Accounting \u2013 University Level \u2013 Pak Notes Hub<\/title>\r\n <link href=\"https:\/\/fonts.googleapis.com\/css2?family=Inter:wght@400;500;600;700&family=Fira+Code:wght@400;500&display=swap\" rel=\"stylesheet\"\/>\r\n <style>\r\n *, *::before, *::after { box-sizing: border-box; margin: 0; padding: 0; }\r\n :root {\r\n --green: #1a7a4a; --green-dark: #145f38; --green-light: #e8f5ee;\r\n --teal: #17a589; --accent: #f0b127; --dark: #1c2833; --mid: #566573;\r\n --light: #f4f6f7; --code-bg: #f0f4f8; --code-border: #2e86c1;\r\n --note-bg: #fef9e7; --note-border: #f0b127; --white: #ffffff;\r\n --radius: 10px; --shadow: 0 4px 24px rgba(26,122,74,.10);\r\n }\r\n html { scroll-behavior: smooth; }\r\n body { font-family: 'Inter', sans-serif; background: #f2f6f3; color: var(--dark); line-height: 1.7; font-size: 15px; }\r\n\r\n \/* NAV *\/\r\n nav { position: sticky; top: 0; z-index: 100; background: var(--green-dark); padding: 0 2rem; display: flex; align-items: center; justify-content: space-between; 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} nav .nav-links { display: none; } }\r\n <\/style>\r\n<\/head>\r\n<body>\r\n\r\n<div class=\"progress-bar\" id=\"progress\"><\/div>\r\n\r\n<nav>\r\n <div class=\"nav-brand\">Pak <span>Notes Hub<\/span><\/div>\r\n <div class=\"nav-links\">\r\n <a href=\"#unit-1\">Basics<\/a>\r\n <a href=\"#unit-5\">Financial<\/a>\r\n <a href=\"#unit-9\">Analysis<\/a>\r\n <\/div>\r\n<\/nav>\r\n\r\n<section class=\"hero\">\r\n <div class=\"hero-tag\">\ud83d\udcca University Level \u2014 BS Commerce \/ BBA<\/div>\r\n <h1>Accounting<br\/><span>Complete Notes<\/span><\/h1>\r\n <p>Double Entry \u00b7 Journals \u00b7 Ledgers \u00b7 Trial Balance \u00b7 Financial Statements \u00b7 All in Easy Urdu\/English<\/p>\r\n <div class=\"hero-pills\">\r\n <div class=\"pill\">Accounting Cycle<\/div>\r\n <div class=\"pill\">Financial Statements<\/div>\r\n <div class=\"pill\">Cost Accounting<\/div>\r\n <\/div>\r\n<\/section>\r\n\r\n<div class=\"page-wrap\">\r\n\r\n \r\n <aside class=\"sidebar\">\r\n <div class=\"sidebar-title\">\ud83d\udcda Table of Contents<\/div>\r\n <ul class=\"toc-list\">\r\n <li><a href=\"#unit-1\"><span class=\"toc-num\">1<\/span> Basics<\/a><\/li>\r\n <li><a href=\"#unit-2\"><span class=\"toc-num\">2<\/span> Double Entry<\/a><\/li>\r\n <li><a href=\"#unit-3\"><span class=\"toc-num\">3<\/span> Journals<\/a><\/li>\r\n <li><a href=\"#unit-4\"><span class=\"toc-num\">4<\/span> Ledgers<\/a><\/li>\r\n <li><a href=\"#unit-5\"><span class=\"toc-num\">5<\/span> Trial Balance<\/a><\/li>\r\n <li><a href=\"#unit-6\"><span class=\"toc-num\">6<\/span> Income Statement<\/a><\/li>\r\n <li><a href=\"#unit-7\"><span class=\"toc-num\">7<\/span> Balance Sheet<\/a><\/li>\r\n <li><a href=\"#unit-8\"><span class=\"toc-num\">8<\/span> Adjustments<\/a><\/li>\r\n <li><a href=\"#unit-9\"><span class=\"toc-num\">9<\/span> Cost Accounting<\/a><\/li>\r\n <li><a href=\"#unit-10\"><span class=\"toc-num\">10<\/span> Analysis<\/a><\/li>\r\n <\/ul>\r\n <\/aside>\r\n\r\n <main>\r\n\r\n \r\n <div class=\"unit\" id=\"unit-1\">\r\n <div class=\"unit-header\">\r\n <div class=\"unit-num-badge\">Unit 1<\/div>\r\n <h2>Accounting Basics<\/h2>\r\n <p>Foundations of Accounting and Business Finance<\/p>\r\n <\/div>\r\n <div class=\"unit-body\">\r\n\r\n <h3>What is Accounting?<\/h3>\r\n <p><strong>Accounting<\/strong> is the process of recording, classifying, summarizing, and interpreting financial transactions to provide information for decision-making.<\/p>\r\n\r\n <h3>Objectives of Accounting<\/h3>\r\n <ul>\r\n <li>Record all financial transactions systematically<\/li>\r\n <li>Classify transactions by type<\/li>\r\n <li>Summarize data for reporting<\/li>\r\n <li>Communicate financial information to users<\/li>\r\n <li>Facilitate decision-making<\/li>\r\n <\/ul>\r\n\r\n <h3>Users of Accounting Information<\/h3>\r\n <table class=\"data-table\">\r\n <thead>\r\n <tr><th>User<\/th><th>Interest<\/th><th>Need<\/th><\/tr>\r\n <\/thead>\r\n <tbody>\r\n <tr><td>Owner\/Managers<\/td><td>Business performance<\/td><td>Profitability, cash flow<\/td><\/tr>\r\n <tr><td>Creditors<\/td><td>Can business pay debts?<\/td><td>Liquidity, solvency<\/td><\/tr>\r\n <tr><td>Investors<\/td><td>Return on investment<\/td><td>Profit, growth<\/td><\/tr>\r\n <tr><td>Government<\/td><td>Tax compliance<\/td><td>Taxable income<\/td><\/tr>\r\n <tr><td>Employees<\/td><td>Job security<\/td><td>Business stability<\/td><\/tr>\r\n <\/tbody>\r\n <\/table>\r\n\r\n <h3>Accounting Equation<\/h3>\r\n <div class=\"code-block\"><pre>ASSETS = LIABILITIES + EQUITY\r\n\r\nAssets: What business owns (Cash, Land, Equipment, Inventory)\r\nLiabilities: What business owes (Loans, Accounts Payable)\r\nEquity: Owner's stake (Capital, Retained Earnings)\r\n\r\nExample:\r\nAssets: Rs. 100,000\r\nLiabilities: Rs. 40,000\r\nEquity: Rs. 60,000\r\nCheck: 100,000 = 40,000 + 60,000 \u2713<\/pre><\/div>\r\n\r\n <h3>Types of Accounts<\/h3>\r\n <ul>\r\n <li><strong>Assets:<\/strong> Debit increase, Credit decrease<\/li>\r\n <li><strong>Liabilities:<\/strong> Credit increase, Debit decrease<\/li>\r\n <li><strong>Equity:<\/strong> Credit increase, Debit decrease<\/li>\r\n <li><strong>Revenue:<\/strong> Credit increase, Debit decrease<\/li>\r\n <li><strong>Expenses:<\/strong> Debit increase, Credit decrease<\/li>\r\n <\/ul>\r\n\r\n <div class=\"practice\"><strong>\u270f\ufe0f Practice:<\/strong> Identify which account type (asset\/liability\/equity) for: Cash, Loans, Capital, Inventory<\/div>\r\n <\/div>\r\n <\/div>\r\n\r\n \r\n <div class=\"unit\" id=\"unit-2\">\r\n <div class=\"unit-header\">\r\n <div class=\"unit-num-badge\">Unit 2<\/div>\r\n <h2>Double Entry System<\/h2>\r\n <p>The Foundation of Modern Accounting<\/p>\r\n <\/div>\r\n <div class=\"unit-body\">\r\n\r\n <h3>Double Entry Principle<\/h3>\r\n <p>Every transaction has TWO effects - every debit has a corresponding credit. Total debits always equal total credits.<\/p>\r\n\r\n <h3>Rules of Debit and Credit<\/h3>\r\n <table class=\"data-table\">\r\n <thead>\r\n <tr><th>Account Type<\/th><th>Debit<\/th><th>Credit<\/th><\/tr>\r\n <\/thead>\r\n <tbody>\r\n <tr><td>Asset<\/td><td>Increase (+)<\/td><td>Decrease (-)<\/td><\/tr>\r\n <tr><td>Liability<\/td><td>Decrease (-)<\/td><td>Increase (+)<\/td><\/tr>\r\n <tr><td>Capital\/Equity<\/td><td>Decrease (-)<\/td><td>Increase (+)<\/td><\/tr>\r\n <tr><td>Revenue<\/td><td>Decrease (-)<\/td><td>Increase (+)<\/td><\/tr>\r\n <tr><td>Expense<\/td><td>Increase (+)<\/td><td>Decrease (-)<\/td><\/tr>\r\n <\/tbody>\r\n <\/table>\r\n\r\n <h3>Practical Examples<\/h3>\r\n <div class=\"code-block\"><pre>Transaction 1: Owner deposits Rs. 50,000 cash\r\nAnalysis: Cash increases (asset), Capital increases (equity)\r\nEntry: Debit Cash 50,000 \/ Credit Capital 50,000\r\n\r\nTransaction 2: Buy equipment for Rs. 10,000 cash\r\nAnalysis: Equipment increases, Cash decreases\r\nEntry: Debit Equipment 10,000 \/ Credit Cash 10,000\r\n\r\nTransaction 3: Sell goods for Rs. 5,000 (cash received)\r\nAnalysis: Cash increases, Revenue increases\r\nEntry: Debit Cash 5,000 \/ Credit Sales Revenue 5,000<\/pre><\/div>\r\n\r\n <h3>T-Account Format<\/h3>\r\n <div class=\"code-block\"><pre> Cash\r\n ___________________________\r\n | |\r\nDebit | 50,000 (capital) | Credit\r\n | 5,000 (sales) | 10,000 (equipment)\r\n | |\r\n ----------------------------\r\n Balance: 45,000<\/pre><\/div>\r\n\r\n <div class=\"practice\"><strong>\u270f\ufe0f Practice:<\/strong> Record 5 transactions using double entry method<\/div>\r\n <\/div>\r\n <\/div>\r\n\r\n \r\n <div class=\"unit\" id=\"unit-3\">\r\n <div class=\"unit-header\">\r\n <div class=\"unit-num-badge\">Unit 3<\/div>\r\n <h2>Journals (Book of Original Entry)<\/h2>\r\n <p>Recording Transactions Chronologically<\/p>\r\n <\/div>\r\n <div class=\"unit-body\">\r\n\r\n <h3>What is a Journal?