to acquire
• Assets or to improve the quality
• Of existing assets is capital expenditure
REVENUE EXPENDITURE:
• Those expenditure of business that
• Provides benefits to business for
• Short period that is
• A period less than one year.
• In other words,
• Revenue expenditure is the money
• Spent by business entities to
• Maintain their everyday operations
Example of capital and revenue
expenditure
• Buying a van = capital expenditure
• Petrol cost for van = revenue expenditure
• Putting extra headlights
• on van= capital expenditure
• Purchase a machinery= capital expenditure
• Wages paid to the labour= revenue expenditure
• Rent paid = revenue expenditure
FINANCIAL STATEMENTS
• Are written records
• that convey the business activities
• And the financial performance of company
1. Income statement
2. Balance sheet
3. Cash flow statements
INCOME STATEMENT
• Shows a company’s revenues, expenses ,
• And profitability over a period of time
• Also sometimes called profit and loss Statement or an earning
statement
CASH FLOW STATEMENT
• A financial statement that shows
• How cash entered and exited in a company
• During an accounting period
• Cash coming in and out of a business
• Is referred to as cash flows
BALANCE SHEET
• A financial statement that contains details
• Of company’s assets, Liabilities and owner’s equity
• At a specific point of time.
• Used for evaluating the
• Performance of a business
ACCOUNTING EQUATION
• ASSETS = LIABILITIES + OWNER’S EQUITY/ CAPITAL

• Relationship between
• Assets, liabilities and capital of a busienss
BASIS OF ACCOUNTING
1. Cash basis
2. Accrual basis
3. Mixed or Hybrid basis
CASH BASIS ACCRUAL BASIS
• Records only cash transactions • Records both cash and credit
and ignores the credit transactions.
transaction. • Accounting method where the
• Only records transactions when activities/ transactions are
there is money flow or money recorded as and when happen
transfers between the parties • As soon as service is rendered or
• Transactions recorded only on product is supplied revnue
receipt of cash against the recognition happens
product
CASH BASIS ACCRUAL BASIS
• Income and expenses are • All the incomes and expenses
recorded when they are are recorded whether they are
received or paid. received or paid or not.
• Revenue is • Revenue is
recognised/recorded when recognised/recorded when it
cash is received is earned
• Expenses are recorded when • Expenses are recorded when
cash is spent/ paid they are incurred
CASH BASIS ACCRUAL BASIS
• Not recognised under the • Recognised under the
companies act. companies act.
• Does not ascertain correct • Ascertain correct profit or
profit or loss. loss.
• Suitable for professionals • Adopted by business
doctors, CA, lawers etc. enterprises with profit motive.
• MIXED OR HYBRID ACCOUNTING:
• It is a mix of cash basis and
• Accrual basis of accounting
• Revenues are accounted for on cash basis
• Costs are accounted for on an accrual basis
• Hybrid accounting also called
• Mixed system of accounting
• Outstanding expenses:
Those expenses which is due but not paid
• Prepaid expenses:
Those expenses which is not due but paid

• Accrued income:
Those income which is earned but not received
• Unearned income:
Those income which is not earned but received in advance
 GAAP
(GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES)
ACCOUNTING PRINCIPLES
• Are basic rules, guidelines, fundamentals
• With the help of which we make accounts.
• Accounting statements disclose the
• Profitability and solvency of the business
• To various parties.
• Therefore , it is necessary that such statements
• Should be prepared according to some
• Standard language and set of rules.
• These rules are usually called GAAP

