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Member You - Classification of Accounts - Hints for Journalizing - Advantages of Journal
After you determine that you will be exhibiting at a show; get your killer display; scheduled and train staff; and have everything set up on the show floor…now comes the hard part…getting people to visit your booth! There seems to be a never-ending push for creativity and innovation in this area, and truly there is no magic answer, but there are a few things that can help.Be Important to Attendees Be sure that you're exhibiting at a show where your product and service is highly relevant and needed by the show attendees. It's also not a bad idea to choose shows where you're NOT one of a thousand companies that do the exact same thing you do. Search for shows where your product or service is highly relevant, but where you stand a chance of being one of only a few companies that do what you do.Have an Eye-Catching Display Your booth display must be well done, and tell an intriguing message quickly in order to catch a show attendee's eye. A display company can show you thousands of options and provide valuable consulting about the types of graphics to use, the size of your signage, etc. Another smart approach is to pay attention to the exhibitors at any shows that you attend and determine which booths are being visited and why, then try to apply those principals to your exhibit.Have Good Give-Aways One sure-fire way to attract people to your booth is to give away something of value to that audience. We've all seen the "collectors" at shows – the attendees who do nothing more than fill their fre
Double Entry System
In the 15th century a Franciscan Monk, Lucas Pacioli, described a method of arranging accounts in such a way that the dual aspect (present in every account transaction) would be expressed by a debit amount and an equal and offsetting credit amount.
Double Entry system is the system under which each transaction is regarded to have two fold aspects and both the aspects are recorded to obtain complete record of dealings. Double Entry system of book keeping adheres to the rule. that for each transactions the debit amount (s) must equal the credit amount(s). That is why this system is called Double Entry.
Advantages of Double Entry System
(i) It enables to keep a complete record of business transactions.
(ii) It provides a check on the arithmetical accuracy of books of accounts based on equality of debit and credit.
(iii) It gives the results of business activities either profit or loss during the accounting period.
(iv) It tells the financial position of the business at a point of time. Total resources of the business, claims of the outsiders, amount due by outsiders etc. are revealed by a statement known as Balance Sheet.
(v) It makes possible comparison of the current year with those of previous years helping the owner to manage his business on better lines.
(vi) It reduces the chances of errors creeping in the accounting records because of its equality principle. .
(vii) It helps to ascertain the details regarding any account easily and accurately. Other systems of book-keeping. In addition to the double entry system, there is also single entry system.
The single-entry system is "a system of book-keeping in which as a rule only records of cash and of personal account are maintained; it is always incomplete double entry varying with circumstances. Such system may be economical but it is incomplete, unscientific and full of defects.
Compound Journal Entries
If in a journal entry only one account is to be debited and only one account is to be credited then such an entry is 'Simple Journal Entry'. However, in some cases the entry may require more than one debit or credit or both. Such entries are known as compound entries. Compound entries should be created where
(i) Transaction occur on the same day
(ii) One aspect of these transactions is common; and
(iii)
If you run a mobile pressure washer business it is extremely important that you know the components so you can trouble shoot in the field while you are online with the manufacturers help desk or equipment vendor. Most problems that are encountered on the job can be easily fixed so you do not lose any money in the field.Your engine has a single crankshaft where all the power goes. In a car, this crankshaft goes to a transmission. On your machine there is a circular pulley pressed or wedged on to the crankshaft. The pulley has two grooves on it. A car has a pulley on the front of the engine block between the engine and the radiator also with grooves. One goes to an alternator and another goes to a water pump.The alternator makes electricity and keeps your car’s battery charged; same on the pressure washer unit. The water pump pumps water into your engine block from the radiator to keep your car from over heating. It does this by use of belts connected to these pulleys. It’s relatively simple. If you look under the hood of you car, you’ll see. On your machine, your engine also has belts connected to the pulley. One goes to the generator. The generator makes electricity and powers:The burner blower for heating waterThe spark to ignite the fuel to heat the waterThe vacuum on your truckThe lights on your machine for night workThe 110 volt outlet on your machine for your work lights and reclaim equipmentThe pump on the other hand pushes the water from the pump through the hose
Accounts recording transactions relating to individuals or firms or company are known as personal accounts. Personal accounts may further be classified as :
(1) Natural person's personal accounts: The accounts recording transactions relating to individual human beings e.g., Anand's A/c, Remesh's A/c, Pankaj's A/c are classified as natural person's personal accounts.