<\/h3>\r\n <p><strong>Journal<\/strong> is the first formal record of business transactions. Transactions recorded in chronological order with explanation (narration).<\/p>\r\n\r\n <h3>Journal Entry Format<\/h3>\r\n <div class=\"code-block\"><pre>Date: [Transaction date]\r\n[Account to be Debited] Debit\r\n [Account to be Credited] Credit\r\nNarration: [Explanation]\r\n\r\nExample:\r\n2024-01-15\r\nCash 50,000\r\n Capital 50,000\r\nNarration: Capital contributed by owner<\/pre><\/div>\r\n\r\n <h3>Types of Journals<\/h3>\r\n <ul>\r\n <li><strong>General Journal:<\/strong> For all types of transactions<\/li>\r\n <li><strong>Cash Book:<\/strong> For cash and bank transactions<\/li>\r\n <li><strong>Sales Journal:<\/strong> For credit sales<\/li>\r\n <li><strong>Purchase Journal:<\/strong> For credit purchases<\/li>\r\n <li><strong>Sales Returns Journal:<\/strong> For return of goods<\/li>\r\n <li><strong>Purchase Returns Journal:<\/strong> For return of purchased goods<\/li>\r\n <\/ul>\r\n\r\n <h3>Journal vs Ledger<\/h3>\r\n <table class=\"data-table\">\r\n <thead>\r\n <tr><th>Journal<\/th><th>Ledger<\/th><\/tr>\r\n <\/thead>\r\n <tbody>\r\n <tr><td>Chronological order<\/td><td>Account-wise order<\/td><\/tr>\r\n <tr><td>First record<\/td><td>Second record<\/td><\/tr>\r\n <tr><td>One column per account<\/td><td>Account balance updated<\/td><\/tr>\r\n <tr><td>Book of Original Entry<\/td><td>Principal Book<\/td><\/tr>\r\n <\/tbody>\r\n <\/table>\r\n\r\n <div class=\"practice\"><strong>\u270f\ufe0f Practice:<\/strong> Prepare journal entries for 10 business transactions<\/div>\r\n <\/div>\r\n <\/div>\r\n\r\n \r\n <div class=\"unit\" id=\"unit-4\">\r\n <div class=\"unit-header\">\r\n <div class=\"unit-num-badge\">Unit 4<\/div>\r\n <h2>Ledgers (Principal Book)<\/h2>\r\n <p>Classifying and Summarizing Transactions<\/p>\r\n <\/div>\r\n <div class=\"unit-body\">\r\n\r\n <h3>What is a Ledger?<\/h3>\r\n <p><strong>Ledger<\/strong> is the principal book where accounts are maintained. Transactions grouped by account type, balance calculated.<\/p>\r\n\r\n <h3>Ledger Format<\/h3>\r\n <div class=\"code-block\"><pre> Account: Cash\r\n _____________________________________________\r\nDate | Narration | Debit | Credit | Balance\r\n2024-01-01| Capital | 50,000 | | 50,000 Dr\r\n2024-01-05| Equipment | | 10,000 | 40,000 Dr\r\n2024-01-10| Sales | 5,000 | | 45,000 Dr<\/pre><\/div>\r\n\r\n <h3>Types of Ledger Accounts<\/h3>\r\n <ul>\r\n <li><strong>Personal Accounts:<\/strong> Debtors, creditors, banks<\/li>\r\n <li><strong>Real Accounts:<\/strong> Assets (land, building, equipment)<\/li>\r\n <li><strong>Nominal Accounts:<\/strong> Revenue, expenses, income<\/li>\r\n <\/ul>\r\n\r\n <h3>Posting Process<\/h3>\r\n <p>Transfer entries from Journal to Ledger accounts.<\/p>\r\n <div class=\"code-block\"><pre>Step 1: Take entry from Journal\r\n Debit Cash 50,000 \/ Credit Capital 50,000\r\n\r\nStep 2: Post to Cash account (Debit side)\r\nStep 3: Post to Capital account (Credit side)\r\n\r\nStep 4: Calculate balances after each posting<\/pre><\/div>\r\n\r\n <h3>Debit and Credit Balance<\/h3>\r\n <ul>\r\n <li><strong>Debit Balance:<\/strong> Debits exceed credits<\/li>\r\n <li><strong>Credit Balance:<\/strong> Credits exceed debits<\/li>\r\n <li>Assets normally have Debit Balance<\/li>\r\n <li>Liabilities normally have Credit Balance<\/li>\r\n <\/ul>\r\n\r\n <div class=\"practice\"><strong>\u270f\ufe0f Practice:<\/strong> Prepare ledger accounts from given journal entries<\/div>\r\n <\/div>\r\n <\/div>\r\n\r\n \r\n <div class=\"unit\" id=\"unit-5\">\r\n <div class=\"unit-header\">\r\n <div class=\"unit-num-badge\">Unit 5<\/div>\r\n <h2>Trial Balance<\/h2>\r\n <p>Checking Accuracy of Ledger Accounts<\/p>\r\n <\/div>\r\n <div class=\"unit-body\">\r\n\r\n <h3>What is Trial Balance?<\/h3>\r\n <p><strong>Trial Balance<\/strong> lists all ledger account balances. Tests if total debits equal total credits.<\/p>\r\n\r\n <h3>Trial Balance Format<\/h3>\r\n <div class=\"code-block\"><pre> Trial Balance as at 31-12-2023\r\n _____________________________________\r\nAccount Name | Debit | Credit\r\nCash | 45,000 |\r\nEquipment | 30,000 |\r\nAccounts Payable | | 15,000\r\nCapital | | 60,000\r\nSales | | 20,000\r\nExpenses | 10,000 |\r\n ___________________________________\r\n Total | 85,000 | 85,000 \u2713<\/pre><\/div>\r\n\r\n <h3>Purpose of Trial Balance<\/h3>\r\n <ul>\r\n <li>Verify arithmetic accuracy of ledger<\/li>\r\n <li>Check if debits equal credits<\/li>\r\n <li>Identify posting errors<\/li>\r\n <li>Provide list of accounts for financial statements<\/li>\r\n <\/ul>\r\n\r\n <h3>Errors Detected by Trial Balance<\/h3>\r\n <ul>\r\n <li><strong>Missing entry:<\/strong> Not posted to ledger<\/li>\r\n <li><strong>Incorrect amount:<\/strong> Wrong debit\/credit<\/li>\r\n <li><strong>Wrong side:<\/strong> Debited instead of credited<\/li>\r\n <li><strong>Posting error:<\/strong> Posted to wrong account<\/li>\r\n <\/ul>\r\n\r\n <h3>Errors NOT Detected<\/h3>\r\n <ul>\r\n <li>Entry recorded twice<\/li>\r\n <li>Entry not recorded in journal<\/li>\r\n <li>Accounting principle error<\/li>\r\n <\/ul>\r\n\r\n <div class=\"info-box\">\ud83d\udca1 Trial Balance balances \u2260 No errors. Always verify accuracy of entries!<\/div>\r\n\r\n <div class=\"practice\"><strong>\u270f\ufe0f Practice:<\/strong> Prepare trial balance from given ledger accounts<\/div>\r\n <\/div>\r\n <\/div>\r\n\r\n \r\n <div class=\"unit\" id=\"unit-6\">\r\n <div class=\"unit-header\">\r\n <div class=\"unit-num-badge\">Unit 6<\/div>\r\n <h2>Income Statement (P&L)<\/h2>\r\n <p>Measuring Profit or Loss<\/p>\r\n <\/div>\r\n <div class=\"unit-body\">\r\n\r\n <h3>What is Income Statement?<\/h3>\r\n <p><strong>Income Statement<\/strong> (Profit & Loss Account) shows revenues and expenses for a period. Difference = Profit or Loss.