5.01 Meaning of an Account
5.02 Meaning of Debit and Credit
5.03 Classification of Accounts
5.04 Significance of Debit and credit in Accounts
5.05 Journal
5.05.01 Steps and Rules of Journalising
5.05.02 Totaling and Carry Forward.
5.05.03 Simple and Compound Journal Entries
5.06 Opening Entry
5.07 Sub-division of Journal
5.08 Ledger
5.08.01 Meaning
5.08.02 Form of a Ledger
5.08.03 Mechanics of Posting
5.08.04 Balancing of Ledger Accounts
5.01 Meaning of an Account
5.02 Meaning of Debit and Credit
5.03 Classification of Accounts
5.04 Significance of Debit and credit in Accounts
5.05 Journal
5.05.01 Steps and Rules of Journalising
5.05.02 Totaling and Carry Forward.
5.05.03 Simple and Compound Journal Entries
5.06 Opening Entry
5.07 Sub-division of Journal
5.08 Ledger
5.08.01 Meaning
5.08.02 Form of a Ledger
5.08.03 Mechanics of Posting
5.08.04 Balancing of Ledger Accounts
Accounting Cycle- Accruals and Defferls- Adjusting entriesFaHaD .H. NooR
An accrual occurs before a payment or receipt. A deferral occurs after a payment or receipt. There are accruals for expenses and for revenues. There are deferrals for expenses and for revenues.
An accrual of an expense refers to the reporting of an expense and the related liability in the period in which they occur, and that period is prior to the period in which the payment is made. An example of an accrual for an expense is the electricity that is used in December, but the payment will not be made until January.
An accrual of revenues refers to the reporting of revenues and the related receivables in the period in which they are earned, and that period is prior to the period of the cash receipt. An example of the accrual of revenues is the interest earned in December on an investment in a government bond, but the interest will not be received until January.
A deferral of an expense refers to a payment that was made in one period, but will be reported as an expense in a later period. An example is the payment in December for the six-month insurance premium that will be reported as an expense in the months of January through June.
A deferral of revenues refers to receipts in one accounting period, but they will be earned in future accounting periods. For example, the insurance company has a cash receipt in December for a six-month insurance premium. However, the insurance company will report this as part of its revenues in January through June.
Basics of Accounting. Principles and concepts of Accounting
what is Double Entry System of Accounting?what Financial Statements?
Accounting is a process of identifying, recording, summarising and reporting economic information
to decision makers in the form of financial statements.
Here we have considered the Difference between the Bank balance as per Cash Book & the Pass book by preparation of the Bank Statement. The reasons of differences & importance of finding the variation is discussed.
Basic of Financial Accounting - Easy NotesFaHaD .H. NooR
These notes will provide you understanding basic of financial accounting
Financial accounting is a specialized branch of accounting that keeps track of a company's financial transactions. Using standardized guidelines, the transactions are recorded, summarized, and presented in a financial report or financial statement such as an income statement or a balance sheet.
Companies issue financial statements on a routine schedule. The statements are considered external because they are given to people outside of the company, with the primary recipients being owners/stockholders, as well as certain lenders. If a corporation's stock is publicly traded, however, its financial statements (and other financial reportings) tend to be widely circulated, and information will likely reach secondary recipients such as competitors, customers, employees, labor organizations, and investment analysts.
It's important to point out that the purpose of financial accounting is not to report the value of a company. Rather, its purpose is to provide enough information for others to assess the value of a company for themselves.If financial accounting is going to be useful, a company's reports need to be credible, easy to understand, and comparable to those of other companies. To this end, financial accounting follows a set of common rules known as accounting standards or generally accepted accounting principles (GAAP, pronounced "gap").
Accounting Cycle- Accruals and Defferls- Adjusting entriesFaHaD .H. NooR
An accrual occurs before a payment or receipt. A deferral occurs after a payment or receipt. There are accruals for expenses and for revenues. There are deferrals for expenses and for revenues.
An accrual of an expense refers to the reporting of an expense and the related liability in the period in which they occur, and that period is prior to the period in which the payment is made. An example of an accrual for an expense is the electricity that is used in December, but the payment will not be made until January.
An accrual of revenues refers to the reporting of revenues and the related receivables in the period in which they are earned, and that period is prior to the period of the cash receipt. An example of the accrual of revenues is the interest earned in December on an investment in a government bond, but the interest will not be received until January.
