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Other Added - Classification of Accounts - Hints for Journalizing - Advantages of Journal
Whether or not the company you work for offers yearly celebrations, there comes a time in every business when get-togethers arise. Sometimes, the occasion calls for the popping of champagne, while others include a simple spread of cheese and crackers. Depending on the event that needs planning, corporate parties have the potential to become rather entertaining moments that create everlasting memories when organized in the proper manner. Regardless if this is your first time planning a corporate party, there are plenty of tips to follow and things to learn along the way. Below are a few to keep in mind:1) Knowing the budget allotted for a corporate party is rather important, which allows a planner to make the proper arrangements that better serve the theme of the event. When you don’t have a clue as to the amount of money that you can spend on a get-together, the decisions you make for the event may not be as realistic as they can or should be.2) Since you’ve been working in the office for a decent amount of time (to have the responsibility of planning a corporate party), you should already have an idea about what type of things that your fellow co-workers enjoy. Planning the kind of activities that will get employees involved during the party makes the event more enjoyable for all. For instance, a silly office group may appreciate “Pin the Tail on the Boss” while others may enjoy a friendly round of charades.3) Food and drink is what keeps a party going. When guests are hungry and thirsty, they are less likely to
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 rec
Seasoned exhibitors know that one of the more important elements in making your trade show investment a success is proper training of the booth staff. In order to project a concise and consistent message at the show, everyone working the show needs to be able to "walk the talk". It's a good idea to have several short sessions with your booth staff before, during and after the show.Pre-show TrainingNo trade show exhibitor should hit the show floor without having done proper booth staff training. Improperly trained booth staff can reflect poorly on your company, and cut down dramatically on the leads you receive at a show. On the other hand, properly trained staff will draw people to your booth, give them information about your organization that is relevant to their needs, and leave the conversation with some type of follow-up or appointment.Top 5 Areas of Pre-Show Booth TrainingIn addition to complete knowledge of your products and services (that's a given), your booth training should include the top 5 areas that are imperative to cover prior to show opening:1. Rules of Engagement – It is a good idea to come up with a list of do's and don'ts for the show and review those with your booth staff. Items to include may be the minimum and maximum number of booth staff at one time (see Booth Staffing), rules about eating and drinking inside your booth, taking breaks, walking the show floor or moving outside of your booth for impromptu meetings, and so on.2. Profes
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 reco
Increased Competition - need for low costs of goods and time With a surge of online business, much competition is experienced accross all industries. With chess retailing many companies have sprung up to take advantage of what the internet affords us - a relatively easy way to put up a commercial store. The increased competition has had three main effects: 1. Now the goods have to the right goods, be of good quality and be worth their price. 2. The profit margin is reduced through the competition. 3. The cost of being seen by customers through such mediums as web advertising (adwords, etc.) has risen significantly as merchants see the front page as the new High Street/Mall.Therefore more than ever (and clearly set to become more critical) there is a need for suppliers to provide high quality goods for a low price. In the case of chess sets, chess boards and chess pieces, once the goods are imported, tax paid, packaging bought, packers paid, etc. the cost of the goods are such that little profit is seen. Poor quality in terms of scratches, chips and such may well render a sale as just break-even or even a loss. Every area in chess set retailing needs to be watched - but the most difficult factor is dealing with a third world country where quality is just not the same as we have come to expect in the commercial, industrialised and demanding west.Need to trust suppliersIf time is taken by operatives to examine every item that comes through to the chess warehouse, the product's profit is impacted. but i
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 rec
Common office interruptions, such as phone calls or visits from co-workers, can lessen your productivity. These interruptions are especially menacing when on a deadline. By following some key steps, you can keep office distractions at bay and get your work done on time.1) Take Advantage of Voice Mail. Phone calls are important to every job; however, when on a deadline, let the call go into voice mail. When you answer a phone call, your mind wanders from the task at hand. Unless you are waiting for an important call, when on deadline let the machine get it. Returning phone calls is easy, while returning to your train of thought is not.2) Do Not Disturb. Chatting with co-workers is the most common office "time-sucker." That's not to say that you should be anti-social, but sometimes it is important to separate yourself from others to complete your project. If someone other than your boss, tries to interrupt you while you are scrambling to complete a project, don't be afraid to tell them that you are extremely busy and don't have time to chat right now.3) Stay Focused. Although it is often tempting to let your mind wander, a key to success is to keep from daydreaming when on a deadline. Your mind may want to continually wander away from the task at hand, but don't let it! Otherwise your concentration will be broken and you'll likely make mistakes. So stay focused on your task at hand to get the work done.4) Keep it Neat. A messy workspace is a guaranteed way to cause interruptions. When you have to c
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 rec
How do you make a decision to purchase a service or product?Think back to the last time you made a decision to make a significant investment, be that something for your home or business life and the chances are that you not only tried out the product or service before you bought it, but you also asked the opinion of others.Let’s take for example purchasing a camera. Perhaps you asked a friend about their experience of a certain model of camera. You might have also researched the camera on the Internet or in magazines. You might even have gone into your local camera shop so you could ask the opinion of the camera expert in the store.In all these cases, you were seeking endorsements and opinions – in other words testimonials about the camera.When it comes to your potential clients making a decision to invest in your services, which are no doubt far more expensive than purchasing a camera, what reference sites and testimonials can you offer up?Putting in place a process to systematise accessing testimonials is an often an overlooked strategy in many professional services practice. Added to that, many testimonials are far from impactful.For example have you ever noticed the testimonials on a web site that say something like:“Working with Jo was great. CD, London.”This just leaves you wondering – who was CD? Why did they find working with Jo great? What difference did it make to them? Was CD in the same situation as I find myself in?Frankly this form of testimonial is not going
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 rec
Cubicle accessories are items that make cubicles look perfect. Cubicles are designed for a specific use. Therefore, the accessories in cubicles vary depending on the individual?s purposes and needs, tastes and preferences.Cubicle accessories serve as a functional and decorative item. They can be used as planners and storage materials. The accessories can have multiple functions and multiple layers. Some accessories are used frequently and some others are kept as such. There are accessories to be kept on surfaces and accessories for hanging. Accessories can be attached to partition panels, walls, and doors. Phone mounts, shelves, and boards are included in the accessories that are easily attached to partition panel systems.Some of the commonly used cubicle accessories at homes and offices are coat hooks, sorters, organizers, clip hangers, wall racks, card holders, pencil and pen stands, cell phone holders, desk planners, message boards, whiteboards, and marker boards. Coat hooks are a great addition to keep coats, hats, and other garments neat and tidy. Cubicle organizers make use of wall space for well defined planning and organization. Wall racks are great additions in cubicles to hold all the necessary items. Marker boards are available in folding and unfolding styles for convenient usage.Office cubicle accessories are a good choice to modify or alter offices. Some of them are hanging triple file baskets, hot file hangings systems, adjustable aluminum hangers, and poly holders. These accessories serve as a means
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) Accounts involved are more than two In fact compound entry is the combination of two or more simple journal ntries.
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