Second Semester

Category Archive Second Semester

Source Documents

Source Documents:

A piece of paper that is used as evidence to record a transactions.A source document, often called business paper, is the document produced with each business event and used to record every business transaction. In other words, it’s a physical or electronic document that lists the details of a transaction and is used by the accounting department tojournalize accounting information.

Some common examples of source documents include sales receipts,checks, purchase orders, invoices,bank statements, and payroll reports. These are all original documents that were created from a transaction and the first component in an accounting system.

Source documents are used to record transactions because they are original and show an objective report of the economic activities of each transaction. For example, when a company purchases goods from a vendor, the vendor creates a receipt or invoice that shows the goods that were purchases, the purchase price, date of transaction, seller’s name, and the method of payment. This document gives the buyer’s accounting department an objective and reliable record of the purchase transaction. It also gives the vendor a document that can used to record the sale of goods.

Source documents are also used for internal control purposes as well. For example, the manufacturing department issues a purchase requisition for the goods it needs to complete its upcoming jobs. The purchase requisition is sent to the purchasing department for approval. Once it is approved, a purchase order is issued and sent to the receiving department when the goods received are compared with the purchase order. A receiving report is issued and all three of these documents are sent to the accounting department to approve the invoice from the vendor. If all of these documents agree, the invoice is approved and the cashier issues a check for the goods.

As you can see, all of the source documents are used to ensure that only proper goods are ordered, received, and paid for.


Examples are:

  • Cash Memo:
    This is used for cash transactions. A Cash Memo is received or given when goods are purchased or sold for cash. Hence, all cash transactions are recorded in the books of accounts on the basis of these cash memos. The cash memo is different from Cash Receipt in the sense that it is normally issued for cash received subsequent to the sale of goods but Cash Memo is used for money received instantly.
  • Invoice or Credit Bill:An Invoice or Credit Bill is used for business transactions carried out on credit. A sales invoice is prepared to record the credit sale of goods or provision of services. The original copy of the sales invoice is sent to the purchaser and the seller keeps a duplicate copy as the proof of sale.
  • Receipts:A firm issues a receipt when it receives cash or cheques. It is an acknowledgement of receipt of cash or chequeand acts as a documentary proof for receiving the cash.
  • Deposit Slip:It is a form available from the bank for depositing money or chequein a bank account. It has a counterfoil or a carbon copy, which is returned to the depositor with signature of the cashier, as receipt. The counterfoil or a carbon copy of the deposit slip gives the details regarding the date, the amount (in cash or chequedeposited) etc.
  • Cheque:A chequeis a form made available by a Banker to its account holder. Each chequehas a counterfoil to record the same information written on the chequethat remains with the account holder for his future reference. The counterfoil is taken as a source document to make entries about payments in the books of accounts.
  • Debit Note:Debit note is a note sent to a supplier informing him that his account has been debited to the extent of goods returned to him. It is also used to send to a customer informing him that an additional amount is recoverable from him for difference in price etc.
  • Credit Note: Credit note is a note sent to a customer informing him that his account has been credited to the extent of goods returned by him or sent to a supplier informing him about the difference in price etc.
  • Bank Statement:It is a statement sent by the Bank on a regular basis, say monthly. It shows the running balance of the bank account for the period with details of deposits and payments out of the Bank Account.

Role of Source Documents in Accounting:

  • Recording basis:The source documents are the basis for recording and accounting, without which recording would be virtually meaningless.
  • Authenticates the amount paid or received:The source document establishes the amount paid or received.
  • Evidence in the court of law:The source documents can be produced in the court of law as documentary proof in the event of any dispute involving the accounting entity.
  • Basis for taxation:The tax authorities use the source documents to establish the amount of tax to be paid by the accounting entity extensively.
  • Information about make, quantity, and values:Source documents provide, in brief, the information about the model, make, quantity, amount of tax collected or payable, and the value of transactions.
  • Proof of payment or receipt:The source documents are the proof of payment made and amount received along with their purposes. For e.g., issue of account payee chequesand their record in the Bank Statement is a proof of payment.

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Annual Report

Annual Report:

An annual report is a comprehensive report on a company’s activities throughout the preceding year. Annual reports are intended to give shareholders and other interested people information about the company’s activities and financial performance.
The annual report is a financial document published by most private and public companies to summarize the major transactions of the year. The report usually begins with a letter from the Chairman of the Board and/or the Chief Executive Officer. It also includes the balance sheet, income statement and the cash flow statement as well as a discussion of company affairs and notes to the financial statements.
The joint stock companies publicly owned and listed on a stock exchange are required to prepare and publish an annual report for its shareholders. In Nepal, the privately owned companies are also required by the Companies Act, 2053 BS to prepare an annual report and submit it to the Office of the Registrar of Companies.