<\/p>\r\n\r\n <h3>Income Statement Format<\/h3>\r\n <div class=\"code-block\"><pre> Income Statement for year ended 31-Dec-2023\r\n ______________________________________________\r\nSales Revenue 200,000\r\nLess: Cost of Goods Sold\r\n Opening Inventory 10,000\r\n Add: Purchases 80,000\r\n Less: Closing Inventory (15,000) (75,000)\r\nGross Profit 125,000\r\n\r\nOperating Expenses:\r\n Salaries 20,000\r\n Rent 12,000\r\n Utilities 5,000\r\n Depreciation 8,000 (45,000)\r\n\r\nNet Profit 80,000<\/pre><\/div>\r\n\r\n <h3>Revenue<\/h3>\r\n <ul>\r\n <li><strong>Sales Revenue:<\/strong> Main income from selling goods\/services<\/li>\r\n <li><strong>Other Income:<\/strong> Interest, rent, commissions<\/li>\r\n <\/ul>\r\n\r\n <h3>Expenses<\/h3>\r\n <ul>\r\n <li><strong>COGS:<\/strong> Cost directly related to production<\/li>\r\n <li><strong>Operating Expenses:<\/strong> Salaries, rent, utilities, marketing<\/li>\r\n <li><strong>Financial Expenses:<\/strong> Interest on loans<\/li>\r\n <li><strong>Extraordinary Items:<\/strong> One-time gains\/losses<\/li>\r\n <\/ul>\r\n\r\n <h3>Key Formula<\/h3>\r\n <div class=\"code-block\"><pre>Gross Profit = Sales - Cost of Goods Sold\r\nNet Profit = Gross Profit - Operating Expenses - Taxes\r\n + Other Income<\/pre><\/div>\r\n\r\n <div class=\"practice\"><strong>\u270f\ufe0f Practice:<\/strong> Prepare income statement from trial balance data<\/div>\r\n <\/div>\r\n <\/div>\r\n\r\n \r\n <div class=\"unit\" id=\"unit-7\">\r\n <div class=\"unit-header\">\r\n <div class=\"unit-num-badge\">Unit 7<\/div>\r\n <h2>Balance Sheet<\/h2>\r\n <p>Snapshot of Financial Position<\/p>\r\n <\/div>\r\n <div class=\"unit-body\">\r\n\r\n <h3>What is Balance Sheet?<\/h3>\r\n <p><strong>Balance Sheet<\/strong> (Statement of Financial Position) shows assets, liabilities, and equity at a specific date. It's a snapshot of financial health.<\/p>\r\n\r\n <h3>Balance Sheet Format<\/h3>\r\n <div class=\"code-block\"><pre> Balance Sheet as at 31-December-2023\r\n _____________________________________\r\nASSETS\r\nCurrent Assets:\r\n Cash 45,000\r\n Accounts Receivable 20,000\r\n Inventory 15,000 80,000\r\n\r\nNon-Current Assets:\r\n Equipment 100,000\r\n Less: Depreciation (20,000) 80,000\r\nTotal Assets 160,000\r\n\r\nLIABILITIES\r\nCurrent Liabilities:\r\n Accounts Payable 30,000\r\n Short-term Loan 10,000 40,000\r\n\r\nNon-Current Liabilities:\r\n Long-term Loan 30,000 30,000\r\nTotal Liabilities 70,000\r\n\r\nEQUITY\r\n Capital 80,000\r\n Plus: Net Profit 10,000 90,000\r\n __________\r\nTotal Liabilities + Equity 160,000<\/pre><\/div>\r\n\r\n <h3>Balance Sheet Equation<\/h3>\r\n <p><strong>ASSETS = LIABILITIES + EQUITY<\/strong><\/p>\r\n\r\n <h3>Classification<\/h3>\r\n <ul>\r\n <li><strong>Current Assets:<\/strong> Converted to cash within 1 year<\/li>\r\n <li><strong>Non-Current Assets:<\/strong> Long-term, not quickly converted<\/li>\r\n <li><strong>Current Liabilities:<\/strong> Due within 1 year<\/li>\r\n <li><strong>Non-Current Liabilities:<\/strong> Due after 1 year<\/li>\r\n <\/ul>\r\n\r\n <div class=\"practice\"><strong>\u270f\ufe0f Practice:<\/strong> Prepare balance sheet from trial balance<\/div>\r\n <\/div>\r\n <\/div>\r\n\r\n \r\n <div class=\"unit\" id=\"unit-8\">\r\n <div class=\"unit-header\">\r\n <div class=\"unit-num-badge\">Unit 8<\/div>\r\n <h2>Adjustments & Closing<\/h2>\r\n <p>Period-End Adjustments and Account Closure<\/p>\r\n <\/div>\r\n <div class=\"unit-body\">\r\n\r\n <h3>Need for Adjustments<\/h3>\r\n <p>Trial Balance prepared from original entries. But some items need adjustment for accurate reporting (Matching Principle).<\/p>\r\n\r\n <h3>Common Adjustments<\/h3>\r\n <table class=\"data-table\">\r\n <thead>\r\n <tr><th>Item<\/th><th>Adjustment<\/th><th>Reason<\/th><\/tr>\r\n <\/thead>\r\n <tbody>\r\n <tr><td>Depreciation<\/td><td>Charge expense<\/td><td>Asset wears out<\/td><\/tr>\r\n <tr><td>Prepaid Expenses<\/td><td>Defer to asset<\/td><td>Benefit in future<\/td><\/tr>\r\n <tr><td>Accrued Expenses<\/td><td>Add to expense<\/td><td>Incurred but not paid<\/td><\/tr>\r\n <tr><td>Closing Inventory<\/td><td>Add to purchases<\/td><td>Reduce COGS<\/td><\/tr>\r\n <\/tbody>\r\n <\/table>\r\n\r\n <h3>Depreciation Example<\/h3>\r\n <div class=\"code-block\"><pre>Equipment cost: 100,000\r\nUseful life: 10 years\r\nAnnual Depreciation = 100,000 \/ 10 = 10,000\r\n\r\nAdjustment Entry:\r\nDebit Depreciation Expense 10,000\r\n Credit Accumulated Depreciation 10,000\r\n\r\nIn Balance Sheet:\r\nEquipment 100,000\r\nLess: Accumulated Dep. (10,000)\r\nNet Equipment 90,000<\/pre><\/div>\r\n\r\n <h3>Closing Entries<\/h3>\r\n <p>Transfer revenue and expense accounts to Profit & Loss account, then to Capital.<\/p>\r\n <div class=\"code-block\"><pre>Step 1: Close Revenue accounts\r\nDebit Sales 200,000\r\n Credit Income Summary 200,000\r\n\r\nStep 2: Close Expense accounts\r\nDebit Income Summary 120,000\r\n Credit Expenses 120,000\r\n\r\nStep 3: Close Net Profit to Capital\r\nDebit Income Summary 80,000\r\n Credit Capital 80,000<\/pre><\/div>\r\n\r\n <div class=\"practice\"><strong>\u270f\ufe0f Practice:<\/strong> Record adjustment entries and closing entries<\/div>\r\n <\/div>\r\n <\/div>\r\n\r\n \r\n <div class=\"unit\" id=\"unit-9\">\r\n <div class=\"unit-header\">\r\n <div class=\"unit-num-badge\">Unit 9<\/div>\r\n <h2>Cost Accounting<\/h2>\r\n <p>Analyzing Costs for Business Decisions<\/p>\r\n <\/div>\r\n <div class=\"unit-body\">\r\n\r\n <h3>What is Cost Accounting?<\/h3>\r\n <p><strong>Cost Accounting<\/strong> focuses on identifying, measuring, and controlling costs to assist management in decision-making.<\/p>\r\n\r\n <h3>Types of Costs<\/h3>\r\n <table class=\"data-table\">\r\n <thead>\r\n <tr><th>Classification<\/th><th>Type<\/th><th>Example<\/th><\/tr>\r\n <\/thead>\r\n <tbody>\r\n <tr><td>Behavior<\/td><td>Fixed Cost<\/td><td>Rent, Insurance (same regardless)<\/td><\/tr>\r\n <tr><td>Behavior<\/td><td>Variable Cost<\/td><td>Raw material (changes with output)<\/td><\/tr>\r\n <tr><td>Function<\/td><td>Manufacturing<\/td><td>Direct labor, raw materials<\/td><\/tr>\r\n <tr><td>Function<\/td><td>Administrative<\/td><td>Office salaries<\/td><\/tr>\r\n <tr><td>Relevance<\/td><td>Relevant Cost<\/td><td>Changes with decision<\/td><\/tr>\r\n <tr><td>Relevance<\/td><td>Irrelevant Cost<\/td><td>Sunk cost (already spent)<\/td><\/tr>\r\n <\/tbody>\r\n <\/table>\r\n\r\n <h3>Cost Structure<\/h3>\r\n <div class=\"code-block\"><pre>Cost of Production:\r\n Raw Materials 50,000\r\n Direct Labor 20,000\r\n Manufacturing Overhead 10,000\r\nTotal Production Cost 80,000\r\n\r\nAdd: Opening Inventory 5,000\r\nLess: Closing Inventory (8,000)\r\nCost of Goods Sold 77,000\r\n\r\nGross Profit = Sales - COGS\r\n = 150,000 - 77,000 = 73,000<\/pre><\/div>\r\n\r\n <h3>Break-Even Analysis<\/h3>\r\n <p>Point where Revenue = Total Cost (no profit, no loss)<\/p>\r\n <div class=\"code-block\"><pre>Break-Even Point = Fixed Costs \/ Contribution Margin Ratio\r\nContribution Margin = Selling Price - Variable Cost per