Double entry document, Analysis and Design

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The main focus of this document is to explain
1. How double entry system works,
2. Manual workflow,
3. Reports required,
including its analysis and engineering
4. Data Flow Diagram,
5. ER Diagram,
6. Tables and Data Structures,
7. Menus, Forms Designing (List and Edit View) and Workflows
8. Architecture Design.

Portfolio: http://be.net/myasinr
Wordpress: http://mohsinpage.wordpress.com
Linkedin: http://pk.linkedin.com/in/rmyasin
Twitter: http://twitter.com/moshsin
Facebook: https://www.facebook.com/pages/Mohsin-Page/180815835319473

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Double entry document, Analysis and Design

  1. 1. Business Process ofDouble Entry System, Analysisand DesignPrepared By Mohsin Yaseen (System Analyst)Email: myasinr@gmail.comSkype: myasinrCell: +92 334 906 9919Portfolio: http://be.net/myasinrWordpress: http://mohsinpage.wordpress.comLinkedin: http://pk.linkedin.com/in/rmyasinTwitter: http://twitter.com/moshsin @2012
  2. 2. Double Entry System, Analysis and DesignContentsChapter 1: ............................................................................................................................................... 6 Introduction ........................................................................................................................................ 6Chapter 2: ............................................................................................................................................... 7 Double Entry System ........................................................................................................................... 7 For Example ..................................................................................................................................... 7 Prerequisite of a Transaction (Voucher) ........................................................................................... 8Chapter 3: ............................................................................................................................................. 12 Accounting Reports and Financial Statements ................................................................................... 12 Accounting Reports ....................................................................................................................... 12 Financial Reports ........................................................................................................................... 12Chapter 4: ............................................................................................................................................. 13 Data Flow Diagram ............................................................................................................................ 13 Notations....................................................................................................................................... 13 Double Accounting Operation ........................................................................................................ 14 Bank Reconciliation........................................................................................................................ 15 Reporting....................................................................................................................................... 16 Closing and Opening Entries .......................................................................................................... 17 Users ............................................................................................................................................. 17 Data Stores .................................................................................................................................... 18 Documents .................................................................................................................................... 18 Processes....................................................................................................................................... 18Chapter 5: ............................................................................................................................................. 35 Entity Relationship Diagram............................................................................................................... 35Chapter 6: ............................................................................................................................................. 37 Table, Data Structure, Security .......................................................................................................... 37 Access Controls Keywords.............................................................................................................. 37 Security Groups ............................................................................................................................. 37 Tables ............................................................................................................................................ 37 Tables and Access Control Summary .............................................................................................. 38 Security Roles ................................................................................................................................ 39 Data Structures .............................................................................................................................. 39 2