• The rules on the basis of which Accounts are prepared is called

GAAP
FEATURES OF ACCOUNTING
PRINCIPLES
• Are uniform set of rules
• Are man-made
• Are flexible
• Are generally accepted
ACCOUNTING CONCEPTS
• Business entity concept • Accrual concept
• Money measurement concept • Matching concept
• Going concern concept • Dual aspect concept
• Accounting period concept • Objectivity concept
• Cost concept
• Realization concept
ACCOUNTING CONVENTIONS
• Convention of materiality
• Convention of full disclosure
• Convention of consistency
• Convention of conservatism/prudence
ACCOUNTING
CONCEPTS
MEANING OF ACCOUNTING
CONCEPTS
• Are the fundamental accounting assumptions
• That act as a foundation for recording
• Business transactions and preparation of
• Final accounts.
GOING CONCERN CONCEPT
• It states that a business entity
• Will continue running its operations
• In the foreseeable future and
• Will not be liquidated or forced
• To discontinue operations for any reason.
ACCRUAL CONCEPT
• An accounting concept where
• Revenue or expenses are recorded when
• Transaction occurs rather than
• When money is exchanged.
BUSINESS ENTITY CONCEPT
• It states that business and the owner
• Are two separate entities and therefore,
• Should be considered separate from each other.
MONEY MEASUREMENT CONCEPT
• Based on theory that a company
• Should be recording only those transactions
• That can be measured or expressed in
• Monetory terms on the financial statements.
ACCOUNTING PERIOD CONCEPT
• Is the timeframe at the end of which,
• The financial statements of a business are
• Prepared, to evaluate its profits and losses,
• And to learn the status of
• Its assets and liabilities.
• Accounting period starts from 1st April of every year
• And ends on 31st march of next year.
COST/ HISTORICAL COST CONCEPT
• It states that an asset should be recorded
• At the cost at which it was purchased,
• Regardless of its market value.

1. Record asset on cost

2. Calculate estimated life
3. Divide among the years.
DUAL ASPECT CONCEPT
• This concept explains that
• If something is given, someone will receive it
• This can be explained as whenever
• A transaction occurs, there is a
• Two- sided effect, one is credit
• And other is debit for similar account.
REALIZATION/ REVENUE
RECOGNITION CONCEPT
• It states that revenue should be
• Recognised at the time goods are
• Sold and sevices are rendered.
• Revenue from any business transaction
• Should be included in the
• Accounting records only when it is realized
MATCHING CONCEPT
• Matching principle requires income earned
• And expenses incurred to be matched
• During the accounting period.
• So that income, expenses
• And profits are accurately stated
OBJECTIVITY CONCEPT
• Is referred to as the principle
• Which states that financial statements
• Should be objective in nature
• In other words, financial information
• Should be unbiased and free from
• Any kind of internal and external influence.
ACCOUNTING
CONVENTIONS
MEANING OF ACCOUNTING
CONVENTIONS
• Are the methods and procedures
which have universal acceptance
• It assists the accountants in preparing
accounting statements.
FULL DISCLOSURE
• A business should report all the necessaary information in their
financial statements, so that the users who are able to read the
financial information are in a better position to make important
decisions regarding the company.
CONSERVATISM/ PRUDENCE
• Also called doctrine of prudence,
• Is a policy of anticipating possible
future loss but not future gains.
• It is a policy of caution or playing safe
and had its origin as a safeguard
against possible losses in a world of uncertainty.
MATERIALITY
• The accountant should record an item
as material even though it is of small
amount and its knowledge seems to influence
the decisions of the properitors, auditors,
investors etc.
CONSISTENCY CONCEPT
• It states that business should maintain
• The same accounting methods or principles
• Thoughout the accounting period
• So that users of financial statements
• Or information are able to make meaningful
• Conclusions from the data.
ACCOUNTING
STANDARDS
MEANING
• Accounting standards are authoritative
for financial reporting and are primary source
Of GAAP
• Accounting standards specify how transactions
And other events are to be recognized, measured,
Presented and disclosed in financial statements.
TYPES OF ACCOUNTING STANDARDS
• Generally Accepted Accounting Principles (GAAP) and
International Financial Reporting Standards (IFRS).
• These standards are developed and maintained
by professional accounting organizations and
regulatory bodies, such as
the Financial Accounting Standards Board (FASB) in US
And the International Accounting Standards Board (IASB)
globally.
OBJECTIVES
• To make accounting principles used in India
at par with internationally recognised standards.
• To adopt a uniform set of accounting principles
for financial reporting.
• To create a single recognised framework
of the accounting system.
• To make international companies understand Indian
accounting practices.
• To ensure transparency in the financial statements
• To expand the scope of doing business globally.
BENEFITS
• Bring uniformity in accounting
• Avoids frauds and manipulations
• Facilitate comparability
• Assits auditors
• Enhance realiability of financial statements
Ind AS 1 Presentation of Financial Statements