Unit<\/pre><\/div>\r\n\r\n <div class=\"practice\"><strong>\u270f\ufe0f Practice:<\/strong> Calculate cost of production and COGS; Find break-even point<\/div>\r\n <\/div>\r\n <\/div>\r\n\r\n \r\n <div class=\"unit\" id=\"unit-10\">\r\n <div class=\"unit-header\">\r\n <div class=\"unit-num-badge\">Unit 10<\/div>\r\n <h2>Financial Analysis<\/h2>\r\n <p>Interpreting Financial Statements<\/p>\r\n <\/div>\r\n <div class=\"unit-body\">\r\n\r\n <h3>Financial Ratios<\/h3>\r\n <table class=\"data-table\">\r\n <thead>\r\n <tr><th>Ratio<\/th><th>Formula<\/th><th>Interpretation<\/th><\/tr>\r\n <\/thead>\r\n <tbody>\r\n <tr><td>Profit Margin<\/td><td>Net Income \/ Sales<\/td><td>% profit on sales<\/td><\/tr>\r\n <tr><td>ROA<\/td><td>Net Income \/ Total Assets<\/td><td>Efficiency of assets<\/td><\/tr>\r\n <tr><td>ROE<\/td><td>Net Income \/ Equity<\/td><td>Return to owners<\/td><\/tr>\r\n <tr><td>Current Ratio<\/td><td>Current Assets \/ Current Liab<\/td><td>Short-term liquidity<\/td><\/tr>\r\n <tr><td>Debt Ratio<\/td><td>Total Debt \/ Total Assets<\/td><td>Solvency<\/td><\/tr>\r\n <\/tbody>\r\n <\/table>\r\n\r\n <h3>Liquidity Analysis<\/h3>\r\n <ul>\r\n <li><strong>Current Ratio:<\/strong> Ability to pay short-term debts (Ideal: 1.5-2.0)<\/li>\r\n <li><strong>Quick Ratio:<\/strong> (Current Assets - Inventory) \/ Current Liabilities<\/li>\r\n <li><strong>Cash Ratio:<\/strong> (Cash + Receivables) \/ Current Liabilities<\/li>\r\n <\/ul>\r\n\r\n <h3>Profitability Analysis<\/h3>\r\n <ul>\r\n <li><strong>Gross Profit Margin:<\/strong> Gross Profit \/ Sales<\/li>\r\n <li><strong>Operating Margin:<\/strong> Operating Income \/ Sales<\/li>\r\n <li><strong>Net Profit Margin:<\/strong> Net Income \/ Sales<\/li>\r\n <\/ul>\r\n\r\n <h3>Efficiency Ratios<\/h3>\r\n <ul>\r\n <li><strong>Asset Turnover:<\/strong> Sales \/ Total Assets<\/li>\r\n <li><strong>Inventory Turnover:<\/strong> COGS \/ Average Inventory<\/li>\r\n <li><strong>Receivables Turnover:<\/strong> Sales \/ Average Receivables<\/li>\r\n <\/ul>\r\n\r\n <div class=\"practice\"><strong>\u270f\ufe0f Practice:<\/strong> Calculate financial ratios and interpret them<\/div>\r\n <\/div>\r\n <\/div>\r\n\r\n \r\n <div class=\"congrats\">\r\n <h2>\ud83c\udf89 Congratulations!<\/h2>\r\n <p>You've completed Accounting! Now master these concepts for successful business finance!<\/p>\r\n <\/div>\r\n\r\n <p style=\"text-align: center; color: var(--mid); font-size: .85rem; padding-bottom: 1rem;\">\r\n \ud83d\udcda Pak Notes Hub \u2014 Accounting Complete Notes | University Level | BS Commerce \/ BBA<br>\r\n For corrections and suggestions: support@paknoteshub.com\r\n <\/p>\r\n <\/main>\r\n<\/div>\r\n\r\n<button id=\"back-top\" onclick=\"window.scrollTo({top:0,behavior:'smooth'})\">\u2191<\/button>\r\n\r\n<script>\r\n const progress = document.getElementById('progress');\r\n window.addEventListener('scroll', () => {\r\n const scrollPercent = (window.scrollY \/ (document.documentElement.scrollHeight - window.innerHeight)) * 100;\r\n progress.style.width = scrollPercent + '%';\r\n document.getElementById('back-top').classList.toggle('visible', window.scrollY > 400);\r\n });\r\n \r\n document.querySelectorAll('.unit').forEach(unit => {\r\n const observer = new IntersectionObserver(entries => {\r\n entries.forEach(entry => {\r\n if(entry.isIntersecting) {\r\n const id = entry.target.id;\r\n document.querySelectorAll('.toc-list a').forEach(a => {\r\n a.classList.toggle('active', a.href.endsWith(id));\r\n });\r\n }\r\n });\r\n }, { rootMargin: '-20% 0px -70% 0px' });\r\n observer.observe(unit);\r\n });\r\n<\/script>\r\n<\/body>\r\n<\/html>\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"<p>Accounting \u2013 University Level \u2013 Pak Notes Hub Pak Notes Hub Basics Financial Analysis \ud83d\udcca University Level \u2014 BS Commerce \/ BBA AccountingComplete Notes Double Entry \u00b7 Journals \u00b7 Ledgers \u00b7 Trial Balance \u00b7 Financial Statements \u00b7 All in Easy Urdu\/English Accounting Cycle Financial Statements Cost Accounting \ud83d\udcda Table of Contents 1 Basics 2 Double […]<\/p>\n","protected":false},"author":1,"featured_media":0,"parent":0,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"_angie_page":false,"footnotes":""},"class_list":["post-534","page","type-page","status-publish","hentry"],"_hostinger_reach_plugin_has_subscription_block":false,"_hostinger_reach_plugin_is_elementor":false,"_links":{"self":[{"href":"https:\/\/paknoteshub.online\/index.php?rest_route=\/wp\/v2\/pages\/534","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/paknoteshub.online\/index.php?rest_route=\/wp\/v2\/pages"}],"about":[{"href":"https:\/\/paknoteshub.online\/index.php?rest_route=\/wp\/v2\/types\/page"}],"author":[{"embeddable":true,"href":"https:\/\/paknoteshub.online\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/paknoteshub.online\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=534"}],"version-history":[{"count":4,"href":"https:\/\/paknoteshub.online\/index.php?rest_route=\/wp\/v2\/pages\/534\/revisions"}],"predecessor-version":[{"id":538,"href":"https:\/\/paknoteshub.online\/index.php?rest_route=\/wp\/v2\/pages\/534\/revisions\/538"}],"wp:attachment":[{"href":"https:\/\/paknoteshub.online\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=534"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}

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box-shadow: var(--shadow); margin-bottom: 2.5rem; overflow: hidden; scroll-margin-top: 72px; }\r\n .unit-header { background: linear-gradient(100deg, var(--green) 0%, #1d9560 100%); padding: 1.4rem 1.8rem; }\r\n .unit-num-badge { background: rgba(255,255,255,.18); color: #a9dfbf; font-size: .72rem; font-weight: 700; letter-spacing: 1px; text-transform: uppercase; padding: .3rem .75rem; border-radius: 100px; }\r\n .unit-header h2 { color: #fff; font-size: 1.25rem; font-weight: 700; line-height: 1.25; margin-top: .35rem; }\r\n .unit-header p { color: #c8f0d8; font-size: .85rem; margin-top: .2rem; }\r\n .unit-body { padding: 1.8rem; }\r\n\r\n \/* HEADINGS & TEXT *\/\r\n .unit-body h3 { font-size: 1rem; font-weight: 700; color: var(--green); margin: 1.6rem 0 .7rem; padding-left: .85rem; border-left: 3px solid var(--green); line-height: 1.3; }\r\n .unit-body h3:first-child { margin-top: 0; }\r\n .unit-body p { color: var(--dark); margin-bottom: .7rem; }\r\n .unit-body ul { list-style: none; padding: 0; margin: .5rem 0 1rem; }\r\n .unit-body ul li { padding: .3rem 0 .3rem 1.5rem; position: relative; color: var(--dark); font-size: .93rem; }\r\n .unit-body ul li::before { content: '\u27a4'; position: absolute; left: 0; color: var(--teal); font-size: .75rem; top: .45rem; }\r\n\r\n \/* CODE BLOCK *\/\r\n .code-block { background: var(--code-bg); border-left: 4px solid var(--code-border); border-radius: 6px; padding: 1.1rem 1.3rem; margin: .9rem 0 1rem; overflow-x: auto; }\r\n .code-block pre { font-family: 