Components of annual report:

  1. Financial Statements:

    The financial statements consist of four statements prepared by the companies as a form of communication with its shareholders and other user groups. They include income statement, the balance sheet, statement of cash flows, and statement of changes in stockholder’s equity. The information provided in the financial statements is the responsibility of the management and subject to verification as part of the external audit.

  2. Chairperson’s Report:

    This report is an address by the Chairperson of the company’s Board of Directors to its shareholders at the Annual General Meeting (AGM). It comprises the summary of the results of financial affairs, composition of the BOD and discussion about the external environment, especially the economic and financial situation of the country and place of operation of the business. The chairperson might take this opportunity to thank and acknowledge the support and co-operation of the company’s BOD, shareholders and staff and employees.

  3. Management Discussion and Analysis:

    The management team discusses the financial statements and provides vital explanations for the amounts reported in the financial statements. Some companies report this section as financial review. The section is directed at not only simplifying the information contained in the financial statement and any back-up information requiring clarification but also providing crucial information about the company’s business plan or strategy.

  4. Management’s responsibility for financial reporting:

    It is a written statement in the annual report indicating the responsibility of management for the financial statements.

  5. Notes to Financial Statements:

    The notes to financial statements provide crucial information regarding the accounting policies and procedures adopted, the basis of taxation, the employee benefit schemes, the commitments and contingencies, the inventories, the account receivables, account payables and other details of items clubbed together to make the financial statements brief.

  6. Financial Summary:

    Another regular feature in any annual report is the summary of financial information, especially of the revenue, net income, and total assets. Many reports call it financial highlights. This section is primarily a pictorial representation using colourful pie charts, bar diagrams, or graphical curves.

  7. Report of the Independent Auditor:

    Before the annual report is presented to the company’s shareholders at the AGM and submitted to the concerned government office, the books of accounts and the financial statements of the company are subject to an external audit from an independent auditor. After such an audit, the auditor issues a report addressing to the company’s shareholders.(According to accounting standard)


Keeping Errors At Bay

Keeping Errors At Bay-Four Levels


Literal Comprehension:

This essay is written by Betrand Russell which provides multiple examples of mistake that people generally commit in their day to day life. His main idea is to provide suggestions to avoid the mistakes. We need careful, serious, critical and analytical mind to get rid of these errors. This essay deals with the ideas of avoiding errors that happen in our daily life situations. We can remove many foolish opinions by observing the related facts. When observations are impossible, we have to compare our ideas with those of the others. If there are evidence and knowledge, there will be no wrong understanding. Visiting different places and observing societies of the world also helps us to purify your own opinions. Knowing others idea makes us less dogmatic. If we have one-sided idea about anything, we will not find out the truth, such situation, we will make our good points more important. Fear and prejudice of different types create obstacles from learning the truth or reality. So we should be very careful while doing any work. We should not take as granted anything without proper observation.


The focus of this essay is to prevent people from committing some silly errors in day to day life.Making keen observation on subject matter having our personal experience, having a good plan and argument, self -esteem and fearlessness helps people to avoid such errors. To error is human but to do mistake is not excusable. Human make errors knowingly or having known about that error is not human. This is somewhat punishable also. We cannot find truth without proper understanding. The essay tries to tell us why human beings are unable to see the truth. They do not see the matter. They have illusion that they know everything without knowing it properly. It says that we have some mistakes generally we do not compare our idea with that of others. We unnecessarily feel pride and ignore things. Therefore, we commit crimes or errors. This is human but to do mistake knowingly cannot be human. There are solutions for errors but not the knowingly committing mistakes.

Critical Thinking:

Russell gives very concrete idea about errors and their solutions. He says how and why we do errors and how can we correct them. After reading this story I came to know and have some questions. The writer has presented a scientific way of thinking. By comparing and contrasting, we can judge our own ideas. I agree with many things which the essayist says but there are some questions in my mind.

  • Who can remain without doing any error?
  • How can one know that it is error and this not?
  • Can we change our mind not to doing errors?
  • Why people cannot find out the fact easily?
  • How we can compare such things to those of the others?
  • What are the forms of the truth?
  • How to know that whose idea is right or wrong? 


Generally, we think right whatever we do. This essay gave me lots of ideas about errors and their types as well as their remedies (solution). I started to realize my mistakes in my life as I sometimes used to stubborn and think everything right. I started to honour other’s ideas. I also came to know why people mistake while making ideas. A wise man should look at the things from different sides. We should be comparative and multidimensional perspectives should be used. I came to know that we can do errors in every work every time but that is only found out after its proper judgment.