  3. 3. Double Entry System, Analysis and DesignChapter 8: ............................................................................................................................................. 55 Forms, Menus and Workflows ........................................................................................................... 55 Main Forms ................................................................................................................................... 55 Form Control Legends .................................................................................................................... 56 Forms ............................................................................................................................................ 56 Menus and its Hierarchy ................................................................................................................ 66Chapter 9: ............................................................................................................................................. 68 Architecture Design ........................................................................................................................... 68 3
  4. 4. Double Entry System, Analysis and DesignFigures:Figure 1: Transaction Cycle ..................................................................................................................................... 8Figure 2: Voucher Approval Workflow ................................................................................................................... 10Figure 3: DFD Double Accounting Operation ......................................................................................................... 14Figure 4: DFD Bank Reconciliation ......................................................................................................................... 15Figure 5: DFD Reporting........................................................................................................................................ 16Figure 6: DFD Closing and Opening Entries ............................................................................................................ 17Figure 7: Forms: Main Window ............................................................................................................................. 55Figure 8: Forms Control Legend............................................................................................................................. 56Figure 9: Forms res_currency ................................................................................................................................ 57Figure 10: Forms: res_company ............................................................................................................................ 57Figure 11: Forms account_account_type ............................................................................................................... 58Figure 12: Forms account_account ....................................................................................................................... 58Figure 13: Forms res_country, res_country_state, res_partner_address ................................................................ 59Figure 14: Forms res_users ................................................................................................................................... 59Figure 15: Forms res_partner_category, res_partner_title ..................................................................................... 60Figure 16: Forms res_partner ................................................................................................................................ 60Figure 17: Forms res_groups ................................................................................................................................. 61Figure 18: Forms ir_ui_menu, ir_rule..................................................................................................................... 61Figure 19: Forms ir_model_access , ir_rule, ir_sequence_type ............................................................................... 62Figure 20: Forms ir_sequence, account_journal_column, account_journal_view .................................................... 62Figure 21: Forms account_fiscalyear, account_period ........................................................................................... 63Figure 22: Forms account_journal ......................................................................................................................... 63Figure 23: Forms account_bank_statement .......................................................................................................... 64Figure 24: Forms account_bank_statement_line ................................................................................................... 64Figure 25: Forms account_move ........................................................................................................................... 65Figure 26: Forms account_move_line .................................................................................................................... 65Figure 27: Architecture Design .............................................................................................................................. 68 4