'Fira Code', monospace; font-size: .83rem; color: #1a3a54; line-height: 1.75; white-space: pre; }\r\n .cm { color: #7f8c8d; } .kw { color: #1a5276; font-weight: 600; } .st { color: #1e8449; }\r\n\r\n \/* TABLES *\/\r\n .data-table { width: 100%; border-collapse: collapse; margin: .9rem 0 1.2rem; font-size: .87rem; border-radius: 8px; overflow: hidden; box-shadow: 0 1px 6px rgba(0,0,0,.06); }\r\n .data-table thead th { background: var(--green); color: #fff; padding: .7rem 1rem; text-align: left; font-weight: 600; font-size: .82rem; }\r\n .data-table tbody tr:nth-child(even) { background: var(--green-light); }\r\n .data-table tbody tr:hover { background: #d4efdf; }\r\n .data-table td { padding: .6rem 1rem; border-bottom: 1px solid #dce8e0; vertical-align: top; }\r\n .data-table td:first-child { font-weight: 600; color: var(--green-dark); }\r\n\r\n \/* BOXES *\/\r\n .info-box { background: var(--note-bg); border: 1px solid var(--note-border); border-radius: 7px; padding: .85rem 1.1rem; margin: .9rem 0; font-size: .88rem; line-height: 1.6; color: #7d6608; display: flex; align-items: flex-start; gap: .7rem; }\r\n .practice { background: var(--green-light); border: 1.5px dashed var(--green); border-radius: 8px; padding: .85rem 1.1rem; margin-top: 1.4rem; color: var(--green-dark); font-size: .88rem; font-weight: 500; }\r\n\r\n \/* PROGRESS + BACK TOP *\/\r\n .progress-bar { position: fixed; top: 0; left: 0; height: 3px; background: var(--accent); z-index: 200; transition: width .1s linear; width: 0%; }\r\n #back-top { position: fixed; bottom: 2rem; right: 2rem; background: var(--green); color: #fff; width: 42px; height: 42px; border-radius: 50%; border: none; cursor: pointer; font-size: 1.1rem; box-shadow: 0 4px 14px rgba(26,122,74,.35); display: flex; align-items: center; justify-content: center; opacity: 0; transition: opacity .25s, transform .25s; pointer-events: none; }\r\n #back-top.visible { opacity: 1; pointer-events: auto; }\r\n #back-top:hover { transform: translateY(-2px); }\r\n\r\n \/* CONGRATS *\/\r\n .congrats { background: linear-gradient(135deg, var(--green) 0%, #145f38 100%); border-radius: var(--radius); padding: 2.5rem 2rem; text-align: center; color: #fff; margin-bottom: 2.5rem; box-shadow: var(--shadow); }\r\n .congrats h2 { font-size: 1.8rem; margin-bottom: .5rem; }\r\n .congrats p { color: #d5f5e3; font-size: 1rem; }\r\n\r\n @media (max-width: 720px) { .page-wrap { grid-template-columns: 1fr; } .sidebar { position: static; display: none; } .hero::before { display: none; } nav .nav-links { display: none; } }\r\n <\/style>\r\n<\/head>\r\n<body>\r\n\r\n<div class=\"progress-bar\" id=\"progress\"><\/div>\r\n\r\n<nav>\r\n <div class=\"nav-brand\">Pak <span>Notes Hub<\/span><\/div>\r\n <div class=\"nav-links\">\r\n <a href=\"#unit-1\">Basics<\/a>\r\n <a href=\"#unit-5\">Financial<\/a>\r\n <a href=\"#unit-9\">Analysis<\/a>\r\n <\/div>\r\n<\/nav>\r\n\r\n<section class=\"hero\">\r\n <div class=\"hero-tag\">\ud83d\udcca University Level \u2014 BS Commerce \/ BBA<\/div>\r\n <h1>Accounting<br\/><span>Complete Notes<\/span><\/h1>\r\n <p>Double Entry \u00b7 Journals \u00b7 Ledgers \u00b7 Trial Balance \u00b7 Financial Statements \u00b7 All in Easy Urdu\/English<\/p>\r\n <div class=\"hero-pills\">\r\n <div class=\"pill\">Accounting Cycle<\/div>\r\n <div class=\"pill\">Financial Statements<\/div>\r\n <div class=\"pill\">Cost Accounting<\/div>\r\n <\/div>\r\n<\/section>\r\n\r\n<div class=\"page-wrap\">\r\n\r\n \r\n <aside class=\"sidebar\">\r\n <div class=\"sidebar-title\">\ud83d\udcda Table of Contents<\/div>\r\n <ul class=\"toc-list\">\r\n <li><a href=\"#unit-1\"><span class=\"toc-num\">1<\/span> Basics<\/a><\/li>\r\n <li><a href=\"#unit-2\"><span class=\"toc-num\">2<\/span> Double Entry<\/a><\/li>\r\n <li><a href=\"#unit-3\"><span class=\"toc-num\">3<\/span> Journals<\/a><\/li>\r\n <li><a href=\"#unit-4\"><span class=\"toc-num\">4<\/span> Ledgers<\/a><\/li>\r\n <li><a href=\"#unit-5\"><span class=\"toc-num\">5<\/span> Trial Balance<\/a><\/li>\r\n <li><a href=\"#unit-6\"><span class=\"toc-num\">6<\/span> Income Statement<\/a><\/li>\r\n <li><a href=\"#unit-7\"><span class=\"toc-num\">7<\/span> Balance Sheet<\/a><\/li>\r\n <li><a href=\"#unit-8\"><span class=\"toc-num\">8<\/span> Adjustments<\/a><\/li>\r\n <li><a href=\"#unit-9\"><span class=\"toc-num\">9<\/span> Cost Accounting<\/a><\/li>\r\n <li><a href=\"#unit-10\"><span class=\"toc-num\">10<\/span> Analysis<\/a><\/li>\r\n <\/ul>\r\n <\/aside>\r\n\r\n <main>\r\n\r\n \r\n <div class=\"unit\" id=\"unit-1\">\r\n <div class=\"unit-header\">\r\n <div class=\"unit-num-badge\">Unit 1<\/div>\r\n <h2>Accounting Basics<\/h2>\r\n <p>Foundations of Accounting and Business Finance<\/p>\r\n <\/div>\r\n <div class=\"unit-body\">\r\n\r\n <h3>What is Accounting?<\/h3>\r\n <p><strong>Accounting<\/strong> is the process of recording, classifying, summarizing, and interpreting financial transactions to provide information for decision-making.<\/p>\r\n\r\n <h3>Objectives of Accounting<\/h3>\r\n <ul>\r\n <li>Record all financial transactions systematically<\/li>\r\n <li>Classify transactions by type<\/li>\r\n <li>Summarize data for reporting<\/li>\r\n <li>Communicate financial information to users<\/li>\r\n <li>Facilitate decision-making<\/li>\r\n <\/ul>\r\n\r\n <h3>Users of Accounting Information<\/h3>\r\n <table class=\"data-table\">\r\n <thead>\r\n <tr><th>User<\/th><th>Interest<\/th><th>Need<\/th><\/tr>\r\n <\/thead>\r\n <tbody>\r\n <tr><td>Owner\/Managers<\/td><td>Business performance<\/td><td>Profitability, cash flow<\/td><\/tr>\r\n <tr><td>Creditors<\/td><td>Can business pay debts?<\/td><td>Liquidity, solvency<\/td><\/tr>\r\n <tr><td>Investors<\/td><td>Return on investment<\/td><td>Profit, growth<\/td><\/tr>\r\n <tr><td>Government<\/td><td>Tax compliance<\/td><td>Taxable income<\/td><\/tr>\r\n <tr><td>Employees<\/td><td>Job security<\/td><td>Business stability<\/td><\/tr>\r\n <\/tbody>\r\n <\/table>\r\n\r\n <h3>Accounting Equation<\/h3>\r\n <div class=\"code-block\"><pre>ASSETS = LIABILITIES + EQUITY\r\n\r\nAssets: What business owns (Cash, Land, Equipment, Inventory)\r\nLiabilities: What business owes (Loans, Accounts Payable)\r\nEquity: Owner's stake (Capital, Retained Earnings)\r\n\r\nExample:\r\nAssets: Rs. 100,000\r\nLiabilities: Rs. 40,000\r\nEquity: Rs. 60,000\r\nCheck: 100,000 = 40,000 + 60,000 \u2713<\/pre><\/div>\r\n\r\n <h3>Types of Accounts<\/h3>\r\n <ul>\r\n <li><strong>Assets:<\/strong> Debit increase, Credit decrease<\/li>\r\n <li><strong>Liabilities:<\/strong> Credit increase, Debit decrease<\/li>\r\n <li><strong>Equity:<\/strong> Credit increase, Debit decrease<\/li>\r\n <li><strong>Revenue:<\/strong> Credit increase, Debit decrease<\/li>\r\n <li><strong>Expenses:<\/strong> Debit increase, Credit decrease<\/li>\r\n <\/ul>\r\n\r\n <div class=\"practice\"><strong>\u270f\ufe0f Practice:<\/strong> Identify which account type (asset\/liability\/equity) for: Cash, Loans, Capital, Inventory<\/div>\r\n <\/div>\r\n <\/div>\r\n\r\n \r\n <div class=\"unit\" id=\"unit-2\">\r\n <div class=\"unit-header\">\r\n <div class=\"unit-num-badge\">Unit 2<\/div>\r\n <h2>Double Entry System<\/h2>\r\n <p>The Foundation of Modern Accounting<\/p>\r\n <\/div>\r\n <div class=\"unit-body\">\r\n\r\n <h3>Double Entry Principle<\/h3>\r\n <p>Every transaction has TWO effects - every debit has a corresponding credit. Total debits always equal total credits.