Accountancy, Book-keeping & Auditing
What this domain tests
Accountancy, Book-keeping & Auditing covers the accounting cycle, final accounts, depreciation, bank reconciliation and basic audit principles.
Core rules
- Dual aspect: every transaction affects at least two accounts; assets = liabilities + capital.
- Journal: debit the receiver/expense/asset increase; credit the giver/income/liability increase.
- Ledger posting leads to a trial balance; debit and credit totals must agree.
- Final accounts: trading account gives gross profit; profit & loss account gives net profit; balance sheet shows financial position.
- Depreciation: straight-line = (cost − scrap) / useful life; written-down value applies a fixed rate to book value.
- Audit: vouching checks documentary evidence; internal check is preventive, internal audit is independent appraisal.
Worked example
Bought furniture ₹50,000, paid ₹20,000 cash and the rest by cheque. Entry: Furniture A/c Dr 50,000; Cash A/c Cr 20,000; Bank A/c Cr 30,000. Reason: one asset increases; two assets decrease.
Traps
Do not treat capital expenditure as revenue; do not ignore outstanding expenses or prepaid items; in BRS, a cheque deposited but not cleared makes the pass book balance lower than the cash book.