(2) Artificial person's personal account: The accounts recording transactions relating to limited companies. bank, firm, institution, club. etc. e.g. Delhi Cloth Mill; Hans Raj College; Gymkhana Club are classified as artificial persons' personal accounts.
(3) Representative personal accounts: The accounts recording transactions relating to the expenses and incomes are classified as nominal accounts. But in certain cases due to the matching concept of accounting the amount, on a particular date, is payable to the individuals or recoverable from individuals.
Such amount (a) relates to the particular head of expenditure or income and (b) represents persons to whom itis payable or from whom it is recoverable. Such accounts are classified as representative personal accounts e.g. "Wages Outstanding Account", Pre-paid Insurance Account. etc.
Real Accounts
The accounts recording transactions relating to tangible things (which can be touched, purchased and sold) such as goods, cash, building. machinery etc., are classified as tangible real accounts.
Whereas the accounts recording transactions relating to. intangible things (which do not have physical shape) such as goodwill, patents and copy rights. trade marks etc., are classified as intangible real accounts.
Nominal Accounts
The accounts recording transactions relating to the losses, gains. expenses and incomes e.g., Rent, salaries, wages, commission, interest, bad debts etc. are classified as nominal accounts. As already discussed, wherever a nominal account represents the amount payable to or receivable from certain persons it is known as representative personal account.
Rules of Debit and Credit (classification based)
1. Personal Accounts: Debit the receiver, Credit the giver (supplier)
2. Real Accounts: Debit what comes in, Credit what goes out
3. Nominal Accounts: Debit expenses and losses, Credit incomes and gains.,
Hints for Journalizing
The following discussion will help in diagnosing the transaction with a view to find out which accounts are relevant for passing the journal entry.
1. Treatment of cash/credit transaction.
Read carefully the following transactions:
(i) Purchased goods for Rs. 1,200 cash. . (ii) Purchased goods for Rs. 1,200. (iii) Purchased goods for Rs. 1,200 from Arun. (iv) Purchased goods for Rs. 1,200 from Arun on cash.
Transaction (i) and (iv) are clear as it has been specifically stated that purchases have been made on cash. Thus the entry is :
Purchases account Dr. 1,200 To Cash account 1,200
Transaction (ii) and (iii) are not specific as to whether the purchases are for cash or on credit. However transaction (ii) does not mention any name of the supplier; therefore it implies that the purchases are for cash. Similarly transaction (iii) mentions the name of the supplier but is silent regarding cash-it implies that purchases are on credit: Thus the entry for transaction (iii) is
Purchases account Dr. 1,200 To Amex 1200.
2. Treatment of payment on personal/expenses account.
When payment is made to a person against amount due to him as per his ledger account-the personal account of the creditor should be debited. However if the payment is being made to a person representing business expenditure then the particular expenditure (nominal) account should be debited.
3. Treatment of receipt on personal/ income account.
When amount is received from a person against amount recoverable from him as per ledger account-the personal account of the debtor should be credited. However if the amount received represents business income, then the particular income (nominal) account should be credited.
4. Treatment of trade discount.
In many cases the seller allows to the buyer deduction off the list price. Such deduction is known as 'trade discount'. Trade discount as such is not recorded in the books. The transaction is recorded with only the net amount i.e. (list price -trade discount).
5. Treatment- of cash discount (full settlement).
In some cases creditor may allow some concession to his debtor to prompt him to make the payment within the period of credit allowed. Such concession is known as 'cash discount'. It is allowed by the person receiving the payment and represents, expenditure. It is availed by the person making the payment and represents income.
6. Treatment of Bad debts (debtor becoming insolvent).
An amount due from a debtor may become irrecoverable either partially or wholly. Reason may be that he has been declared insolvent or any other. Such irrecoverable amount represents loss to the business and is debited to Bad debts amount.
7. Treatment of Bad debts recovered
It is evident from the above entry that whenever irrecoverable amount is written off the personal account is credited. If after some time any paymentis received against a debt previously written of then it represents income and as such should be credited to an account styled as 'Bad debts recovered account'. Personal account must not be credited.
8. Treatment of personal expenses of the owner
It is quite common for the proprietor to withdraw cash or goods from the business for personal or domestic use. Sometimes premium on the life policy of the owner may also be paid by the business. Similarly income tax payable by the proprietor may be paid by business. All this represents owner's personal expenses and are debited to his personal account viz. Drawings account.
9. Treatment of payment/ receipt on behalf of customer or supplier.
In some cases business might pay expenses on behalf of its customers. Such payments do not constitute the expenditure of business. Hence it should be debited to the personal account of the concerned customer.