Mr. Know-All

Mr. Know-All-Four levels


Literal Comprehension:

When the First World War ended, the writer ‘Somerset Maugham ‘ decided to go to Japan from America by ship. It was very difficult to get a good seat in the ship. But he managed to get in cabin seat in the ship. His cabin partner , max Kelada , was much talkative. At first the writer thought that he was a Negro but later he came to know that he was also an English man. However, he hated his chatty nature. He introduced with everyone in the ship and conducted a lottery action. He said that he had good knowledge of everything. So they called him ‘mr. know all’. Although alcohol was strictly prohibited to carry, he uttered writer to have cocktail “mix wine”. Once the writer, Mr. kelada, Mr and Mrs Ramsays got chanced to have dinner in the same table. Mr. ramsays was in the consular service posted at Kobe, Japan. He had spent one year in alone in japan because his salary was very low. Now he had come to take his wife with him. Mr. kelada said that he was going to japan to examine pearls. He saw a pearls chain around mrs ramsays neck and said that they were original. When Mr. Ramsays told him to guess the price, he said that they could cost upto 30,000 dollars.but when Mr. Ramsay said that they were false, he didn’t believe and they had bet of one hundred dollars. When Mr. Kelada was going to check the pearls, Mrs ramsay looked nervous. Although the pearls were original , Mr. kelada said that they were false to save Mrs. Ramsays. The next day when she returned his money, the writer was surprised to know the reality. He also know that Mr. kelada was really mr. know all. Then he began to like Mr. kelada.


This story may be trying to tell us about the writer’s attitude towards non-whites.The writer may be trying to show humanity and nature of women. Outer cover can never represents the inner reality. Although Mr. kelada is hated by all, he is proved to be the best example of humanity. He became fool and lost money and prestige but he saved the happy married life of Mr and Mrs Ramsay. This story also shows the duel character of women.

Critical thinking: 

Although this story gives the moral lession. Some ideas of the writer are not convincing. After reading this story we can ask some questions.

  • If alcohol was not allowed to carry how did Mr. kelada offet cocktail to the writer?
  • Did Mr. kelada know everything? Then why did people hate him?
  • Is a passenger allowed to carry all kinds of wines with him?
  • Does anyone dislike the other because of color?
  • Does anyone give up his money even after winning the bet?
  • Can we find such Mr. Know all in this world?
  • Don’t we find a frank and friendly person good during a long journey?
  • Should a husband really suspect on the behavior of his wife?


Before I read the story, I used to make friendship with as many people as I met. I enjoyed talking with them about what I know.But I did not study their view whether they liked my talk or not.I am very much affected by this story. After reading this story, I know that we can’t judge people from their appearance. This story also taught me that it is not easy to understand the character and secrecy of women. Now I won’t believe in women easily.



The Burden of Skepticism

The Burden of Skepticism-Four Levels



Literal Comprehension:
Skepticism is found in every day life. If we have to buy a used car we examining it even if we do not have any ideas about the car. If we buy it without examining, we know that we may have to be sorry for it. In some cases we use skepticism, but in politics and commercials we do not use it. So we cheated a little. But if we do not use it in the case of medicine we have we have to bear a great loss.

If we study the whole history of mankind, we find that they have always accepted some kind of popular belief system. The reason for this is that all human needs are never fulfilled. These unfulfilled needs may be satisfied by these beliefs. It is natural for us to have a desire to take our dead relatives. And we would be happy when we learn that our spirit does not die and our existence will not come to an end forever.

Critical Thinking:
There are many channels who claim that they can contact with the spirit of a person long- long ago. But these spirits do not answer any specific questions and they answer only general and vague (unclear) questions. Their specific answer would have helps us a lot to know about the society of the past.
  • Why does the writer completely neglected the possibility of the existence of spirit /god? Can he prove what he is saying?

Skepticism is dangerous. So it is not taught in school. Skepticism and openness to new ideas are equally necessary for human progress. If we are too open, we will not be in opposition to tell a difference between what is good and what is bad. But, on the other hand, if we are too skeptical, no new ideas will find any place. Scientist forms new ideas in to their minds in the form of hypothesis and examining them closely. If their ideas are proved correct they will be accepted. If they are proved false later on, the scientists will accept that they have made a mistake. But religious and political leaders never accept what is against their principles, however wrong their ideas may be.