  5. 5. Double Entry System, Analysis and DesignTablesTable 1: Voucher Format _______________________________________________________________________7Table 2: General Journal Format _________________________________________________________________8Table 3: Ledger Format_________________________________________________________________________8Table 4: Financial Year 2012-2013 ________________________________________________________________ 9Table 5: Chart of Accounts With Types _____________________________________________________________ 9Table 6: Complate Voucher Format ______________________________________________________________ 10Table 7: DFD Legends _________________________________________________________________________13Table 8: DFD Processes ________________________________________________________________________34Table 9: DB Tables, Security Groups and Rights _____________________________________________________38Table 10: DB Table res_currency_________________________________________________________________39Table 11: DB Table res_currency_rate ____________________________________________________________ 39Table 12: DB Table res_company ________________________________________________________________ 40Table 13: DB Table account_account_type_________________________________________________________ 41Table 14: DB Table account_account _____________________________________________________________ 42Table 15: DB Table res_country _________________________________________________________________42Table 16: DB Table res_country_state ____________________________________________________________ 42Table 17: DB Table res_partner_address __________________________________________________________ 43Table 18: DB Table res_users ___________________________________________________________________44Table 19: DB Table res_partner_category _________________________________________________________ 44Table 20: DB Table res_partner_titles ____________________________________________________________ 44Table 21: DB Table res_partner _________________________________________________________________46Table 22: DB Table res_groups __________________________________________________________________46Table 23: DB Table ir_ui_menu __________________________________________________________________47Table 24: DB Table ir_model_access______________________________________________________________ 47Table 25: DB Table ir_rule______________________________________________________________________47Table 26: DB Table ir_sequence_type _____________________________________________________________ 47Table 27: DB Table ir_sequence _________________________________________________________________48Table 28: DB Table account_journal_column _______________________________________________________ 48Table 29: DB Table account_journal_view _________________________________________________________ 49Table 30: DB Table account_fiscalyear ____________________________________________________________ 49Table 31: DB Table account_period ______________________________________________________________ 50Table 32: DB Table account_journal ______________________________________________________________ 51Table 33: DB Table account_bank_statement ______________________________________________________ 52Table 34: DB Table account_bank_statement_line __________________________________________________52Table 35: DB Table account_move _______________________________________________________________ 53Table 36: DB Table account_move_line ___________________________________________________________ 54Table 37: Hierarchical Menus and Tables __________________________________________________________ 67 5
  6. 6. Double Entry System, Analysis and DesignChapter 1:IntroductionThe main focus of this document is to explain 1. How double entry system works, 2. Manual workflow, 3. Reports required, including its analysis and engineering 4. Data Flow Diagram, 5. ER Diagram, 6. Tables and Data Structures, 7. Menus, Forms Designing (List and Edit View) and Workflows 8. Architecture Design. I have bifurcated these topics as per chapter for this document. I will spend more time to explain last 5 topics. In First chapter I will explain some basic concept of manual double entry system, in 2 nd its workflow with diagrams and in 3rd some important reports. 6
  7. 7. Double Entry System, Analysis and DesignChapter 2:Double Entry SystemDouble Entry System represents an business accounting in which, every transaction related to anyfinancial year (periods) is recorded in books of accounts in such way that balance of both sides should beequal.Keywords: Transaction: Any operation that effects (increases or decrease) the business accounts value like capital,liability, expense, assets and revenue.Financial Year: Every organization shows financial value of its organization in a year. Every year splits inmonths (3 or6) wise periods.Books of Accounts: Books are type of accounting registers where transactions are recorded.Balance: Value of any business account.For ExampleAn Owner starts a trading business, and he invests Rs. 500,000 in his business on 18-Sep-2012. How thisbusiness transaction will be recorded in books of accounts?First he writes his business transaction in a summarize form as a proof called voucher. Example Company Name Voucher No 1 Date 18-Sep-2012 Financial Year Financial Year 2012-2013 Financial Period 12-13- IST Period Currency PKR Accounts Dr Cr Assets - Bank 500000 Transaction Capital – Owners Equity 500000 Balance Total 500000 500000 Narration Investment from Owner Table 1: Voucher FormatIn second step, transaction from voucher will be recorded in books of accounts, this book known is asGeneral Journal. Example General Journal Date Accounts Dr Cr 7