10. Treatment or exchange or new asset with old one.
Sometimes business may exchange its old asset with new one-only the difference in value is paid in cash. In such cases asset account needs debit only with the actual amount paid.
11. Treatment of goods given as charity/ advertisement.
Business might distribute goods as 'free samples' to advertise its products. In some cases it may also distribute goods as charity to boost its image. Both 'advertisement' and 'charity' are expenses of the business, hence should be debited and purchases account should be credited.
12. Treatment of goods lost in accident/ fire.
In certain case a business might suffer loss of goods due to some accident or fire etc., destroyed or damaged goods might have been insured also. In such cases total value of goods lost or destroyed is credited to purchases account and the (i) insurance claim admitted is debited to Insurance Company (ii) balance is debited to loss by accident/ fire account.
13. Treatment of depreciation charged on fixed assets.
Fixed assets are those properties/ possessions of the business which are used for carrying on of business viz. plant, machinery, building etc. Depreciation is the permanent decrease in the value of an asset due to wear and tear, passage of time and obsolescence. Depreciation is treated as a business expenditure. Depreciation account is debited and the respective asset account is credited.
14. Treatment of payment/ receipt of representative personal accounts.
At the close of the previous accounting year a business might have incurred expenditure which remained unpaid. It is known as 'Outstanding expenditure'. It is a representative personal account. When actual payment is made in current accounting period the concerned account is debited and cash account is credited.
Advantages of Journal
(1) Transactions are recorded in the chronological order, thus reducing the chances of omitting any transaction.
(2) Transactions, invariably, are accompanied by narration. Thus, the entry is supplemented with basic information regarding the transactions.
(3) Debit and credit amounts are written side by side. It minimizes the chances of entering wrong amount.
Restricted use of Journal
Originally the system of recording the financial transactions developed consisted of (1) writing each transaction, with narration, in the book of original entry, i.e.. Journal and then (2) posting therefrom to the respective accounts in the principal book, i.e., ledger. As the number of transactions' grew the system was modified and the transactions of similar nature say purchases, sales, cash etc. were recorded in sub-journal instead of journal for the following reasons:
(i) If too many transactions are recorded in journal it will be unwieldy.
(ii) In every business cash balance is required to be ascertained at frequent intervals, say, everyday: therefore it was found convenient to use a separate book for recording cash transactions.
(iil) By recording transactions of similar nature. in one sub journal, say, purchases of goods in purchases journal saves time and efforts in recording and posting.
Because of the reasons listed above, nowadays, journal is used to record only such transactions which are infrequent. Now a days computerized accounting has made the entry of journal very easy and accurate.
Double Entry System
In the 15th century a Franciscan Monk, Lucas Pacioli, described a method of arranging accounts in such a way that the dual aspect (present in every account transaction) would be expressed by a debit amount and an equal and offsetting credit amount.
Double Entry system is the system under which each transaction is regarded to have two fold aspects and both the aspects are recorded to obtain complete record of dealings. Double Entry system of book keeping adheres to the rule. that for each transactions the debit amount (s) must equal the credit amount(s). That is why this system is called Double Entry.
Advantages of Double Entry System
(i) It enables to keep a complete record of business transactions.
(ii) It provides a check on the arithmetical accuracy of books of accounts based on equality of debit and credit.
(iii) It gives the results of business activities either profit or loss during the accounting period.
(iv) It tells the financial position of the business at a point of time. Total resources of the business, claims of the outsiders, amount due by outsiders etc. are revealed by a statement known as Balance Sheet.
(v) It makes possible comparison of the current year with those of previous years helping the owner to manage his business on better lines.
(vi) It reduces the chances of errors creeping in the accounting records because of its equality principle. .
(vii) It helps to ascertain the details regarding any account easily and accurately. Other systems of book-keeping. In addition to the double entry system, there is also single entry system.
The single-entry system is "a system of book-keeping in which as a rule only records of cash and of personal account are maintained; it is always incomplete double entry varying with circumstances. Such system may be economical but it is incomplete, unscientific and full of defects.