Ind AS 2 Inventories

Ind AS 7 Statement of Cash Flows

Accounting Policies, Changes in Accounting

Ind AS 8
Estimates and Errors

Ind AS 10 Events After the Reporting Period

Ind AS 11 Construction Contracts

Ind AS 12 Income Taxes

Ind AS 16 Property Plant and Equipment

Ind AS 17 Leases

Ind AS 18 Revenue

Ind AS 19 Employee Benefits

Accounting for Government Grants and Disclosure of

Ind AS 20
Government Assistance

Ind AS 21 The Effects of Changes in Foreign Exchange Rates

Ind AS 23 Borrowing Costs

Ind AS 24 Related Party Disclosures

Ind AS 27 Consolidated and Separate Financial Statements

Ind AS 28 Investments in Associates

Ind AS 29 Financial Reporting in Hyperinflationary Economies

Ind AS 31 Interests in Joint Ventures

Ind AS 32 Financial Instruments: Presentation

Ind AS 33 Earnings Per Share

Ind AS 34 Interim Financial Reporting

Ind AS 36 Impairment of Assets

Provisions, Contingent Liabilities and Contingent

Ind AS 37
Assets

Ind AS 38 Intangible Assets

Ind AS 39 Financial Instruments: Recognition and Measure

Ind AS 40 Investment Property

Ind AS 101 First-Time Adopting of Indian Accounting Standards

Ind AS 102 Share Based Payment

Ind AS 103 Business Combinations

Ind AS 104 Insurance Contracts

Non-Current Assets Held For Sale and Discontinued

Ind AS 105
Operations

Ind AS 106 Exploration for and Evaluation of Mineral Resources

Ind AS 107 Financial Instruments: Disclosure

Ind AS 108 Operating Segments

ACCOUNTING
EQUATION
QUES
1. Equation based
2. Formula based
3. T- shaped i.e account based
4. Example based
EQUATION BASED
• RULES:
1. Every transaction has atleast 2 impacts.
(double entry system)

2. Basic accounting equation is :

Assets= liabilities + capital

3. All the expenses and losses will be

Deducted from capital
4. All incomes and gains will be added in capital

5. Adjustments in capital will be made for

Current accounting period.
TYPES OF ACCOUNTS
PERSONAL IMPERSONAL ACCOUNT
• NATURAL PERSON • REAL ACCOUNT
• ARTIFICIAL PERSON 1. Tangible assests
• REPRESENTATIVE PERSON 2. Intangible assests.
• NOMINAL ACCOUNT
1. Income
2. expense
 • All accounts will be classified into three groups
1. Real account: represent particular assets whose benefit is
more than 1 year
2. Personal account: represent particular person, community,
company , representative etc
3. Nominal account: all the expenses and incomes ( benefit is
less than one year)
EXAMPLES:
• CASH A/C… (R)
• RELIANCE A/C…(P)
• RENT PAID ….(N)
• FURNITURE PURCHASE ….(R) …WHY ? IT IS ALSO
EXPENSE , YES, BUT ITS BENEFIT IS MORE THAN 1 YR
THAT’S WHY IT IS UNDER REAL A/C
• DISCOUNT RECEIVE…(N)
• SHIKHA A/C ….(P)
• TRADEMARK….(R)
• HDFC BANK….(P)….REPRESENTS PARTICULAR ENTITY
• OUTSTANDING SALARY….(P)
• SALARY A/C……..(N)
GOLDEN RULES OF
ACCOUNT
Traditional rules…..