  8. 8. Double Entry System, Analysis and Design 18-Sep-2012 Assets - Bank 500000 18-Sep-2012 Capital – Owners Equity 500000 Table 2: General Journal FormatIn third step using this general journal, entries are classified according to accounts and are recorded inother book called ledger and the process is known as posting. Example Assets Bank- Ledger Date Dr Balance Date Cr Balance 18-Sep-2012 500000 500000 Capital Owners Equity – Ledger Date Dr Balance Date Cr Balance 18-Sep-2012 500000 500000 Table 3: Ledger FormatAbove given example elaborate the basic double entry system from preparation of vouchers to posting. Transaction Voucher Posting General Posting Accounts Transaction Starts Preparation Journal Ledgers Ends Figure 1: Transaction CyclePrerequisite of a Transaction (Voucher)Some prerequisite of a voucher are 1. Company’s Currency 2. Company financial years and periods 3. Business Accounts List (Chart of Account) 4. Company’s Books of Accounts 5. Voucher Approval Process 1. Company CurrencyEvery company uses a currency as its basic unit of account and other currencies are used too in businessprocess. In all vouchers this basic currency will be used till transactions in other currencies are notmentioned. 2. Company financial years and periodsEvery Company define its start and end dates of financial year and its sub financial periods beforepreparing vouchers, like Financial Year 2012-2013 8
  9. 9. Double Entry System, Analysis and Design Start Date 1st July 2012 End date 30 June 2013 Period Start Date End date Duration IST 12-13 1st Jul 2012 30 Sep 2012 3 Months 2ND 12-13 1st Oct2012 31 Dec 2012 3 Months 3RD 12-13 1st Jan 2012 31 Mar 2012 3 Months 4TH 12-13 1st Apr 2012 30 Jun 2012 3 Months Table 4: Financial Year 2012-2013 3. Business Accounts List (Chart of Account)Organizations define different accounts under following major type C: Capital L: Liability E: Expense A: Asset R: RevenueSome companies define these accounts in hierarchal nature like parent and child account, some otherrelated terms used for these accounts are main and sub accounts. This classification of account withunique number is known as chart of accounts. Below is the example of a small chart of account ofcompany ABC Account Code Account Name Account Type 001 Assets Asset 002 Building Asset 003 Furniture Asset 004 Liability Liability 005 Account Payable Liability 006 Expenses Expense 007 Purchases Expense 008 Electricity Expenses Expense 009 Income Revenue 010 Sales Revenue 011 Other Income Revenue Table 5: Chart of Accounts With Types 4. Company’s Books of Accounts As explained earlier main book of account is General Journal. After recording voucher General Journal posting in ledgers is done. Different Organizations use different ledger like: Cash Ledger Bank Ledger Expense Ledger and others 9
  10. 10. Double Entry System, Analysis and Design 5. Voucher approval processThe process varies according to organization’s hierarchy staff and its approval policy. Generally accountsofficer prepares the voucher and attaches physical proofs if needed. This voucher is then forward to hissenior for approval example State: Draft State: Approved by Auditor Auditor/ Posting Voucher Accounts Officer Manager Controller Director Finance Accounts Officer GeneralPreparation Finnece Accounts Journal State: posted Cancel State: Approved by Controller Finance State: Approved by Director Finance Figure 2: Voucher Approval WorkflowIn manual accounting system approval signature show the status of voucher. After approval of voucherfrom the person in authority as per organization’s and its policy, Account officer is then responsible forentering and recording vouchers in General Journal with mentioned dates finally are filed vouchers withproofs. Company Name Voucher No 1 Date 18-Sep-2012 Financial Financial Year 2012-2013 Year Financial Period 12-13- IST Period Currency PKR Accounts Dr Cr Business Assets - Bank 500000 Accounts & Capital – Owners Equity 500000 its impact Balance Total 500000 500000 Narration Investment from Owner Approved By Approval Controller Director Prepared By Auditor Process Finance Finance Signature Signature Signature Signature Table 6: Complate Voucher FormatAny change is required in business account of a posted voucher, the account officer will prepare anothervoucher to reset the attributes. This voucher is known as adjustment voucher including adjustmententries. 10
  11. 11. Double Entry System, Analysis and Design 11
  12. 12. Double Entry System, Analysis and DesignChapter 3:Accounting Reports and FinancialStatementsClassifications of reports areAccounting Reports Main Ledger Report Sub Ledger Report Journal Report Trail Balance Payable Balance Reports Receivable Balance ReportsFinancial Reports Profit and Loss Statement Balance Sheet Cash Flow Changes in Equity Report Additional Reports 12
  13. 13. Double Entry System, Analysis and DesignChapter 4:Data Flow DiagramGeneral we divide data flow diagram of double accounting system in four sub diagrams; Double Accounting Operation Bank Reconciliation Reporting Closing and Opening EntriesNotationsDate StoreFlow of InformationProcessPhysical ProofsFilesUsersReport $BankCheque Book Table 7: DFD Legends 13