Compound Journal Entries
If in a journal entry only one account is to be debited and only one account is to be credited then such an entry is 'Simple Journal Entry'. However, in some cases the entry may require more than one debit or credit or both. Such entries are known as compound entries. Compound entries should be created where
(i) Transaction occur on the same day
(ii) One aspect of these transactions is common; and
(iii)
Lately, private label products have made a tremendous impact on the U.S. market, affecting almost everyone, from producers to retailers to consumers. Private label products are products whose name or brand solely belongs to a specific retailer (e.g. Wal-Mart and Marks & Spencer). Let’s say that you’re in a grocery store. At first you see all those gourmet sandwiches with brands that have long been familiar to you. Then you go to Marks & Spencer and lo and behold, now they’re selling the same type of sandwiches too!Private label products have grown significantly in Europe, especially in the Western half, and now it’s making its mark in the United States. Private labels can be divided into sub groups: store brands are products where the retailer’s name is a strong factor in its packaging and marketing aspects; store sub-brands are products whose connection to the retailer is minimal; umbrella branding is a strategy where a retailer uses only one private label for different product categories and finally there are individual brands in which one private label is accorded to one product type.The advantages are of course numerous, to all key persons involved. For the retailer, one of the most obvious pros would be the increase in sales. And since it’s their own private label, the retailer then has the freedom to create its own marketing strategy, have more control over its stock inventory and possibly use it also to gain a more positive image to the public. And with a positive image, this would of course lead to stronger custo
The following discussion will help in diagnosing the transaction with a view to find out which accounts are relevant for passing the journal entry.
1. Treatment of cash/credit transaction.
Read carefully the following transactions:
(i) Purchased goods for Rs. 1,200 cash. . (ii) Purchased goods for Rs. 1,200. (iii) Purchased goods for Rs. 1,200 from Arun. (iv) Purchased goods for Rs. 1,200 from Arun on cash.
Transaction (i) and (iv) are clear as it has been specifically stated that purchases have been made on cash. Thus the entry is :
Purchases account Dr. 1,200 To Cash account 1,200
Transaction (ii) and (iii) are not specific as to whether the purchases are for cash or on credit. However transaction (ii) does not mention any name of the supplier; therefore it implies that the purchases are for cash. Similarly transaction (iii) mentions the name of the supplier but is silent regarding cash-it implies that purchases are on credit: Thus the entry for transaction (iii) is
Purchases account Dr. 1,200 To Amex 1200.
2. Treatment of payment on personal/expenses account.
When payment is made to a person against amount due to him as per his ledger account-the personal account of the creditor should be debited. However if the payment is being made to a person representing business expenditure then the particular expenditure (nominal) account should be debited.
3. Treatment of receipt on personal/ income account.
When amount is received from a person against amount recoverable from him as per ledger account-the personal account of the debtor should be credited. However if the amount received represents business income, then the particular income (nominal) account should be credited.
4. Treatment of trade discount.
In many cases the seller allows to the buyer deduction off the list price. Such deduction is known as 'trade discount'. Trade discount as such is not recorded in the books. The transaction is recorded with only the net amount i.e. (list price -trade discount).
5. Treatment- of cash discount (full settlement).
In some cases creditor may allow some concession to his debtor to prompt him to make the payment within the period of credit allowed. Such concession is known as 'cash discount'. It is allowed by the person receiving the payment and represents, expenditure. It is availed by the person making the payment and represents income.
6. Treatment of Bad debts (debtor becoming insolvent).
An amount due from a debtor may become irrecoverable either partially or wholly. Reason may be that he has been declared insolvent or any other. Such irrecoverable amount represents loss to the business and is debited to Bad debts amount.
7. Treatment of Bad debts recovered
It is evident from the above entry that whenever irrecoverable amount is written off the personal account is credited. If after some time any paymentis received against a debt previously written of then it represents income and as such should be credited to an account styled as 'Bad debts recovered account'. Personal account must not be credited.
8. Treatment of personal expenses of the owner
It is quite common for the proprietor to withdraw cash or goods from the business for personal or domestic use. Sometimes premium on the life policy of the owner may also be paid by the business. Similarly income tax payable by the proprietor may be paid by business. All this represents owner's personal expenses and are debited to his personal account viz. Drawings account.
9. Treatment of payment/ receipt on behalf of customer or supplier.
In some cases business might pay expenses on behalf of its customers. Such payments do not constitute the expenditure of business. Hence it should be debited to the personal account of the concerned customer.
10. Treatment or exchange or new asset with old one.
Sometimes business may exchange its old asset with new one-only the difference in value is paid in cash. In such cases asset account needs debit only with the actual amount paid.
11. Treatment of goods given as charity/ advertisement.
Business might distribute goods as 'free samples' to advertise its products. In some cases it may also distribute goods as charity to boost its image. Both 'advertisement' and 'charity' are expenses of the business, hence should be debited and purchases account should be credited.