Adventures In English Vol II

Adventures In English Vol II ,Four levels


Unit One: The Environment

  1. How Sane Are We?
  2. Don’t Cut Down the Trees Brother Woodcutter

Unit Two: Natural Science

  1. To Know a Fly

Unit Three: Humor and Satire

  1. King John and the Abbot of Canterbury
  2. Third Thoughts
  3. Who was to Blame?
  4. The Clock Tower

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Accounting Equation

Accounting Equation,Financial Accounting I,BBA first semester,BBA-BI second semester

Accounting Equation:

The accounting equation displays that all assets are either financed by borrowing money or paying with the money of the company’s shareholders. Thus, the accounting equation is: Assets = Liabilities +Shareholder Equity. The balance sheet is a complex display of this equation, showing that the total assets of a company are equal to the total of liabilities and shareholder equity. Any purchase or sale by an accounting equity has an equal effect on both sides of the equation, or offsetting effects on the same side of the equation. The accounting equation is also written as Liabilities = Assets – Shareholder Equity and Shareholder Equity = Assets – Liabilities.


                                                    Accounting Equation for the month of march

                                                     Expert Counselling Service Incorporation

Assets = Liabilities and Owners Equity
Date Cash A/R Supplies Equipment     A/P N/P Capital Stock R/E
2-Mar 40000               40000  
7-Mar 15000             15000    
bal 55000             15000 40000  
12-Mar     700       700      
bal 55000   700       700 15000 40000  
19-Mar   4000               4000
bal 55000 4000 700       700 15000 40000 4000
20-Mar (1,300)                 (1300)
bal 53,700 4000 700       700 15000 40000 2700
22-Mar 1000 (1000)                
bal 54,700 3000 700       700 15000 40000 2700
26-Mar 2800                 2800
bal 57,500 3000 700       700 15000 40000 5500
29-Mar (8000)     8000            
bal 49,500 3000 700 8000     700 15000 40000 5500
30-Mar (3300)                 (3300)
bal 46,200 3000 700 8000     700 15000 40000 2200
31-Mar (1400)                 (1400)
  44,800 3000 700 8000     700 15000 40000  800
Total Assets=56500     Total liabilities +O/E=56500

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An accounting worksheet is a spreadsheet used to prepare accounting information and reports. Accounting worksheets are most often used in the accounting cycle process to draft an unadjusted trial balance, adjusting journal entries, adjusted trial balance, and financial statements.

Worksheets are prepared at the end of an accounting period and usually include a list of accounts, account balances, adjustments to each account, and each account’s adjusted balance all sorted in financial statement order. As you can imagine, after a worksheet is completely filled out, preparing financial statements manually is quite simple. Most of the preparation work goes into drafting the worksheets.

As with most working papers, accounting worksheets are designed for internal purposes only. External users like investors and creditors rarely if ever get to see a company’s accounting worksheet. This means that the worksheet format can be flexible. Companies can customize the format of their worksheets to fit their internal demands and work flow needs.

Bookkeepers and accountants use accounting worksheets for a variety of reasons. Worksheets make transferring t-accounts into an adjusted trial balance much easier. Worksheets also reduce the risk of errors making errors when producing financial statements.

Worksheets can also be used for planning purposes. Since the worksheets are used to make adjusting journal entries, managers can examine the worksheets before the adjustments are posted to see their effect on the overall financial statements. Worksheets can also be helpful in preparing interim financial statements.



                                     Forever Green Land Scaping

                                            August 31,2012            


Accounting Heads Unadjusted TB Adjustment Adjusted TB Income Statement Balance Sheet
  Debit Credit Debit Credit Debit Credit Debit Credit Debit Credit
Cash 6460       6460       6460  
Accounts Receivable 23400       23400       23400  
Supplies on hand 1260     530 730       730  
Prepaid Insurance 3675     175 3500       3500  
Equipment 28800       28800       28800  
Acc. Depn Equipmnt   9200   600   9800   Foreve   9800
Buildings 72000       72000       72000  
Acc. Depn Building   16800   200   17000       17000
Accounts Payable   10500       10500       10500
Notes Payable   10000       10000       10000
Capital Stock   40000       40000       40000
Retained Earnings   42100       42100       42100
Service Revenue   14200       14200   14200    
Advertising Expenses 1200       1200   1200      
Gasoline and Oil Expenses 1775       1775   1775      
Wages and salary Expenses 4230   3320   7550   7550      
Supplies expenses     530   530   530      
Insurance expenses     175   175   175      
Depreciation exp Equipmnt     600   600   600      
Depreciation exp Buildings     200   200   200      
Rent Receivable     700   700       700  
Rent Revenue       700   700   700    
Wages and salary payable       3320   3320       3320
Interest expenses     100   100   100      
Interest Payable       100   100       100
              2770     2770
  142800 142800 5625 5625 147720 147720 14900 14900 135590 135590