  14. 14. Double Entry System, Analysis and DesignDouble Accounting Operation 2.0 1.0 Attached Proofs Prepare Voucher With Voucher Account Officer Proofs Cancel 3.0 Approval 7.0 6.0 Auditor/ File The Record Approved Manager Accounts Approved Voucher in General Vouchers Journal 4.0 Approval Controller Finance 5.0 Approval General Journal Voucher Files Director Finance 8.0 Posting in Ledgers Ledger Figure 3: DFD Double Accounting Operation 14
  15. 15. Double Entry System, Analysis and DesignBank Reconciliation Bank Statements 6.2 $ 6.3 Receive Bank Bank Reconciliation Statement (Weekly or Monthly) Bank 6.2 Bank Present Cheque Reconciliation and Payment Statement Account Officer Transfer 6.0 6.4 6.1 Record Approved Prepare Adjustment Prepare Cheque for Voucher in General Voucher Payment Journal Supplier 3.0 Approval General Auditor/ Journal Manager Accounts 4.0 Cheque Book Approval Controller Finance 5.0 Approval Director Finance Figure 4: DFD Bank Reconciliation 15
  16. 16. Double Entry System, Analysis and DesignReporting 9.0 Main Ledger Ledger Reporting and Sub Reports 10.0 Journal Reporting Journal Report 11.0 Trail Balance Reporting Trial Balance 12.0 Payable and Ledgers Payable and Receivable Receivable Reporting Reports Account Officer 13.0 Profit and Loss Profit and Reporting Loss Statement 14.0 Balance Sheet Reporting Balance Sheet 15.0 Cash Flow Cash Flow Reporting Statement 16.0 Changes in Changes in Equity Reporting Equity Repot Figure 5: DFD Reporting 16
  17. 17. Double Entry System, Analysis and DesignClosing and Opening Entries Closing and Opening Entries Current New Year Year Ledgers Ledgers 17.0 Prepare Voucher: 18.0 For Closing & Record Opening Opening Balances Balance of Current Fiscal Year Account Officer 3.0 Approval Auditor/ Manager Accounts 4.0 Approval Controller Finance Figure 6: DFD Closing and Opening EntriesUsersFollowing roles are used in double accounting system; Account officer Audit / manager accounts Controller finance Director finance 17
  18. 18. Double Entry System, Analysis and Design Data Stores Following data stores are used in double accounting system; General Journal Ledgers Documents Following documents are used in double accounting system; Vouchers Physical Proofs Bank Statements Processes Data Store / Process ID User/Role Document/ Process Description Name Report1.0 Prepare Account Officer Voucher In chapter 2, formats, attributes and prerequisites of a voucher Voucher has been explained. Each voucher can be divided into five categories. To these categories for every organization is not obligatory. The number of these categories could be increase or decrease for our own case. These Five forms are; Bank Payment Voucher (BPV) If a transaction includes payment from any bank account of the organization then the voucher is termed as BPV. Bank Receipt Voucher (BRV) Transaction which includes cash receipt in any bank account of the organization is termed as BRV. Cash Payment Voucher (CPV) The transaction which involved payment from any cash account (also known as Petty Cash Account) of the organization is called CPV Cash Receipt Voucher (CRV) A transaction including receipt in any cash account (also known as Petty Cash Account) of the organization is CRV Journal Voucher (JV) 18
  19. 19. Double Entry System, Analysis and Design If any transaction does not includes BPV, BRV, CPV or CRV then we narrate this voucher as JV. Journal Voucher is the main category, rest are extracted from JV to make the operation easy.2.0 Attached Account Officer Voucher and Each voucher includes some physical proofs. For example any Proofs With Additional organization who wants to pay a supplier. Now what are the Voucher Proofs reasons of payment? May be supplier provides some services or sell some goods to organization. May be this will be some sort of advance (security) of start transaction. Whatever reason is, there should be some physical proof. In case of payments of electricity bills we will attach copy of electricity bill. In case of security to avail the services of supplier then we will attach the agreement copy and vice versa.3.0 Approval Auditors/ Voucher and When Account officer successfully prepare the voucher and Manager Additional attached the proofs successfully then this voucher will send to Accounts Proofs Organization Auditors/ Manager Accounts for approval. Approval level will be varying according to policy of organization. Auditor/ Manager Accounts sign the voucher is this is prepared correctly, IF an mistake exist then Auditor request Account Officer to correct the mistake or prepare again with mention correction.4.0 Approval Controller Voucher and Same voucher will be sign by auditor’s manager like controller Finance Additional finance. Controller Finance also ensures that either this voucher is Proofs sign by Auditors/ Manager Account or not.5.0 Approval Director Finance Voucher and In next approval; Director Finance will sign the voucher after Additional checking of Auditor and Controller finance approval. Proofs6.0 Record Account Officer Voucher and As mention previously this approval flow of voucher can be vary Approved General according to organization policy. According to approval policy if Voucher in Journal voucher is completely approved by each responsible then voucher General will be send back to Account Officer. Account officer record its Journal transaction detail in General Journal. General Journal is first book Or of account where every voucher details are recorded. Journalizing Format of General Journal: Date- VNo Particulars L/F Debit Credit 2012 18-Sep 1 Bank - 500000 To Capital - 500000 [amount brought toward capital, 19