12. Treatment of goods lost in accident/ fire.
In certain case a business might suffer loss of goods due to some accident or fire etc., destroyed or damaged goods might have been insured also. In such cases total value of goods lost or destroyed is credited to purchases account and the (i) insurance claim admitted is debited to Insurance Company (ii) balance is debited to loss by accident/ fire account.
13. Treatment of depreciation charged on fixed assets.
Fixed assets are those properties/ possessions of the business which are used for carrying on of business viz. plant, machinery, building etc. Depreciation is the permanent decrease in the value of an asset due to wear and tear, passage of time and obsolescence. Depreciation is treated as a business expenditure. Depreciation account is debited and the respective asset account is credited.
14. Treatment of payment/ receipt of representative personal accounts.
At the close of the previous accounting year a business might have incurred expenditure which remained unpaid. It is known as 'Outstanding expenditure'. It is a representative personal account. When actual payment is made in current accounting period the concerned account is debited and cash account is credited.
Advantages of Journal
(1) Transactions are recorded in the chronological order, thus reducing the chances of omitting any transaction.
(2) Transactions, invariably, are accompanied by narration. Thus, the entry is supplemented with basic information regarding the transactions.
(3) Debit and credit amounts are written side by side. It minimizes the chances of entering wrong amount.
Restricted use of Journal
Originally the system of recording the financial transactions developed consisted of (1) writing each transaction, with narration, in the book of original entry, i.e.. Journal and then (2) posting therefrom to the respective accounts in the principal book, i.e., ledger. As the number of transactions' grew the system was modified and the transactions of similar nature say purchases, sales, cash etc. were recorded in sub-journal instead of journal for the following reasons:
(i) If too many transactions are recorded in journal it will be unwieldy.
(ii) In every business cash balance is required to be ascertained at frequent intervals, say, everyday: therefore it was found convenient to use a separate book for recording cash transactions.
(iil) By recording transactions of similar nature. in one sub journal, say, purchases of goods in purchases journal saves time and efforts in recording and posting.
Because of the reasons listed above, nowadays, journal is used to record only such transactions which are infrequent. Now a days computerized accounting has made the entry of journal very easy and accurate.
Double Entry System
In the 15th century a Franciscan Monk, Lucas Pacioli, described a method of arranging accounts in such a way that the dual aspect (present in every account transaction) would be expressed by a debit amount and an equal and offsetting credit amount.
Double Entry system is the system under which each transaction is regarded to have two fold aspects and both the aspects are recorded to obtain complete record of dealings. Double Entry system of book keeping adheres to the rule. that for each transactions the debit amount (s) must equal the credit amount(s). That is why this system is called Double Entry.
Advantages of Double Entry System
(i) It enables to keep a complete record of business transactions.
(ii) It provides a check on the arithmetical accuracy of books of accounts based on equality of debit and credit.
(iii) It gives the results of business activities either profit or loss during the accounting period.
(iv) It tells the financial position of the business at a point of time. Total resources of the business, claims of the outsiders, amount due by outsiders etc. are revealed by a statement known as Balance Sheet.
(v) It makes possible comparison of the current year with those of previous years helping the owner to manage his business on better lines.
(vi) It reduces the chances of errors creeping in the accounting records because of its equality principle. .
(vii) It helps to ascertain the details regarding any account easily and accurately. Other systems of book-keeping. In addition to the double entry system, there is also single entry system.
The single-entry system is "a system of book-keeping in which as a rule only records of cash and of personal account are maintained; it is always incomplete double entry varying with circumstances. Such system may be economical but it is incomplete, unscientific and full of defects.
Compound Journal Entries
If in a journal entry only one account is to be debited and only one account is to be credited then such an entry is 'Simple Journal Entry'. However, in some cases the entry may require more than one debit or credit or both. Such entries are known as compound entries. Compound entries should be created where
(i) Transaction occur on the same day
(ii) One aspect of these transactions is common; and
(iii)
Envelopes are used to dispatch important material, so details like a secure flap and seal are vital.There are many ways to seal an envelope. The simplest is with glue, which may need moisture to work while some are self-adhering with light pressure. Some gums can also be reused to close the envelope. Peel and stick envelopes are becoming more popular. A thin strip of paper is peeled off then the gummed area is pressed for sealing the envelope. More ready-made seals are also available such as buttons, clasp, snap and zips. Buttons and metal or plastic clasps are common in heavier paper envelopes while snaps and zips are available only on plastic envelopes.There are seals that create an elegant envelope for invitations, weddings, thank you notes etc. They come in a wide variety of colors for all occasions. They can be embossed or simply printed in a variety of symbols or themes. Their text, font and colors can be personalized for individual needs to a large extent. Generally they are around one inch size and can be ordered via Internet or can be picked up from a stationary shop.Traditional sealing wax is still in use. Some use a wax sticks along with a wooden stamp handle. Drip melted wax onto the envelope and press with the wooden stamp handle to imprint the design. This unique method is not very commonly used.Another popular mode of envelope seals is the perforated edge. These are popular with tax information, some bills, even with online DVD rental stores.
