Introduction to Accounting

 Introduction to Accounting Essay

Source Documents: Whenever a business transaction takes place, concerning sales or perhaps purchases, obtaining or spending money, or perhaps owing or perhaps being due money, it can be usual pertaining to the transaction to be upon a document. Source paperwork are the way to obtain all the information noted by a business. Examples

Bill, Credit Notice, Debit Notice, Goods Received Note,

Books of Original Access: In the course of organization, source files are created. The details on these types of source papers need to be summarized, as otherwise the business might forget to help to make some obligations, ask for money owed or even by accident pay for anything twice. Therefore, it is imperative to keep records of source files of deals. Such data are made in " literature of original entry”. The books of original entry also called a daybook certainly are a descriptive and chronological (diary-like) record of day-to-day economical transactions. The key books of original entry are:

oSales Day Publication (book of original access for credit sales)

oPurchase Day Publication (book of original admittance for credit purchases) oSales Return Working day Book (book of first entry pertaining to goods returned from customers) oPurchases Come back Day Book (book of original entrance for products returned to suppliers) oJournal (book of original entry for credit rating sales)

oCash Book (book of initial entry for cash statements and payments. It data all deals that go through the bank account) oPetty Cash Book (It records obligations of a small amount of cash)

Double admittance book keeping: is the technique used to transfer our weekly/monthly totals from our books of original entry into the nominal ledger. The double entrance system of publication keeping makes certain that every purchase is noted twice inside the accounts. The essential rule which usually must permits be observed is the fact every economic transaction gives rise to two accounting entries, 1 a charge and the various other a credit rating. The total worth of debit entries in the nominal journal is consequently always equivalent at any time for the total worth of credit entries. Which will account receives the credit rating entry and which obtains the charge entry depends on the nature with the transaction.

For example for anyone who is to purchase car for GHВў2, 000. 00 you would be influenced in 2 different ways: a)You might own a car worth GHВў2, 000. 00

b)You have GHВў2, 000. 00 less cash

The guidelines of publication keeping

A debit admittance will:

Increase an asset (e. g. a selection of workplace furniture)

Decrease a the liability (paying a creditor)

Increase an expense (e. g. getting stationery)

A credit entry will:

Decrease an asset (e. g. producing a cash payment)

Increase a responsibility (e. g. buying products on credit)

Increase income/revenue (e. g. a customer transaction)

Cases

Show the two sides from the following ventures

a)A funds sale of GHВў1, 000. 00

b)Payment of the rent costs totaling GHВў1, 500. 00

c)Buying some goods pertaining to cash at GHВў2, 000. 00

d)Buying some pieces of furniture for cash at GHВў2, 500. 00

e)The business sells products on credit to Lexis for GHВў3, 500. 00 f)The business buys merchandise on credit rating from Aaliyah for GHВў4, 000. 00

Show the two sides for the following transactions

a)Bought a furniture upon credit coming from Bella, price GHВў8, 1000. 00 b)Bought goods upon credit coming from Flora, expense GHВў5, 1000. 00

c)Sold goods in credit to Michael, expense GHВў8, 800. 00

d)Paid Doctor (a credit supplier) GHВў1, 200. 00

e)Collected GHВў4, 500. 00 coming from John, a credit consumer

f)Paid salary GHВў12, 1000. 00

g)Received rent expenses of GHВў5, 555. 00 from homeowner Gomez

h)Paid rent of GHВў8, 888. 00 to landlord Gideon

i)Paid insurance premium GHВў2, 700. 00

Ledger Accounts

Ledger Accounts summarise all of the individual deals listed in the books of original entrance. Ledger Accounts

Ledger Accounts summarise each of the individual transactions listed in the books of original access. The principal accounts are a part of a journal called the nominal journal The nominal ledger is an accounting record which usually summarises the financial affairs of a organization. It...

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