A deferral of an expense refers to a payment that was made in one period, but will be reported as an expense in a later period. An example is the payment in December for the six-month insurance premium that will be reported as an expense in the months of January through June.
A deferral of revenues refers to receipts in one accounting period, but they will be earned in future accounting periods. For example, the insurance company has a cash receipt in December for a six-month insurance premium. However, the insurance company will report this as part of its revenues in January through June.
Basics of Accounting. Principles and concepts of Accounting
what is Double Entry System of Accounting?what Financial Statements?
Accounting is a process of identifying, recording, summarising and reporting economic information
to decision makers in the form of financial statements.
Here we have considered the Difference between the Bank balance as per Cash Book & the Pass book by preparation of the Bank Statement. The reasons of differences & importance of finding the variation is discussed.
Basic of Financial Accounting - Easy NotesFaHaD .H. NooR
These notes will provide you understanding basic of financial accounting
Financial accounting is a specialized branch of accounting that keeps track of a company's financial transactions. Using standardized guidelines, the transactions are recorded, summarized, and presented in a financial report or financial statement such as an income statement or a balance sheet.
Companies issue financial statements on a routine schedule. The statements are considered external because they are given to people outside of the company, with the primary recipients being owners/stockholders, as well as certain lenders. If a corporation's stock is publicly traded, however, its financial statements (and other financial reportings) tend to be widely circulated, and information will likely reach secondary recipients such as competitors, customers, employees, labor organizations, and investment analysts.
It's important to point out that the purpose of financial accounting is not to report the value of a company. Rather, its purpose is to provide enough information for others to assess the value of a company for themselves.If financial accounting is going to be useful, a company's reports need to be credible, easy to understand, and comparable to those of other companies. To this end, financial accounting follows a set of common rules known as accounting standards or generally accepted accounting principles (GAAP, pronounced "gap").
It is the system in which both the aspects i.e. debit as well as credit are recorded in the books of accounts .It records transactions relating to all the accounts i.e. personal, real and nominal.
BASIC ACCOUNTING FOR ALL INCLUDING MANAGERS. ACCOUNTING, DOUBLE ENTRY SYSTEM, JOURNEL (defination,advantages/limitations, how to make,) TRAIL BALANCE(defination,limitations/advantages, steps}
This powerpoint presentation is created by Gyanbikash.com for the students of class nine to ten from their accounting NCTB textbook for multimedia class.
This document briefly describes each and every stage of accounting cycle with appropriate rules. rules followed are based on type of account.it also includes the proforma of journal,ledger,trail balance, final account statements.
2. 4. Preparing the trial balance The trial balance is a list of accounts found in the ledger together with the account’s balance or total. 5. Preparing the worksheet and adjusting entries The worksheet is a common tool used by accountants to assemble on a sheet of a paper al the information needed to prepare the financial statements, adjusting entries, closing entries, and the post-closing trial balance. 6. Preparing the financial statements A balance sheet , income statement, statement of changes in equity, and cash flow statement are prepared to provide useful information to parties interested in the financial information of the business.
3. 7. Journalizing and posting of adjusting journal entries Adjusting entries are prepared at the end of the accounting period to update the accounts for internal transactions because they affect more than one accounting period. 8. Journalizing and posting of closing journal entries Closing entries are prepared at the end of the accounting period to update the owner’s capital account. 9. Preparing the post closing trial balance After the closing entries have been posted, the post closing trial balance is prepared from the general ledger accounts. 10. Journalizing and posting of reversing journal entries Reversing entries are prepared to simplify the accounting process. The adjusting entries are simply reversed on the first day of the accounting period.
4. The Analysis of Transaction Following are the steps involved to analyze transactions: From the business document, determine the kind of transaction or exchange made. Analyze the transaction to determine the accounts affected. They can either affect the assets, liabilities, owner’s equity, revenue or expenses accounts. Determine the effect of the transaction on the accounts affected.The transaction can either increase or decrease the accounts. Apply the rules of debit and credit to identify whether the accounts affected should be debited or credited to show the corresponding increase or decrease. The Journal The Journal is a chronological record of events or business transaction showing all the effects of each transaction in terms
5. of debits and credits. Because transactions are initially recorded in the journal, it is called the book of original entry. The simplest journal is the general journal. A Journal entry should contain the following: Date. Write a month on the first transaction unless there is a change in month for the succeeding transactions or a new page is used. Account Titles and Explanation. Write the debit account at the extreme left of the first line while the credit account is indented half-inch on the next line. The explanation describing the transaction is written on the extreme left of the next line below the credit. Remember to skip on line before proceeding to the next transaction.