6. Treatment of Bad debts (debtor becoming insolvent).
An amount due from a debtor may become irrecoverable either partially or wholly. Reason may be that he has been declared insolvent or any other. Such irrecoverable amount represents loss to the business and is debited to Bad debts amount.
7. Treatment of Bad debts recovered
It is evident from the above entry that whenever irrecoverable amount is written off the personal account is credited. If after some time any paymentis received against a debt previously written of then it represents income and as such should be credited to an account styled as 'Bad debts recovered account'. Personal account must not be credited.
8. Treatment of personal expenses of the owner
It is quite common for the proprietor to withdraw cash or goods from the business for personal or domestic use. Sometimes premium on the life policy of the owner may also be paid by the business. Similarly income tax payable by the proprietor may be paid by business. All this represents owner's personal expenses and are debited to his personal account viz. Drawings account.
9. Treatment of payment/ receipt on behalf of customer or supplier.
In some cases business might pay expenses on behalf of its customers. Such payments do not constitute the expenditure of business. Hence it should be debited to the personal account of the concerned customer.
10. Treatment or exchange or new asset with old one.
Sometimes business may exchange its old asset with new one-only the difference in value is paid in cash. In such cases asset account needs debit only with the actual amount paid.
11. Treatment of goods given as charity/ advertisement.
Business might distribute goods as 'free samples' to advertise its products. In some cases it may also distribute goods as charity to boost its image. Both 'advertisement' and 'charity' are expenses of the business, hence should be debited and purchases account should be credited.
12. Treatment of goods lost in accident/ fire.
In certain case a business might suffer loss of goods due to some accident or fire etc., destroyed or damaged goods might have been insured also. In such cases total value of goods lost or destroyed is credited to purchases account and the (i) insurance claim admitted is debited to Insurance Company (ii) balance is debited to loss by accident/ fire account.
13. Treatment of depreciation charged on fixed assets.
Fixed assets are those properties/ possessions of the business which are used for carrying on of business viz. plant, machinery, building etc. Depreciation is the permanent decrease in the value of an asset due to wear and tear, passage of time and obsolescence. Depreciation is treated as a business expenditure. Depreciation account is debited and the respective asset account is credited.
14. Treatment of payment/ receipt of representative personal accounts.
At the close of the previous accounting year a business might have incurred expenditure which remained unpaid. It is known as 'Outstanding expenditure'. It is a representative personal account. When actual payment is made in current accounting period the concerned account is debited and cash account is credited.
Advantages of Journal
(1) Transactions are recorded in the chronological order, thus reducing the chances of omitting any transaction.
(2) Transactions, invariably, are accompanied by narration. Thus, the entry is supplemented with basic information regarding the transactions.
(3) Debit and credit amounts are written side by side. It minimizes the chances of entering wrong amount.
Restricted use of Journal
Originally the system of recording the financial transactions developed consisted of (1) writing each transaction, with narration, in the book of original entry, i.e.. Journal and then (2) posting therefrom to the respective accounts in the principal book, i.e., ledger. As the number of transactions' grew the system was modified and the transactions of similar nature say purchases, sales, cash etc. were recorded in sub-journal instead of journal for the following reasons:
(i) If too many transactions are recorded in journal it will be unwieldy.
(ii) In every business cash balance is required to be ascertained at frequent intervals, say, everyday: therefore it was found convenient to use a separate book for recording cash transactions.
(iil) By recording transactions of similar nature. in one sub journal, say, purchases of goods in purchases journal saves time and efforts in recording and posting.
Because of the reasons listed above, nowadays, journal is used to record only such transactions which are infrequent. Now a days computerized accounting has made the entry of journal very easy and accurate.
Double Entry System
In the 15th century a Franciscan Monk, Lucas Pacioli, described a method of arranging accounts in such a way that the dual aspect (present in every account transaction) would be expressed by a debit amount and an equal and offsetting credit amount.
Double Entry system is the system under which each transaction is regarded to have two fold aspects and both the aspects are recorded to obtain complete record of dealings. Double Entry system of book keeping adheres to the rule. that for each transactions the debit amount (s) must equal the credit amount(s). That is why this system is called Double Entry.