  20. 20. Double Entry System, Analysis and Design cheque no 34564] 19-Sep 2 Advance for Office - 25000 To Bank - 25000 [Advance Payment of office rent, cheque no 34565] 20- Sep 3 Purchases - 30000 To Bank - 30000 [Purchases from Ahmad & Co, cheque no 34566] 21-Sep 4 Acc Receivable - 6000 To Sales - 6000 [Sales to Sajid & co]6.1 Prepare Account Officer Cheque Book For each payment to supplier, Account officer prepares cheque. Cheque for Following are some payments by cheque and some receipts in Payments bank account ledger report. Bank Account Ledger Report (from 1-Sep- 12 to 30-Sep-12) Date Cheque Particulars Debit Credit Balance Opening Balance 10000 10000 Payable to 3 343 Dawood & Co 2500 7500 5 3463 Bill Discount 11900 19400 Payable To 9 344 1000 18400 Naeem Receivable from 10 7564 Rizwan & Co 400 18800 Payable to 16 345 Saleem & Co 1500 17300 Receivable from 20 3446 Crown & Co 1800 19100 21 346 Payable to Asif 2000 17100 Receivable from 24 8695 Rafiq & Sons 4000 21100 27 347 Petty Cash 1200 19900 28 4544 Petty Cash 600 20500 Payable to 30 349 5500 15000 Ahmad 20
  21. 21. Double Entry System, Analysis and Design Receivable from 30 65454 Naseem & Co 3000 18000 Closing Balance 180006.2 Receive Bank Account Officer Bank Bank send monthly bank statement to account officer; below is Statement Statement the sep-12 bank account statement; (Weekly or Bank Account Title Monthly) Bank Statement Sep-2012 Date Cheque Particulars Withdrawal Deposit Balance Opening 10000 10000 Balance Cross 2500 7500 Cheque: 4 343 Dawood & Co Bill 11900 19400 5 3463 Discount Rizwan & 400 19800 6 7564 Co Cross 1000 18800 10 344 Cheque: Naeem Cross 1500 17300 Cheque: 17 345 Saleem & Co Self 1200 16100 26 347 Cheque: Self 27 4544 Cash 600 16700 B/R 12000 4700 27 4699 Dishonored Rehman & 1100 5800 28 4678 Sons Interest on 300 6100 29 NIT Units Crown & 1800 7900 29 6799 Co Bank 100 7800 29 Charges6.3 Bank Account Officer Bank Book Bank statement is a report that shows why bank account ledger Reconciliation (Bank closing balance is not matching with bank statement. Few of Account reasons are; Ledger) and Bank Cheques issued but not yet presented for payment Cheques deposited but not yet collected 21
  22. 22. Double Entry System, Analysis and Design Statement Bank charges not entered in the bank book Interest credited by bank not entered in the Bank Book Amount directly deposited into bank be debtors. Credit transfer Standing order Direct Debit Format of bank reconciliation is; Bank Reconciliation Statement as on 30-09-2012 Rs. Bank Balance as per Bank Book (Dr.) -- Those items which increase the bank Add: statement balance more than bank book a. Cheques Issued but not presented Interest credited by bank not entered in b. the cash book Cash directly deposited into the bank c. but not recorded in bank book d. etc Dr Balance -- Deduct: Those items which decrease the bank statement balance then bank book Cheques deposited but not credited by a. the bank Bank charges not recorded in the bank b. book Direct payment by bank as per standing c. order not recorded in bank book d. etc Cr Balance -- Bank Balance as per Bank statement (Cr.) -- By using the bank ledger report refers in process in 6.1 and bank statement refer in process 6.2, I will prepare a bank statement. Starting from bank account ledger report comparing each entry with bank statement, and writing in below bank reconciliation report; Bank Reconciliation Statement as on 31-07-2012 Rs. Bank Balance as per Bank Book (Dr.) 18000 Add: 1 Two cheques have not been Presented 22
  23. 23. Double Entry System, Analysis and Design Asif 2000 Ahmad 5500 Two Amounts are not recorded in Bank 2 Book Rehman & Sons 1100 Interest on NIT Units 300 Dr Balance 8900 Deduct: 1 Two cheques have not been Collected Rafiq & Sons 4000 Naseem & Co 3000 2 Two Amounts are not recorded in Bank Book Dishonored Bills Receivable 12000 Bank Charges 100 Cr Balance 19100 Bank Balance as per Bank statement (Cr.) 7800 Bank Balance as per Bank statement (Cr.)= Bank Balance as per Bank Book (Dr.) + Dr Balance - Cr Balance6.4 Prepare Account Officer Bank Now those entries from bank statement which are not matched Adjustment Reconciliation with Bank Account Ledger. These Entries are; Vouchers Statement Bank Statement Sep-2012 and Voucher Date Cheque Particulars Withdrawal Deposit 12000 B/R 27 4699 Dishonored Rehman & 1100 28 4678 Sons 300 Interest on 29 NIT Units Bank 29 Charges 100 Total 12100 1400 First select all the deposit entries and debit the bank account equal to its deposit sums. Similarly select all the withdrawal 23
  24. 24. Double Entry System, Analysis and Design entries and credit the bank account equal to its withdrawal sums. Following is the Journal Voucher; Company Name Journal Voucher No 65 Date 30-Sep-12 Financial Year 2012-2013 Financial Period 12-13- IST Period Currency PKR Accounts Dr Cr Bank Account 1400 Rehman & Sons 1100 Interest on NIT Units 300 Bank Charges 100 B/R Dishonored 12000 Bank Account 12100 Total 13500 13500 Narration Adjustment Entries after Bank Reconciliation7.0 File The Account Officer Voucher and After recording the voucher details in general journal then this Approved Its Files voucher will be filed. Also account officer write the keyword Vouchers ‘posted’ at the top corner of voucher. The filing of voucher again varies according to organization policy. Voucher Categories File Name Option 1 BPV, BRV, CPV, CRV Vouchers File and JV Option 2 BPV and CPV Payment Voucher File BRV and CRV Receipt Voucher File JV Journal Voucher File Option 3 24