REAL ACCOUNT
• DEBIT: what comes in
• CREDIT: what goes out

• Example: 7-04-2023, purchase furniture for cash rs. 5000

9-04-23, vehicle sold for cash rs.60000

FORMAT OF JOURNAL
• DATE PARTICULAR L.F. DEBIT CREDIT
• 7-04-23 furniture a/c dr. 5000
to cash a/c 5000
( being purchase for cash)

• 9-04-23 cash a/c dr. 60000

to vehicle a/c 60000
(being vehicle sold for cash)
PERSONAL ACCOUNT
• DEBIT: the receiver
• CREDIT: the giver

Example, 10-04-23, paid rs. 4000 cash to Rahul

12-04-23, bldng purchased on credit from Aakash rs.

200000
JOURNAL
• DATE PARTICULAR L.F. DEBIT CREDIT
10-4-23 Rahul a/c dr. 4000
to cash a/c 4000
(being cash paid to Rahul)

12-4-23 bldng a/c dr. 600000

to Aakash a/c 600000
(being bldng purchased
from Aakash on credit)
NOMINAL ACCOUNT
• DEBIT: all the expenses and losses
• CREDIT: all the incomes and gains

• Example…14-04-23, rent paid rs. 3000 in cash

• 16-04-23, received rs 7000 in commission via

cheque
• DATE PARTICULAR L.F. DEBIT CREDIT
• 14-4-23 rent a/c dr. 3000
to cash a/c 3000
(being rent paid in cash)

• 16-4-23 bank a/c dr. 7000

to comm a/c 7000
(being comm. Rec.)
Modern rules…
• Capital account
• Asset account
• Liabilities account
• Expense account
• Income account
Capital account
Any transaction related to capital whether businessman investing
amount or withdrawing the amount.

• Debit : decrease in capital

• Credit: increase in capital
Asset account
• Debit: increase in asset
• Credit : decrease in asset
Liabilities account
• Debit : decrease in liability
• Credit: increase in liability
Expense account
• Debit : increase in expense
• Credit : decrease in expense
Income account
• Debit : decrease in income
• Credit: increase in income
JOURNAL
• A detailed account that records all the financial transactions of a
business, to be used for the future reconciling of accounts and
transfer of information to other official accounting records, such
as the general ledger.
FORMAT
• DTAE PARTICULAR L.F. DR. CR.
 JOURNAL ENTRIES
1. Started business with cash Rs. 1,00,000 and paid into bank Rs. 50,000
2. Purchased goods for Rs. 30,000
3. Purchased goods from Mr. Ajay for Rs. 40,000
4. Bought furniture for cash Rs. 5,000
5. Sold goods to Mr. Khanna for Rs. 10,000
6. Sold goods for Rs. 20,000
7. Advertisement expenses Rs. 1,000; salaries paid Rs. 1,000 and rent paid Rs.
2,000
8. Withdrew from bank for private use Rs. 3,000
9. Goods returned to Mr. Ajay Rs. 10,000
10. Goods returned by Mr. Khanna for Rs. 2,000
FORMAT
• DTAE PARTICULAR L.F. DR. CR.
• cash a/c dr. 100000
to capital a/c 100000
(being business started with cash)

bank a/c dr. 50000

to cash a/c 50000
(being cash paid to bank)

purchase a/c dr. 300000

to cash a/c 300000
• DATE PARTICULAR L.F. DR. CR.
• purchase a/c dr. 40000
to mr. ajay a/c 40000

furniture a/c dr. 5000

to cash a/c 5000

Mr. khanna a/c dr. 10000

to sales a/c 10000
FORMAT
• DTAE PARTICULAR L.F. DR. CR.
• cash a/c dr. 20000
to sales a/c 20000

adv. a/c dr. 1000

salaries a/c dr. 1000
rent a/c dr. 2000
to cash a/c 4000
FORMAT
• DTAE PARTICULAR L.F. DR. CR.
drawings a/c dr. 3000
to bank a/c 3000