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The Clock Tower-Four levels

The Clock Tower


Literal Comprehension:

The speaker in this poem describes the conduction of an old pensioner. The poem has compared the old pensioned senior vet with clock tower, Ghantaghar. He is  old, rejected and has distributed all his things to his relatives. All his military equipments are gone. The old pensioner has jealously too; so, he has kept two souvenirs of his army life. They are an old-modeled, large, round pocket watch and the ancient hat. The clock tower is like a pensioned senior vet who is passing t=long and sand days of the old age. It has a clock on its neck and a cap like the old vet on its head. It is standing forever on the bank of Ghantaghar and it is brooding.


The loneliness of the old man is powerfully presented through the image of the clock tower symbolically. Like the clock tower which is old, neglected and waiting its end day, the old man has also the same fate- old, rejected and dejected. The poem has revealed the bitter reality of the old age. Ranipokhari was built by the king Pratap Malla in 1727 BS in the memory of his son. It was a token of consolation to his wife. Thus, by looking at the lake the old man remembers his past and is mollifying (lessening) his suffering.

Critical Thinking: 

Time is most power full thing. It turns a handsome man to an old and ugly person who has nothing except memories. We all are victims of the time. The poem aptly points out the power of time. The vet is sitting under the tower, time, which itself is the curse of for human being. The poem has used the power of imagery in a powerful way. Without stating the history of Ranipokhari it invites readers to know why the old man is looking at the Ranipokhari, queen’s lake.

  • Why does the poet compare an in animate object like a clock tower with a living human being?
  • Why does he say that the clock tower is brooding? It is unhappy. How does he know?


The poet seems to be very unhappy with our neglect towards tradition, historical monuments.In our life as well, when we grow older, nobody talks to us. We want to share our experiences, but nobody would have time to listen us. Thus we lament and curse time because it is time that changes us to an old and ugly things. We have to wait silently to death. We cannot stop the passage of time, time is powerful than us. We have nothing except lamenting on the bygone days. I met an old man in Pasupati area. He reported all his grief within five minutes to an unknown like me.


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Third Thoughts-Four levels

Third Thoughts


Literal Comprehension:

This story “Third Thoughts” is written by E.V Lucas. The narrator’s friend was not a successful businessman.  Once the writer’s friend while visiting New York bought a painting thinking that it was by Turner. He got it at cheap price since the seller was also confused about its originality. With the painting he went to London and sold it at fifty pounds. He was so much happy that he decided to share the profit with seller of New York. At first, he decided to share fifty percent of his profit and wrote a letter but having no stamp, he went to his room. Again at about 3 AM, he thought it quite inappropriate to share the profit but still thought of sending ten pounds only. His thinking kept on changing and couldn’t sleep well. Again. he thought of sending five pounds thinking that if he shared, the Goddess would be angry and he thought it was he who knew the value of the painting. If he had known it, he wouldn’t have given him at such cheap rate, so it is wrong to send him the profit. Finally, he decided to send only a pound.Early in the morning, he went out side and spent all his money in gambling. Finally, he concluded that buying and selling are straight forward matter. Everyone in this matter tries to get benefit. The buyer once paying to the goods has no obligation to the dealer.


The story presenting the constant changing nature of human mind seems to be full of humor and satire. Basically thinking with the nature of businessman’s mind it proves that human mind can never be rigid and fixed. Especially in business their mind keeps on changing. At another level, it sheds light on human earning since the earning as that of writer’s friend has no meaning at all in life. The most important thing in the story is that in business buying and selling are straight forward dealings. It has nothing to do with human consideration, sympathy and faith. Once goods are sold or bought they have nothing to do with them since then.

Critical Thinking: 

The story offers a great deal of humor and satire. But in many respects, it doesn’t seem appropriate and convincing.  

  •       Does anyone want to share his profit? Isn’t the idea of sharing profit with the dealer  humors?
  •       Does any seller sell his good without knowing it?
  •         Does a customer get Turner’s painting in such low price?
  •       How can we say that there is no value of  feelings and emotions while doing business?


As I went through the story, it reminded me of my own events that I experienced earlier. Once I had been to my village after a long time from the city. I had taken a beautiful watch there. Everyone liked it, one of my friends promised to pay Rs 500 for it ,so I gave it to him. I got Rs 300 as profit, and so I got extremely happy.

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