  25. 25. Double Entry System, Analysis and Design BPV Bank Payment Voucher File BRV Bank Receipt Voucher File CPV Cash Payment Voucher File CRV Cash Receipt Voucher File JV Journal Voucher File Option 4 JV Voucher File8.0 Posting in Account Officer General After recording all the voucher detail in General Journal, Account Ledger Journal and Officer Post each day entry in respected ledger as mention in Account Chapter 2 example. This step can be performing side by side in Ledger whole day or at the end of the evening. It’s depending upon the daily exercise of Account Officer, but this should be ensure that each posted voucher should be recorded in respect ledger. Format of Account book is just like a T. Left side (page) represent the debit side of ledger and right side (page) represent the credit side of ledger. Ledger Title Debit Side Credit Side Below I will show u each side of ledger separately because of limited space available. Let explain this by below example; Bank- Ledger Date Detail Dr Balance Balance B/F 0 18-Sep-2012 Investment from Owner 500000 500000 Date Detail Cr Balance 19-Sep-2012 Paid Advance for Office 25000 25000 20-Sep-2012 Purchases 30000 55000 Balance C/F 445000 Calculation of Balance C/F= Sum of All Debit Entries – Sum of All Credit Entries Where to Write Balance C/F (Left Side or Right Side)= 25
  26. 26. Double Entry System, Analysis and Design If the difference is positive: Write on right side (credit side) by taking absolute If the difference is negative: Write on left side (debit side) by taking absolute. In above example bank ledger: Balance c/f= 500000- 55000=445000, write on credit side of page. Now other ledger’s examples; Capital Owners Equity – Ledger Date Detail Dr Balance Balance C/F 500000 Date Detail Cr Balance Balance B/F 0 18-Sep-2012 Investment from Owner 500000 500000 Advance of Office Rent– Ledger Date Detail Dr Balance Balance B/F 0 19-Sep-2012 Paid Advance for Office 25000 25000 Date Detail Cr Balance Balance C/F 25000 Purchases – Ledger Date Detail Dr Balance Balance B/F 0 20-Sep-2012 Purchases 30000 30000 Date Detail Cr Balance Balance C/F 30000 26
  27. 27. Double Entry System, Analysis and Design Sales – Ledger Date Detail Dr Balance Balance C/F 6000 Date Detail Cr Balance Balance B/F 0 21-Sep-2012 Sales 6000 6000 Acc Receivable– Ledger Date Detail Dr Balance Balance B/F 0 21-Sep-2012 Sales to Sajjid & co 6000 6000 Date Detail Cr Balance Balance C/F 60009.0 Ledger Account Officer Account Ledger reports show all the detail (debit and credit) available in Reporting Ledgers account ledger book. This can be prepared of single account as well as multiple accounts. This report can show the detail of All financial years, Single Financial year Multiple Period or Single Period Or any single date or multiple date Following is the bank account ledger report; Bank Account Ledger Report (from 18-Sep12 to 21-Sep-12) Date- Particulars JF Debit Credit Balance 2012 Opening 0 Balance 18-Sep Investment 500000 500000 from owner 19-Sep Paid Advance 25000 475000 Rent for Office 20-Sep Purchases 30000 445000 27
  28. 28. Double Entry System, Analysis and Design Closing Balance 44500010.0 Journal Account Officer General Journal report shows all the detail (debit and credit) each account Reporting Journal and wise available in General Journal book. This report can show the Account detail of Ledgers All financial years, Single Financial year Multiple Period or Single Period Or any single date or multiple date Following is the General Journal Reporting; General Journal Report (from 18-Sep12 to 21-Sep-12) Date- Particulars Debit Credit Balance 2012 Bank Account 506000 55000 445000 18-Sep Investment from 500000 owner 19-Sep Paid Advance Rent for 25000 Office 20-Sep Purchases 30000 Capital Account 0 500000 500000 18-Sep Investment from 500000 Owner Advance of Office 25000 0 25000 19-Sep Paid Advance of 25000 Office Purchases 30000 0 30000 20-Sep Purchases from 30000 Ahmad & co Sales 0 6000 6000 21-Sep Sales to Sajjid & co 6000 Account Receivable 6000 0 6000 21-Sep Receivable from Sajjid 6000 0 & co11.0 Trial Balance Account Officer Ledger and This report shows the list balances of company chart of account. In 28
  29. 29. Double Entry System, Analysis and Design Reporting Ledger this report, for each account we write the debit or credit balance Reports from ledgers report. The difference of sum of all debit amount and sum of all credit amounts should be zero. This report can show the detail of All financial years, Single Financial year Multiple Period or Single Period Or any single date or multiple date Following is the General Journal Reporting; Trail Balance (from 18-Sep12 to 21-Sep-12) Acc Code Account Debit Credit 001 Bank Account 445000 0 002 Capital 500000 003 Advance of Office 25000 004 Purchases 30000 005 Sales 6000 006 Acc Receivable 6000 Total 506000 50600012.0 Payable and Account Officer Ledger and This report shows the balance of companies vendors (Suppliers Receivable Ledger and Customers). Format of this report varies according to Reporting Reports organization policy; One of the standard format is; Vender Address City-State-Country Phone no Document: Customer account statement Date: Date Customer Ref: Customer Unique Number Dear Sir/Madam, Exception made of a mistake of our side, it seems that the following bills stay unpaid. Please, take appropriate measures in order to carry out this payment in the next 8 days. Would your payment have been carried out after this statement was sent, please consider the present one as void. Do not hesitate to contact our accounting department at Phone No or email. 29