mr. ajay a/c dr. 10000

to purchase return a/c 10000

mr. Khanna a/c dr. 2000

to purchase return 2000
11. Goods given as a charity Rs. 5,000 and as free samples as Rs. 1,000
12. Sold goods to Ekam list price Rs. 8,000 trade discount @ 10% and cash discount
@5% for cash
13. Outstanding salary Rs. 5,000
14. Rent paid in advance Rs. 3,000
15. Commission due but not received Rs. 5,000
16. Interest received in advance Rs. 3,000
17. Received first and final dividend of 60 paisa in a rupee from Mr. Khanna who
owed us Rs. 8,000
18. Depreciation charged on furniture @10%
19. Goods sold for Rs. 10,000 costing Rs. 8,000
20. Purchased goods Rs. 10,000 trade discount @ 10% and cash discount @10%
FORMAT
• DTAE PARTICULAR L.F. DR. CR.
charity a/c dr. 5000
to purchases 5000

adv. a/c dr. 1000

to purchases a/c 1000

cash a/c dr. 6840

discount allowed a/c dr. ( 7200-5%) 360
to sales a/c ( 8000-10%) 7200

salary a/c dr. 5000

to outstanding salary a/c (liability) 5000
FORMAT
• DTAE PARTICULAR L.F. DR. CR.
prepaid rent a/c dr. 3000
to cash a/c 3000

accrued commission a/c (asset) dr. 5000

to commission a/c 5000

cash a/c dr. 3000

to int. rec. in advance a/c 3000

cash a/c dr. 4800

bad debts a/c dr. 3200
to M a/c 8000
FORMAT
• DTAE PARTICULAR L.F. DR. CR.
• depreciation a/c dr. ( 5000*10%) 500
to furniture a/c 500

cash a/c 10000

to sales a/c 8000
to profit and loss a/c 2000

purchases a/c dr. 9000

to cash a/c 8100
to dis. Rec. 900
21. Goods destroyed by fire Rs. 10,000 insurance claim received Rs. 8,000
22. Mr. X purchased goods worth Rs. 10,0000 locally
23. He sold the goods For Rs. 15,0000 in the same state
24. He paid legal consultation fees Rs. 5,000
25. He purchased furniture for his office for Rs. 12,000 from Furniture Mart
FORMAT
• DTAE PARTICULAR L.F. DR. CR.
goods destroyed by fire a/c dr. 2000
cash a/c dr. 8000
to purchases 10000

purchases a/c dr. 100000

input CGST a/c dr. 9000
input SGST a/c dr. 9000
to cash a/c 118000
FORMAT
• DTAE PARTICULAR L.F. DR. CR.
cash a/c dr. 177000
to sales a/c 150000
to output CGST a/c 13500
to output SGST a/c 13500

legal fees a/c dr. 5000

input CGST dr. 450
input SGST dr. 450
to bank a/c 5900
FORMAT
• DTAE PARTICULAR L.F. DR. CR.
furniture a/c dr. 12000
I/P CGST dr. 1080
I/P SGST dr. 1080
to XY a/c 14160

O/P CGST dr. 13500

O/P SGST dr. 13500
to input CGST 10530
to input SGST 10530
to bank 5940
Working notes
• o/p CGST 13500
• I/P CGST (10530)
• (9000+450+1080)
• NET GST 2970 (LIABILITY)

• O/P SGST 13500

• I/P SGST (10530)
2970
2970+2970 = 5940
O/P> I/P Lliability
TRIAL BALANCE
SUBSIDIARY BOOKS
• In big business institutions, it is not easy to record all the
transactions in one journal and post them into various
accounts.
• So, for the easy and accurate recording of all the
transactions, the journal is subdivided into many subsidiary
books. For every type of transaction, there is a separate
book.
TYPES
1. Cash Book
2. Purchase Book
3. Sales Book
4. Purchase Return Book
5. Sales Return Book
6. Bills Receivable Book
7. Bills Payable Books
8. Journal Proper
CASH BOOK
• It records all the transactions related to cash and bank receipts and
payments.
• There are 3 types of cash books that are maintained by an
organization
• Single Column Cash Book
• Double Column Cash Book
• Triple column cash book
Cr.
Cr.
8. Journal Proper
• There are certain transactions that cannot be recorded in any of the
above-mentioned books; these transactions are termed
miscellaneous transactions. So, the Journal Proper is used to record
all the miscellaneous transactions. It includes transactions such as
credit purchase and sale of assets, depreciation, etc.