Page 112 - Agri-Business Management Handbook

Application of funds is the use of business Every business transaction involves two
resources to generate returns e.g. aspects from the business point of view
purchase of goods for resale, purchase i.e. giving and taking of value. The two
of fixed assets, payment of expenses are recorded on the two sides of the
etc. Sources of funds means inflow of ledger. The giving of value is recorded
resources in to the business whether on the credit side e.g. If goods are sold,
from the owner or from outside sources a sales account is opened in the ledger
e.g. capital injected by the owner, sale of and the amount entered on the credit side
goods, receipt of incomes, sale of fixed (credited). Taking of value is recorded on
assets etc. Application of funds will appear the debit side e.g. if cash is received in to
on the debit side of the account opened in the business a cash account is opened
the ledger for such purpose while source and the amount debited. A page in the
of funds will be recorded on the credit side ledger is ruled with four columns on either
of the account opened for the purpose. side. This is described as the T format
of an account illustrated in table 5.2.

Table 5.2: Ledger F Amounts Credit side
Date Particulars F Amounts
Debit side
Date Particulars

Date: shows when a transaction actually took place, Particulars: Shows the
name of the other account affected by the same entry.

F (Folio): Contains the reference page of the account named in the particulars
column. In general, this column is a reference column for the corresponding
entry in the same or different ledger.

Amount: Indicates the monetary value of the transaction. Due to the automation
of the office, the T format of an account is being replaced by the three-column
ledger, which has three amounts column as shown in table 5.3.

Table 5.3: Three Column Ledger

Title of the Account

Date Particulars Folio Debit Credit Balance

55AGRI-BUSINESS MANAGEMENT HANDBOOK |