<\/p>\r\n\r\n <h3>Rules of Debit and Credit<\/h3>\r\n <table class=\"data-table\">\r\n <thead>\r\n <tr><th>Account Type<\/th><th>Debit<\/th><th>Credit<\/th><\/tr>\r\n <\/thead>\r\n <tbody>\r\n <tr><td>Asset<\/td><td>Increase (+)<\/td><td>Decrease (-)<\/td><\/tr>\r\n <tr><td>Liability<\/td><td>Decrease (-)<\/td><td>Increase (+)<\/td><\/tr>\r\n <tr><td>Capital\/Equity<\/td><td>Decrease (-)<\/td><td>Increase (+)<\/td><\/tr>\r\n <tr><td>Revenue<\/td><td>Decrease (-)<\/td><td>Increase (+)<\/td><\/tr>\r\n <tr><td>Expense<\/td><td>Increase (+)<\/td><td>Decrease (-)<\/td><\/tr>\r\n <\/tbody>\r\n <\/table>\r\n\r\n <h3>Practical Examples<\/h3>\r\n <div class=\"code-block\"><pre>Transaction 1: Owner deposits Rs. 50,000 cash\r\nAnalysis: Cash increases (asset), Capital increases (equity)\r\nEntry: Debit Cash 50,000 \/ Credit Capital 50,000\r\n\r\nTransaction 2: Buy equipment for Rs. 10,000 cash\r\nAnalysis: Equipment increases, Cash decreases\r\nEntry: Debit Equipment 10,000 \/ Credit Cash 10,000\r\n\r\nTransaction 3: Sell goods for Rs. 5,000 (cash received)\r\nAnalysis: Cash increases, Revenue increases\r\nEntry: Debit Cash 5,000 \/ Credit Sales Revenue 5,000<\/pre><\/div>\r\n\r\n <h3>T-Account Format<\/h3>\r\n <div class=\"code-block\"><pre> Cash\r\n ___________________________\r\n | |\r\nDebit | 50,000 (capital) | Credit\r\n | 5,000 (sales) | 10,000 (equipment)\r\n | |\r\n ----------------------------\r\n Balance: 45,000<\/pre><\/div>\r\n\r\n <div class=\"practice\"><strong>\u270f\ufe0f Practice:<\/strong> Record 5 transactions using double entry method<\/div>\r\n <\/div>\r\n <\/div>\r\n\r\n \r\n <div class=\"unit\" id=\"unit-3\">\r\n <div class=\"unit-header\">\r\n <div class=\"unit-num-badge\">Unit 3<\/div>\r\n <h2>Journals (Book of Original Entry)<\/h2>\r\n <p>Recording Transactions Chronologically<\/p>\r\n <\/div>\r\n <div class=\"unit-body\">\r\n\r\n <h3>What is a Journal?<\/h3>\r\n <p><strong>Journal<\/strong> is the first formal record of business transactions. Transactions recorded in chronological order with explanation (narration).<\/p>\r\n\r\n <h3>Journal Entry Format<\/h3>\r\n <div class=\"code-block\"><pre>Date: [Transaction date]\r\n[Account to be Debited] Debit\r\n [Account to be Credited] Credit\r\nNarration: [Explanation]\r\n\r\nExample:\r\n2024-01-15\r\nCash 50,000\r\n Capital 50,000\r\nNarration: Capital contributed by owner<\/pre><\/div>\r\n\r\n <h3>Types of Journals<\/h3>\r\n <ul>\r\n <li><strong>General Journal:<\/strong> For all types of transactions<\/li>\r\n <li><strong>Cash Book:<\/strong> For cash and bank transactions<\/li>\r\n <li><strong>Sales Journal:<\/strong> For credit sales<\/li>\r\n <li><strong>Purchase Journal:<\/strong> For credit purchases<\/li>\r\n <li><strong>Sales Returns Journal:<\/strong> For return of goods<\/li>\r\n <li><strong>Purchase Returns Journal:<\/strong> For return of purchased goods<\/li>\r\n <\/ul>\r\n\r\n <h3>Journal vs Ledger<\/h3>\r\n <table class=\"data-table\">\r\n <thead>\r\n <tr><th>Journal<\/th><th>Ledger<\/th><\/tr>\r\n <\/thead>\r\n <tbody>\r\n <tr><td>Chronological order<\/td><td>Account-wise order<\/td><\/tr>\r\n <tr><td>First record<\/td><td>Second record<\/td><\/tr>\r\n <tr><td>One column per account<\/td><td>Account balance updated<\/td><\/tr>\r\n <tr><td>Book of Original Entry<\/td><td>Principal Book<\/td><\/tr>\r\n <\/tbody>\r\n <\/table>\r\n\r\n <div class=\"practice\"><strong>\u270f\ufe0f Practice:<\/strong> Prepare journal entries for 10 business transactions<\/div>\r\n <\/div>\r\n <\/div>\r\n\r\n \r\n <div class=\"unit\" id=\"unit-4\">\r\n <div class=\"unit-header\">\r\n <div class=\"unit-num-badge\">Unit 4<\/div>\r\n <h2>Ledgers (Principal Book)<\/h2>\r\n <p>Classifying and Summarizing Transactions<\/p>\r\n <\/div>\r\n <div class=\"unit-body\">\r\n\r\n <h3>What is a Ledger?<\/h3>\r\n <p><strong>Ledger<\/strong> is the principal book where accounts are maintained. Transactions grouped by account type, balance calculated.<\/p>\r\n\r\n <h3>Ledger Format<\/h3>\r\n <div class=\"code-block\"><pre> Account: Cash\r\n _____________________________________________\r\nDate | Narration | Debit | Credit | Balance\r\n2024-01-01| Capital | 50,000 | | 50,000 Dr\r\n2024-01-05| Equipment | | 10,000 | 40,000 Dr\r\n2024-01-10| Sales | 5,000 | | 45,000 Dr<\/pre><\/div>\r\n\r\n <h3>Types of Ledger Accounts<\/h3>\r\n <ul>\r\n <li><strong>Personal Accounts:<\/strong> Debtors, creditors, banks<\/li>\r\n <li><strong>Real Accounts:<\/strong> Assets (land, building, equipment)<\/li>\r\n <li><strong>Nominal Accounts:<\/strong> Revenue, expenses, income<\/li>\r\n <\/ul>\r\n\r\n <h3>Posting Process<\/h3>\r\n <p>Transfer entries from Journal to Ledger accounts.<\/p>\r\n <div class=\"code-block\"><pre>Step 1: Take entry from Journal\r\n Debit Cash 50,000 \/ Credit Capital 50,000\r\n\r\nStep 2: Post to Cash account (Debit side)\r\nStep 3: Post to Capital account (Credit side)\r\n\r\nStep 4: Calculate balances after each posting<\/pre><\/div>\r\n\r\n <h3>Debit and Credit Balance<\/h3>\r\n <ul>\r\n <li><strong>Debit Balance:<\/strong> Debits exceed credits<\/li>\r\n <li><strong>Credit Balance:<\/strong> Credits exceed debits<\/li>\r\n <li>Assets normally have Debit Balance<\/li>\r\n <li>Liabilities normally have Credit Balance<\/li>\r\n <\/ul>\r\n\r\n <div class=\"practice\"><strong>\u270f\ufe0f Practice:<\/strong> Prepare ledger accounts from given journal entries<\/div>\r\n <\/div>\r\n <\/div>\r\n\r\n \r\n <div class=\"unit\" id=\"unit-5\">\r\n <div class=\"unit-header\">\r\n <div class=\"unit-num-badge\">Unit 5<\/div>\r\n <h2>Trial Balance<\/h2>\r\n <p>Checking Accuracy of Ledger Accounts<\/p>\r\n <\/div>\r\n <div class=\"unit-body\">\r\n\r\n <h3>What is Trial Balance?<\/h3>\r\n <p><strong>Trial Balance<\/strong> lists all ledger account balances. Tests if total debits equal total credits.