How To Learn Accounting In The Most Simple Way?

…Continuing with the old series “Learning accountancy without any pain,” we shall proceed to learn the gimmicks of “account.”

We shall learn the secret of accounting through a story.

There were two friends, A and B. Both of them were unemployed. Their parents were fed up with them. They tried to mend their ways but failed. They planned a scheme. They got two shirts stitched for themselves. Each of the shirts had two pockets on both sides. One on the left and the other on the right. Both of these pockets represent the left and right sides of an account.

Both of them were given the shirts. They were given one pot of salted buttermilk and one basket of roasted chickpeas.

A was given a pot of salted buttermilk, while B was given a basket of roasted chickpeas.

Both of them were given four anas.

They were issued instructions as follows:

They were to keep four anas in the left pocket of their shirts, indicating a debit balance of four anas in cash.

They were told that whenever they made a sale, they should keep the amount received in cash in their left pocket and prepare a slip of sales and keep it in their right side, indicating the debit balance of cash and the credit balance of sales.

Both of them went to the market.

Half the day has passed and they have had no sales either.

They felt hungry and thirsty.

A gave four anas to B and told him to sell roasted chickpeas.

B agreed. He took four anas from A and put them in his left pocket, and he prepared a slip showing sales and kept it in his right pocket.

Now, he had the debit balance of 8 anas in cash and the credit balance of 4 anas in his sales account.

The entry had been

Cash a/c ——– debited

To the sales a/c.

On the left-hand side of the cash account, he has written, “to the sales account,” while on the credit side of “sales account,” he has written, “by cash account.”

A has put a receipt in his left pocket indicating “purchase” and a receipt in his right pocket indicating “cash.”

The entry in the books of accounts of a would have been

Purchase a/c ———–debit

To cash account (credited)

On the purchase account on the left hand side, he has written “to cash,” and on the right hand side of the cash account, he has written “by purchase account.”

Now, it was B’s turn.

He offered to buy salted buttermilk from A. He paid him four anas and obtained a glass of salted buttermilk. A had now 4 anas in his pocket.

B put a purchase receipt in his left pocket and a slip in his right pocket showing the amount paid for the purchase.

The entry in the books of accounts for B would have been:

Purchase account  ————- debited

To cash account —————– credited.

On the left side of the purchase account, he would have written “to cash” and on the right hand side of the cash account, he would have written “by purchases”.

A would have passed the following entry into his books of accounts as

Cash account —————– debited

Sales account —————– credited

He has four anas in his left-hand pocket and a sales slip in his right-hand pocket.

On the left side of the cash account, he has written “to the sales account,” and on the right hand side of the sales account, he has written “by cash.”

They kept on buying and selling among themselves.

Now, you need to tell how much they earned, as at the end of the day, they had no stock of goods in hand. The pot would have fetched 50 glasses of salted buttermilk, and the basket of roasted chickpeas would have facilitated 50 serves. Each glass of salted butter milk would have fetched 4 anas, and a serving of roasted chickpeas would have been sold for 4 anas.

You can prepare the necessary accounts and forward them to me.