6. 3. P.R. (Posting Reference) Write the corresponding account number here once the entry is posted. Meanwhile, it is left blank until the posting has been done. 4. Debit. Under this column, write the debit amount for each debit account. 5. Credit. Under this column, write the credit amount for each debit account. The Simple and Compound Entry When only two accounts are affected, we call this a simple entry where there is only one debit account and one credit account. The previous example where the owner NikoOng, made an initial investment is a simple entry. In some cases, a transaction would require the use of three or more accounts in which case the entry is called a compound entry.
7. Journalizing the Transactions Journalizing is the process of recording transaction in the journal after it has been recognized and measured. In journalizing transactions the double entry system is used. In this case, two or more accounts are affected by each transaction. It follows that for every debit, a corresponding credit is made. The total debits should equal total credits for every transaction. IN this way, the equality of the accounting equation is maintained. Rules for debit and credit You debit to show: You credit to show: Increase in assets 1. Decrease in assets Decrease in liabilities 2. Increase in liabilities Decrease in owner’s equity 3. Increase in owner’s equity -Owner’s withdrawal -Initial investment -Expenses -Additional investment -Revenue/income
8. Use of T-Accounts An account is a form of record that summarizes the increases or decreases of any specific accounting value. The simplest form of an account is the T-Account because the accounting equation is represented by a big T. it is an informal tool used to analyze the effect of a transaction in the assets, liabilities, owner’s equity, revenue, and expenses. The three elements of an account are: Account Title Debit Credit
9. The Ledger The ledger is a group of the accounts used by the company. It is the book of final entry. An account is an accounting device or form of record that summarizes the increases or decreases of any specific accounting value. The accounts in the general ledger are classified into two general groups. Balance sheet or real account (assets, liabilities, and owner’s equity) Income statement or nominal accounts (revenue and expenses) Chart of Accounts Chart of accounts is a list of all account titles used by the company with their corresponding account number. Account titles are arrange in financial statement order. Balanced sheet accounts which include assets, liabilities, and owner’s equity come first. Account titles in the income statement which include revenue and
10. expenses follow. The accounts are so numbered for purposes of indexing and cross-referencing. The Normal Balance of an Account The side of an account where increases and recorded is referred to as the normal balance or an account. This can be the left side (debit) or the right side (credit). The reason for this is account increases usually exceed account decreases. The following are the normal balances or accounts: Normal Debit BalanceNormal Credit Balance Asset Liability Owner’s Drawing Owner’s Equity Expense Income
11. Posting to the Ledger Posting is the process of transferring information from the journal to the ledger. Debits in the journal are correspondingly posted as debits in the ledger, and credits in the journal are likewise posted as credits in the ledger. The steps in posting are as follows: From the journal, copy the date of the transaction to the ledger. Under the journal reference (J.R) column of the ledger, copy the page number of the journal. Under the debit credit ledger, transfer the credit amount from the journal. After posting the amount to the ledger, write the account number in the posting reference (P.R) column of the journal. The Ledger Accounts After Posting The Debit or Credit balance of each account is determined at the end of the accounting period in order to prepare the trial balance.
12. The debit column and the credit column of each account are added to get the balance of each account. If an account’s total debit exceeds total credit, account has a debit balance. If the total credit exceeds total debit, the account has a credit balance. The Trial Balanced The trial balanced is the schedule of all balances to prove the equality of the debit and credit it is a listing of all account title with their respective debit or credit balances taken from the ledger. However it does not check or vouch the accuracy of the report. The following are the steps in the preparation of the trial balance: In their proper numerical order, make a listing of all account titles. Get the account balance of each ledger account and write them under their corresponding debit or credit column.
13. 3. Foot or add the debit and the credit columns of the trial balance. 4. Check whether the debit totals and credit totals are equal. They must be equal, otherwise your trial balance has error.