  30. 30. Double Entry System, Analysis and Design Best regards. Maturity Due Paid Balance Date Date Due Amount Partial Paid Due Amount - Amount Partial Paid Amount Total Amount Due: (Sum of Balance) Currency Symbol.13.0 Profit and Account Officer Trial Balance Loss Reporting14.0 Balance Sheet Account Officer Trial Balance Reporting15.0 Cash Flow Account Officer Trial Balance Reporting16.0 Changes in Account Officer Trial Balance Equity Report17.0 Prepare Account Officer, Ledgers, Trial These steps are performed at the end of each financial year by Voucher Auditor/Manager Balance, account officer. Steps are; for Closing & Accounts, Voucher Calculate General Funds Opening Controller Closing Current Year Balances Balances of Finance Current Fiscal Calculate General Fund: Year In balance sheet liability portion; there is special account known as General fund. This account have multiple name in different organization; some people narrate as profit & loss account , income & expense account or general fund. At the end of the financial year we calculate the actual profit or loss of company for current year; by subtracting all type of expenses from all income. General Fund = Income (Direct Income + In Direct Income) - Expenses (Direct Expenses + In Direct Expense) For example; using the trail balance report of process Trail Balance (2012-1013) Acc Type Account Debit Credit Asset Bank Account 445000 0 Liability Capital 500000 Asset Advance of Office 25000 30
  31. 31. Double Entry System, Analysis and Design Expenses Purchases 30000 Income Sales 6000 Asset Acc Receivable 6000 Total 506000 506000 Sum of Income = 6000 Sum of Expenses =30000 Income or loss = Sum of Income - Sum of Expenses Income or loss = 6000 – 30000 = > -24000 The Negative sign represent the loss and positive sign represent the profit. This profit or loss will be added to General Fund account by finishing income and expenses impacts like below; Company Name Journal Voucher No 66 Date 30-Jun-13 Financial Year 2012-2013 Financial Period 12-13- 4TH Period Currency PKR Accounts Dr Cr Sales 30000 Purchases 6000 General Fund 30000 General Fund 6000 Total 36000 36000 Narration Calculating General Fund Now Same Trial Balance look like below; Trail Balance (2012-2013) Acc Type Account Debit Credit Asset Bank Account 445000 0 Liability Capital 0 500000 Asset Advance of Office 25000 0 Expenses Purchases 0 0 31
  32. 32. Double Entry System, Analysis and Design Income Sales 0 0 Asset Acc Receivable 6000 0 Liability General Fund 24000 0 MGT Balance Transfer 0 0 Account Account Total 500000 500000 Closing Current Year Balances: The 2nd step is closing the balances of current fiscal year. For this purpose I will used a account named ‘Balance Transfer Account’. This Account is neither used in Balance Sheet nor Profit and Loss Statement. Below is the for closing current year balances voucher; Company Name Journal Voucher No 68 Date 30-Jun-13 Financial Year 2012-2013 Financial Period 12-13- 4TH Period Currency PKR Accounts Dr Cr Bank Account 445000 0 Capital 500000 0 Advance of Office 25000 Acc Receivable 6000 General Fund 24000 Balance Transfer 500000 Account Balance Transfer 55000 Account 32
  33. 33. Double Entry System, Analysis and Design Total 555000 555000 Narration Closing current year balances By Entering this voucher, the balances of all the account set to zero in fiscal year 2012-1013.18.0 Record Account Officer Voucher, In this, account officer introduce new ledgers books for new fiscal Opening Ledgers year i.e. 2013-2014 and create first voucher. In this voucher Balance account he introduce the opening entries for each account from last year closing balances; Balance Transfer Account is also again used in this voucher; Company Name Journal Voucher No 1 Date 01-Jul-13 Financial Year 2013-2014 Financial Period 13-14- IST Period Currency PKR Accounts Dr Cr Bank Account 0 445000 Capital 0 500000 Advance of Office 0 25000 Acc Receivable 6000 0 General Fund 24000 0 Balance Transfer 500000 0 Account Balance Transfer 0 55000 Account 33
  34. 34. Double Entry System, Analysis and Design Total 555000 555000 Narration Opening new year balances Trial balances of new fiscal year 2013-2014; Trail Balance (2013-2014) Acc Type Account Debit Credit Asset Bank Account 445000 0 Liability Capital 0 500000 Asset Advance of Office 25000 0 Expenses Purchases 0 0 Income Sales 0 0 Asset Acc Receivable 6000 0 Liability General Fund 24000 0 MGT Balance Transfer 0 0 Account Account Total 500000 500000 Table 8: DFD Processes 34
  35. 35. Double Entry System, Analysis and DesignChapter 5:Entity Relationship DiagramAfter explaining the data flow diagram, I will spend some time to explain the ERD for double accountingsystem.Below is the ERD for double accounting system. 35
  36. 36. Double Entry System, Analysis and Design 36

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