Advantages of Double Entry System
(i) It enables to keep a complete record of business transactions.
(ii) It provides a check on the arithmetical accuracy of books of accounts based on equality of debit and credit.
(iii) It gives the results of business activities either profit or loss during the accounting period.
(iv) It tells the financial position of the business at a point of time. Total resources of the business, claims of the outsiders, amount due by outsiders etc. are revealed by a statement known as Balance Sheet.
(v) It makes possible comparison of the current year with those of previous years helping the owner to manage his business on better lines.
(vi) It reduces the chances of errors creeping in the accounting records because of its equality principle. .
(vii) It helps to ascertain the details regarding any account easily and accurately. Other systems of book-keeping. In addition to the double entry system, there is also single entry system.
The single-entry system is "a system of book-keeping in which as a rule only records of cash and of personal account are maintained; it is always incomplete double entry varying with circumstances. Such system may be economical but it is incomplete, unscientific and full of defects.
Compound Journal Entries
If in a journal entry only one account is to be debited and only one account is to be credited then such an entry is 'Simple Journal Entry'. However, in some cases the entry may require more than one debit or credit or both. Such entries are known as compound entries. Compound entries should be created where
(i) Transaction occur on the same day
(ii) One aspect of these transactions is common; and
(iii)
Nowadays people know that to maintain a good standard way of living, one needs to secure a job, but more importantly, to secure an income. Money, whether we like it or not, is necessary to lead a decent and normal life. Also to have access to all he comforts that today's life offers.People can always bargain any item anywhere because all companies use lowering their prices as bait to make clients buy more. This is how debt reduction works when dealing with creditors. But you should always leave these matters in capable hands. Companies such as ours, negotiate directly with your creditors to achieve that main objective, reduce the whole debt, to start your repayment process.Creditors go for Debt Reduction People everywhere wonder why a creditor would take on an offer, being this less than the original amount. Whenever a creditor gets informed by the credit counseling company that a debtor is interested in accepting the economic aid of Debt Consolidation or Debt Settlement, the creditor will accept to reduce the interest rates and the total debt from a 70% to 50%. It is thanks to the counselor's abilities that the debt gets reduced and that the repayment plan can be setup according to the clients' capabilities. Also, the account is re-set in order to show the client is current on his payments.Debt Reduced by 50% When the debt gets reduced, it can be up to 50%. In some cases, it goes up even more. The remaining debt will be consolidated on monthly installments according to your financial capability. This is j
13. Treatment of depreciation charged on fixed assets.
Fixed assets are those properties/ possessions of the business which are used for carrying on of business viz. plant, machinery, building etc. Depreciation is the permanent decrease in the value of an asset due to wear and tear, passage of time and obsolescence. Depreciation is treated as a business expenditure. Depreciation account is debited and the respective asset account is credited.
14. Treatment of payment/ receipt of representative personal accounts.
At the close of the previous accounting year a business might have incurred expenditure which remained unpaid. It is known as 'Outstanding expenditure'. It is a representative personal account. When actual payment is made in current accounting period the concerned account is debited and cash account is credited.
Advantages of Journal
(1) Transactions are recorded in the chronological order, thus reducing the chances of omitting any transaction.
(2) Transactions, invariably, are accompanied by narration. Thus, the entry is supplemented with basic information regarding the transactions.
(3) Debit and credit amounts are written side by side. It minimizes the chances of entering wrong amount.
Restricted use of Journal
Originally the system of recording the financial transactions developed consisted of (1) writing each transaction, with narration, in the book of original entry, i.e.. Journal and then (2) posting therefrom to the respective accounts in the principal book, i.e., ledger. As the number of transactions' grew the system was modified and the transactions of similar nature say purchases, sales, cash etc. were recorded in sub-journal instead of journal for the following reasons:
(i) If too many transactions are recorded in journal it will be unwieldy.
(ii) In every business cash balance is required to be ascertained at frequent intervals, say, everyday: therefore it was found convenient to use a separate book for recording cash transactions.
(iil) By recording transactions of similar nature. in one sub journal, say, purchases of goods in purchases journal saves time and efforts in recording and posting.
Because of the reasons listed above, nowadays, journal is used to record only such transactions which are infrequent. Now a days computerized accounting has made the entry of journal very easy and accurate.
Double Entry System
In the 15th century a Franciscan Monk, Lucas Pacioli, described a method of arranging accounts in such a way that the dual aspect (present in every account transaction) would be expressed by a debit amount and an equal and offsetting credit amount.
