ACCOUNTING FOR PRIVATE INDIVIDUALS
Most of the persons or private individuals do not keep accounts. Some of the people think as it is a waste of time and some other think keeping private financial records are useless or unnecessary for them.
Nobody can remember all his private financial transactions for a long period. Therefore, for personal use or for legal use it become very necessary to maintain records for personal financial transactions like payment of house tax, Payment for Life Insurance, Payment of health insurance premium etc.
I am going to discuss with you a very simple method by which you any normal person keep records without any expense. In a simple diary or in an old notebook you can maintain records of private financial transactions. For maintaining records, you just need to do following two things.
Left Hand Side Page Treat as Receipt Side
Right Hand Side Page Treat as Payment Side
Format of Left-Hand Side Page
RECIEPT
| DATE | PARTICULAR | AMOUNT |
| 02/04/2020 | To Opening Balance | |
| 02/04/2020 | To Receipt form Salary | |
| 02/04/2020 | To Sale of Scrap | |
| 02/04/2020 | To Sale of News Paper | |
| 02/05/2020 | To Interest Received | |
| Total |
Format of Right-Hand Side Page
PAYMENT
| DATE | PARTICULAR | AMOUNT |
| 02/04/2020 | By House Tax | |
| 02/04/2020 | By Water Tax | |
| 02/04/2020 | By Insurance Premium | |
| 02/04/2020 | By Health Insurance Premium | |
| 02/05/2020 | By Electricity Bill | |
| 02/04/2020 | By Balance c/d to Next Day | |
| Total | = |
Left Hand Side Page: Write down all the private receipts like Receipt of Salary, Receipts for sale of scrape, Sale of old News Paper.
Right Hand Side Page: Write down all the payments like Payment for House Tax, Water Tax, Electricity Bill, Purchase of Furniture.
In the end of Month, you may summaries all the noted transaction into following manner:
SUMMARY OF CASH BOOK
| RECEIPT | AMOUNT | PAYMENT | AMOUNT |
| To Balance b/d | By House Tax | ||
| To Salary | By Water Tax | ||
| To Sale of Scrap | By Life Insurance Premium | ||
| To Sale of Old News Paper | By Health Insurance Premium | ||
| To Bank Interest | By Electricity Bill | ||
| By Balance c/d | |||
| TOTAL | = | TOTAL | = |
Even if you are not able to summarize the transaction you can say I have accounting records and maintained on cash basis, and this is my cash book. In the end I want say and assure you your rough notebooks will work as cash book and in case of need any professional accountant like CA, CS can summarize for you and prepare Balance Sheet and Profit and Loss for you.