<\/p>\r\n\r\n <h3>Trial Balance Format<\/h3>\r\n <div class=\"code-block\"><pre> Trial Balance as at 31-12-2023\r\n _____________________________________\r\nAccount Name | Debit | Credit\r\nCash | 45,000 |\r\nEquipment | 30,000 |\r\nAccounts Payable | | 15,000\r\nCapital | | 60,000\r\nSales | | 20,000\r\nExpenses | 10,000 |\r\n ___________________________________\r\n Total | 85,000 | 85,000 \u2713<\/pre><\/div>\r\n\r\n <h3>Purpose of Trial Balance<\/h3>\r\n <ul>\r\n <li>Verify arithmetic accuracy of ledger<\/li>\r\n <li>Check if debits equal credits<\/li>\r\n <li>Identify posting errors<\/li>\r\n <li>Provide list of accounts for financial statements<\/li>\r\n <\/ul>\r\n\r\n <h3>Errors Detected by Trial Balance<\/h3>\r\n <ul>\r\n <li><strong>Missing entry:<\/strong> Not posted to ledger<\/li>\r\n <li><strong>Incorrect amount:<\/strong> Wrong debit\/credit<\/li>\r\n <li><strong>Wrong side:<\/strong> Debited instead of credited<\/li>\r\n <li><strong>Posting error:<\/strong> Posted to wrong account<\/li>\r\n <\/ul>\r\n\r\n <h3>Errors NOT Detected<\/h3>\r\n <ul>\r\n <li>Entry recorded twice<\/li>\r\n <li>Entry not recorded in journal<\/li>\r\n <li>Accounting principle error<\/li>\r\n <\/ul>\r\n\r\n <div class=\"info-box\">\ud83d\udca1 Trial Balance balances \u2260 No errors. Always verify accuracy of entries!<\/div>\r\n\r\n <div class=\"practice\"><strong>\u270f\ufe0f Practice:<\/strong> Prepare trial balance from given ledger accounts<\/div>\r\n <\/div>\r\n <\/div>\r\n\r\n \r\n <div class=\"unit\" id=\"unit-6\">\r\n <div class=\"unit-header\">\r\n <div class=\"unit-num-badge\">Unit 6<\/div>\r\n <h2>Income Statement (P&L)<\/h2>\r\n <p>Measuring Profit or Loss<\/p>\r\n <\/div>\r\n <div class=\"unit-body\">\r\n\r\n <h3>What is Income Statement?<\/h3>\r\n <p><strong>Income Statement<\/strong> (Profit & Loss Account) shows revenues and expenses for a period. Difference = Profit or Loss.<\/p>\r\n\r\n <h3>Income Statement Format<\/h3>\r\n <div class=\"code-block\"><pre> Income Statement for year ended 31-Dec-2023\r\n ______________________________________________\r\nSales Revenue 200,000\r\nLess: Cost of Goods Sold\r\n Opening Inventory 10,000\r\n Add: Purchases 80,000\r\n Less: Closing Inventory (15,000) (75,000)\r\nGross Profit 125,000\r\n\r\nOperating Expenses:\r\n Salaries 20,000\r\n Rent 12,000\r\n Utilities 5,000\r\n Depreciation 8,000 (45,000)\r\n\r\nNet Profit 80,000<\/pre><\/div>\r\n\r\n <h3>Revenue<\/h3>\r\n <ul>\r\n <li><strong>Sales Revenue:<\/strong> Main income from selling goods\/services<\/li>\r\n <li><strong>Other Income:<\/strong> Interest, rent, commissions<\/li>\r\n <\/ul>\r\n\r\n <h3>Expenses<\/h3>\r\n <ul>\r\n <li><strong>COGS:<\/strong> Cost directly related to production<\/li>\r\n <li><strong>Operating Expenses:<\/strong> Salaries, rent, utilities, marketing<\/li>\r\n <li><strong>Financial Expenses:<\/strong> Interest on loans<\/li>\r\n <li><strong>Extraordinary Items:<\/strong> One-time gains\/losses<\/li>\r\n <\/ul>\r\n\r\n <h3>Key Formula<\/h3>\r\n <div class=\"code-block\"><pre>Gross Profit = Sales - Cost of Goods Sold\r\nNet Profit = Gross Profit - Operating Expenses - Taxes\r\n + Other Income<\/pre><\/div>\r\n\r\n <div class=\"practice\"><strong>\u270f\ufe0f Practice:<\/strong> Prepare income statement from trial balance data<\/div>\r\n <\/div>\r\n <\/div>\r\n\r\n \r\n <div class=\"unit\" id=\"unit-7\">\r\n <div class=\"unit-header\">\r\n <div class=\"unit-num-badge\">Unit 7<\/div>\r\n <h2>Balance Sheet<\/h2>\r\n <p>Snapshot of Financial Position<\/p>\r\n <\/div>\r\n <div class=\"unit-body\">\r\n\r\n <h3>What is Balance Sheet?<\/h3>\r\n <p><strong>Balance Sheet<\/strong> (Statement of Financial Position) shows assets, liabilities, and equity at a specific date. It's a snapshot of financial health.<\/p>\r\n\r\n <h3>Balance Sheet Format<\/h3>\r\n <div class=\"code-block\"><pre> Balance Sheet as at 31-December-2023\r\n _____________________________________\r\nASSETS\r\nCurrent Assets:\r\n Cash 45,000\r\n Accounts Receivable 20,000\r\n Inventory 15,000 80,000\r\n\r\nNon-Current Assets:\r\n Equipment 100,000\r\n Less: Depreciation (20,000) 80,000\r\nTotal Assets 160,000\r\n\r\nLIABILITIES\r\nCurrent Liabilities:\r\n Accounts Payable 30,000\r\n Short-term Loan 10,000 40,000\r\n\r\nNon-Current Liabilities:\r\n Long-term Loan 30,000 30,000\r\nTotal Liabilities 70,000\r\n\r\nEQUITY\r\n Capital 80,000\r\n Plus: Net Profit 10,000 90,000\r\n __________\r\nTotal Liabilities + Equity 160,000<\/pre><\/div>\r\n\r\n <h3>Balance Sheet Equation<\/h3>\r\n <p><strong>ASSETS = LIABILITIES + EQUITY<\/strong><\/p>\r\n\r\n <h3>Classification<\/h3>\r\n <ul>\r\n <li><strong>Current Assets:<\/strong> Converted to cash within 1 year<\/li>\r\n <li><strong>Non-Current Assets:<\/strong> Long-term, not quickly converted<\/li>\r\n <li><strong>Current Liabilities:<\/strong> Due within 1 year<\/li>\r\n <li><strong>Non-Current Liabilities:<\/strong> Due after 1 year<\/li>\r\n <\/ul>\r\n\r\n <div class=\"practice\"><strong>\u270f\ufe0f Practice:<\/strong> Prepare balance sheet from trial balance<\/div>\r\n <\/div>\r\n <\/div>\r\n\r\n \r\n <div class=\"unit\" id=\"unit-8\">\r\n <div class=\"unit-header\">\r\n <div class=\"unit-num-badge\">Unit 8<\/div>\r\n <h2>Adjustments & Closing<\/h2>\r\n <p>Period-End Adjustments and Account Closure<\/p>\r\n <\/div>\r\n <div class=\"unit-body\">\r\n\r\n <h3>Need for Adjustments<\/h3>\r\n <p>Trial Balance prepared from original entries. But some items need adjustment for accurate reporting (Matching Principle).<\/p>\r\n\r\n <h3>Common Adjustments<\/h3>\r\n <table class=\"data-table\">\r\n <thead>\r\n <tr><th>Item<\/th><th>Adjustment<\/th><th>Reason<\/th><\/tr>\r\n <\/thead>\r\n <tbody>\r\n <tr><td>Depreciation<\/td><td>Charge expense<\/td><td>Asset wears out<\/td><\/tr>\r\n <tr><td>Prepaid Expenses<\/td><td>Defer to asset<\/td><td>Benefit in future<\/td><\/tr>\r\n <tr><td>Accrued Expenses<\/td><td>Add to expense<\/td><td>Incurred but not paid<\/td><\/tr>\r\n <tr><td>Closing Inventory<\/td><td>Add to purchases<\/td><td>Reduce COGS<\/td><\/tr>\r\n <\/tbody>\r\n <\/table>\r\n\r\n <h3>Depreciation Example<\/h3>\r\n <div class=\"code-block\"><pre>Equipment cost: 100,000\r\nUseful life: 10 years\r\nAnnual Depreciation = 100,000 \/ 10 = 10,000\r\n\r\nAdjustment Entry:\r\nDebit Depreciation Expense 10,000\r\n Credit Accumulated Depreciation 10,000\r\n\r\nIn Balance Sheet:\r\nEquipment 100,000\r\nLess: Accumulated Dep. (10,000)\r\nNet Equipment 90,000<\/pre><\/div>\r\n\r\n <h3>Closing Entries<\/h3>\r\n <p>Transfer revenue and expense accounts to Profit & Loss account, then to Capital.<\/p>\r\n <div class=\"code-block\"><pre>Step 1: Close Revenue accounts\r\nDebit Sales 200,000\r\n Credit Income Summary 200,000\r\n\r\nStep 2: Close Expense accounts\r\nDebit Income Summary 120,000\r\n Credit Expenses 120,000\r\n\r\nStep 3: Close Net Profit to Capital\r\nDebit Income Summary 80,000\r\n Credit Capital 80,000<\/pre><\/div>\r\n\r\n <div class=\"practice\"><strong>\u270f\ufe0f Practice:<\/strong> Record adjustment entries and closing entries<\/div>\r\n <\/div>\r\n <\/div>\r\n\r\n \r\n <div class=\"unit\" id=\"unit-9\">\r\n <div class=\"unit-header\">\r\n <div class=\"unit-num-badge\">Unit 9<\/div>\r\n <h2>Cost Accounting<\/h2>\r\n <p>Analyzing Costs for Business Decisions<\/p>\r\n <\/div>\r\n <div class=\"unit-body\">\r\n\r\n <h3>What is Cost Accounting?<\/h3>\r\n <p><strong>Cost Accounting<\/strong> focuses on identifying, measuring, and controlling costs to assist management in decision-making.