Double Entry system is the system under which each transaction is regarded to have two fold aspects and both the aspects are recorded to obtain complete record of dealings. Double Entry system of book keeping adheres to the rule. that for each transactions the debit amount (s) must equal the credit amount(s). That is why this system is called Double Entry.
Advantages of Double Entry System
(i) It enables to keep a complete record of business transactions.
(ii) It provides a check on the arithmetical accuracy of books of accounts based on equality of debit and credit.
(iii) It gives the results of business activities either profit or loss during the accounting period.
(iv) It tells the financial position of the business at a point of time. Total resources of the business, claims of the outsiders, amount due by outsiders etc. are revealed by a statement known as Balance Sheet.
(v) It makes possible comparison of the current year with those of previous years helping the owner to manage his business on better lines.
(vi) It reduces the chances of errors creeping in the accounting records because of its equality principle. .
(vii) It helps to ascertain the details regarding any account easily and accurately. Other systems of book-keeping. In addition to the double entry system, there is also single entry system.
The single-entry system is "a system of book-keeping in which as a rule only records of cash and of personal account are maintained; it is always incomplete double entry varying with circumstances. Such system may be economical but it is incomplete, unscientific and full of defects.
Compound Journal Entries
If in a journal entry only one account is to be debited and only one account is to be credited then such an entry is 'Simple Journal Entry'. However, in some cases the entry may require more than one debit or credit or both. Such entries are known as compound entries. Compound entries should be created where
(i) Transaction occur on the same day
(ii) One aspect of these transactions is common; and
(iii)
I am often hired to coach someone who has moved from a technical role to one of leadership. When I use the term "technical" I mean in the broadest sense of a functional expert, whether it be in the field of technology, accounting, legal, sales or other specialised role. The call from the HR Department usually comes after the event, when things have started to go wrong.So why do so many companies promote people into leadership roles who are unprepared for leading a team? Is it simply that there is no formal succession plan? Not at all. An individual may be earmarked for promotion for what on the surface appear good, logical reasons. He or she has received consistently good performance appraisals, feedback from colleagues is positive on their expertise in the job and they regularly meet or exceed their KPIs. All the right reasons for a well deserved promotion, one might think.It seems quite logical to promote someone who is an expert in their field to head up a functional team. Surely a team with an expert at the head can only benefit from that wisdom and experience. The team will consider themselves lucky to have someone as their boss whose technical skills are highly regarded, won't they?Promotions of technical experts without proper preparation for the challenges of leadership often result in a demotivated team, lower performance, intra team conflicts and inter departmental tensions. The reason is simple, the individual has not recognised or been taught the difference between functional excellence and l
Double Entry System
In the 15th century a Franciscan Monk, Lucas Pacioli, described a method of arranging accounts in such a way that the dual aspect (present in every account transaction) would be expressed by a debit amount and an equal and offsetting credit amount.
Double Entry system is the system under which each transaction is regarded to have two fold aspects and both the aspects are recorded to obtain complete record of dealings. Double Entry system of book keeping adheres to the rule. that for each transactions the debit amount (s) must equal the credit amount(s). That is why this system is called Double Entry.
Advantages of Double Entry System
(i) It enables to keep a complete record of business transactions.
(ii) It provides a check on the arithmetical accuracy of books of accounts based on equality of debit and credit.
(iii) It gives the results of business activities either profit or loss during the accounting period.
(iv) It tells the financial position of the business at a point of time. Total resources of the business, claims of the outsiders, amount due by outsiders etc. are revealed by a statement known as Balance Sheet.
(v) It makes possible comparison of the current year with those of previous years helping the owner to manage his business on better lines.
(vi) It reduces the chances of errors creeping in the accounting records because of its equality principle. .
(vii) It helps to ascertain the details regarding any account easily and accurately. Other systems of book-keeping. In addition to the double entry system, there is also single entry system.
The single-entry system is "a system of book-keeping in which as a rule only records of cash and of personal account are maintained; it is always incomplete double entry varying with circumstances. Such system may be economical but it is incomplete, unscientific and full of defects.
Compound Journal Entries
If in a journal entry only one account is to be debited and only one account is to be credited then such an entry is 'Simple Journal Entry'. However, in some cases the entry may require more than one debit or credit or both. Such entries are known as compound entries. Compound entries should be created where
(i) Transaction occur on the same day
(ii) One aspect of these transactions is common; and
(iii) Accounts involved are more than two In fact compound entry is the combination of two or more simple journal ntries.
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