Abstract

The case study discusses the dilemma faced by Shreya Singhal, a B. Tech graduate, who started her sole proprietorship business of Office Equipment and Supplies with capital of Rs. 150,000 and a bank loan of Rs. 100,000. Later, a close friend of hers, Rupam, also joined her business putting an equal amount of capital. At the end of the first month of her business, Shreya decided to do a transactional analysis of the business transactions that had taken place during the month. However, another friend of hers, Namitha, who had an M.Com degree, suggested that she maintain a proper book of accounts for her partnership business. Namitha’s suggestions left Shreya in a state of confusion. Her first dilemma was over the kind of organization she was running and the second was over the accounting method she should use – should it be the accounting equation method or a traditional accounting method. She wondered if the resultant financial performance and financial position would be the same in both the methods. This case can help learners understand various concepts in accounting and the different accounting methods. It also helps them to learn how to prepare various books of account and how to do transactions analysis.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

• To understand the difference between sole proprietorship and partnership
• To understand how to prepare Journals, Ledgers, Trial Balance, and Final Accounts.
• To understand how to do transactions analysis
• To analyze what is preferable – preparing various books of account or just doing transactions analysis

Keywords

Accounting Concepts; Accounting Methods; Journals; Ledgers; Trial Balance; Final Accounts; Transaction Analysis; Business Transactions; Partnership Firm