<\/p>\r\n\r\n <h3>Types of Costs<\/h3>\r\n <table class=\"data-table\">\r\n <thead>\r\n <tr><th>Classification<\/th><th>Type<\/th><th>Example<\/th><\/tr>\r\n <\/thead>\r\n <tbody>\r\n <tr><td>Behavior<\/td><td>Fixed Cost<\/td><td>Rent, Insurance (same regardless)<\/td><\/tr>\r\n <tr><td>Behavior<\/td><td>Variable Cost<\/td><td>Raw material (changes with output)<\/td><\/tr>\r\n <tr><td>Function<\/td><td>Manufacturing<\/td><td>Direct labor, raw materials<\/td><\/tr>\r\n <tr><td>Function<\/td><td>Administrative<\/td><td>Office salaries<\/td><\/tr>\r\n <tr><td>Relevance<\/td><td>Relevant Cost<\/td><td>Changes with decision<\/td><\/tr>\r\n <tr><td>Relevance<\/td><td>Irrelevant Cost<\/td><td>Sunk cost (already spent)<\/td><\/tr>\r\n <\/tbody>\r\n <\/table>\r\n\r\n <h3>Cost Structure<\/h3>\r\n <div class=\"code-block\"><pre>Cost of Production:\r\n Raw Materials 50,000\r\n Direct Labor 20,000\r\n Manufacturing Overhead 10,000\r\nTotal Production Cost 80,000\r\n\r\nAdd: Opening Inventory 5,000\r\nLess: Closing Inventory (8,000)\r\nCost of Goods Sold 77,000\r\n\r\nGross Profit = Sales - COGS\r\n = 150,000 - 77,000 = 73,000<\/pre><\/div>\r\n\r\n <h3>Break-Even Analysis<\/h3>\r\n <p>Point where Revenue = Total Cost (no profit, no loss)<\/p>\r\n <div class=\"code-block\"><pre>Break-Even Point = Fixed Costs \/ Contribution Margin Ratio\r\nContribution Margin = Selling Price - Variable Cost per Unit<\/pre><\/div>\r\n\r\n <div class=\"practice\"><strong>\u270f\ufe0f Practice:<\/strong> Calculate cost of production and COGS; Find break-even point<\/div>\r\n <\/div>\r\n <\/div>\r\n\r\n \r\n <div class=\"unit\" id=\"unit-10\">\r\n <div class=\"unit-header\">\r\n <div class=\"unit-num-badge\">Unit 10<\/div>\r\n <h2>Financial Analysis<\/h2>\r\n <p>Interpreting Financial Statements<\/p>\r\n <\/div>\r\n <div class=\"unit-body\">\r\n\r\n <h3>Financial Ratios<\/h3>\r\n <table class=\"data-table\">\r\n <thead>\r\n <tr><th>Ratio<\/th><th>Formula<\/th><th>Interpretation<\/th><\/tr>\r\n <\/thead>\r\n <tbody>\r\n <tr><td>Profit Margin<\/td><td>Net Income \/ Sales<\/td><td>% profit on sales<\/td><\/tr>\r\n <tr><td>ROA<\/td><td>Net Income \/ Total Assets<\/td><td>Efficiency of assets<\/td><\/tr>\r\n <tr><td>ROE<\/td><td>Net Income \/ Equity<\/td><td>Return to owners<\/td><\/tr>\r\n <tr><td>Current Ratio<\/td><td>Current Assets \/ Current Liab<\/td><td>Short-term liquidity<\/td><\/tr>\r\n <tr><td>Debt Ratio<\/td><td>Total Debt \/ Total Assets<\/td><td>Solvency<\/td><\/tr>\r\n <\/tbody>\r\n <\/table>\r\n\r\n <h3>Liquidity Analysis<\/h3>\r\n <ul>\r\n <li><strong>Current Ratio:<\/strong> Ability to pay short-term debts (Ideal: 1.5-2.0)<\/li>\r\n <li><strong>Quick Ratio:<\/strong> (Current Assets - Inventory) \/ Current Liabilities<\/li>\r\n <li><strong>Cash Ratio:<\/strong> (Cash + Receivables) \/ Current Liabilities<\/li>\r\n <\/ul>\r\n\r\n <h3>Profitability Analysis<\/h3>\r\n <ul>\r\n <li><strong>Gross Profit Margin:<\/strong> Gross Profit \/ Sales<\/li>\r\n <li><strong>Operating Margin:<\/strong> Operating Income \/ Sales<\/li>\r\n <li><strong>Net Profit Margin:<\/strong> Net Income \/ Sales<\/li>\r\n <\/ul>\r\n\r\n <h3>Efficiency Ratios<\/h3>\r\n <ul>\r\n <li><strong>Asset Turnover:<\/strong> Sales \/ Total Assets<\/li>\r\n <li><strong>Inventory Turnover:<\/strong> COGS \/ Average Inventory<\/li>\r\n <li><strong>Receivables Turnover:<\/strong> Sales \/ Average Receivables<\/li>\r\n <\/ul>\r\n\r\n <div class=\"practice\"><strong>\u270f\ufe0f Practice:<\/strong> Calculate financial ratios and interpret them<\/div>\r\n <\/div>\r\n <\/div>\r\n\r\n \r\n <div class=\"congrats\">\r\n <h2>\ud83c\udf89 Congratulations!<\/h2>\r\n <p>You've completed Accounting! Now master these concepts for successful business finance!<\/p>\r\n <\/div>\r\n\r\n <p style=\"text-align: center; color: var(--mid); font-size: .85rem; padding-bottom: 1rem;\">\r\n \ud83d\udcda Pak Notes Hub \u2014 Accounting Complete Notes | University Level | BS Commerce \/ BBA<br>\r\n For corrections and suggestions: support@paknoteshub.com\r\n <\/p>\r\n <\/main>\r\n<\/div>\r\n\r\n<button id=\"back-top\" onclick=\"window.scrollTo({top:0,behavior:'smooth'})\">\u2191<\/button>\r\n\r\n<script>\r\n const progress = document.getElementById('progress');\r\n window.addEventListener('scroll', () => {\r\n const scrollPercent = (window.scrollY \/ (document.documentElement.scrollHeight - window.innerHeight)) * 100;\r\n progress.style.width = scrollPercent + '%';\r\n document.getElementById('back-top').classList.toggle('visible', window.scrollY > 400);\r\n });\r\n \r\n document.querySelectorAll('.unit').forEach(unit => {\r\n const observer = new IntersectionObserver(entries => {\r\n entries.forEach(entry => {\r\n if(entry.isIntersecting) {\r\n const id = entry.target.id;\r\n document.querySelectorAll('.toc-list a').forEach(a => {\r\n a.classList.toggle('active', a.href.endsWith(id));\r\n });\r\n }\r\n });\r\n }, { rootMargin: '-20% 0px -70% 0px' });\r\n observer.observe(unit);\r\n });\r\n<\/script>\r\n<\/body>\r\n<\/html>\t\t\t\t<\/div>\n\t\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t\t\t<\/div>\n\t\t","protected":false},"excerpt":{"rendered":"<p>Accounting \u2013 University Level \u2013 Pak Notes Hub Pak Notes Hub Basics Financial Analysis \ud83d\udcca University Level \u2014 BS Commerce \/ BBA AccountingComplete Notes Double Entry \u00b7 Journals \u00b7 Ledgers \u00b7 Trial Balance \u00b7 Financial Statements \u00b7 All in Easy Urdu\/English Accounting Cycle Financial Statements Cost Accounting \ud83d\udcda Table of Contents 1 Basics 2 Double […]<\/p>\n","protected":false},"author":1,"featured_media":0,"parent":0,"menu_order":0,"comment_status":"closed","ping_status":"closed","template":"","meta":{"_angie_page":false,"footnotes":""},"class_list":["post-534","page","type-page","status-publish","hentry"],"_hostinger_reach_plugin_has_subscription_block":false,"_hostinger_reach_plugin_is_elementor":false,"_links":{"self":[{"href":"https:\/\/paknoteshub.online\/index.php?rest_route=\/wp\/v2\/pages\/534","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/paknoteshub.online\/index.php?rest_route=\/wp\/v2\/pages"}],"about":[{"href":"https:\/\/paknoteshub.online\/index.php?rest_route=\/wp\/v2\/types\/page"}],"author":[{"embeddable":true,"href":"https:\/\/paknoteshub.online\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/paknoteshub.online\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=534"}],"version-history":[{"count":4,"href":"https:\/\/paknoteshub.online\/index.php?rest_route=\/wp\/v2\/pages\/534\/revisions"}],"predecessor-version":[{"id":538,"href":"https:\/\/paknoteshub.online\/index.php?rest_route=\/wp\/v2\/pages\/534\/revisions\/538"}],"wp:attachment":[{"href":"https:\/\/paknoteshub.online\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=534"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}