FINANCIAL ACCOUNT 101.

                 TWO COLUMN CASHBOOK.

Hey Guys, Happy Wednesday. It’s a new day to live and learn, and we are continuing our previous topic on Cashbook. So sit back, relax and gain knowledge today.

Two Column Cashbook is a combination of the Cash Account and Bank Account for the sake of convenience. There are separate columns for Date, Particulars, Folio, Cash and Bank on both the Debit and Credit sides.

Cash Column: contains cash receipts and payments.

Bank Column: contains all payments made by cheque and money received and paid into the Bank.

Contra Entries: are entries made in the cashbook when cash is deposited into the bank account out of cash in hand or when cash is withdrawn from the bank for office use.

Cash paid into the Bank: when there is surplus of cash in hand, the firm can pay it into the bank. Cash balance will decrease and Bank balance will increase.

Cash Column will be credited, Bank Column will be debited. There must be a letter “C” put in the folio column of both sides to signify that it’s a contra entry.

For Example:  Cash received of N500 was paid into the Bank.

Dr                                          Cash Book.                                          Cr

Date    Particulars  F Cash  Bank  Date  Particulars  F   Cash    Bank

Jan 1    Cash          c            500    Jan 1    Bank      c    500

Withdrawal from Bank: when there is shortage of cash in hand, money can be withdrawn from Bank. Bank balance decreases while Cash balance increases.

Bank Column will be credited while Cash Column will be debited and also a “C” will be put in the

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FINANCIAL ACCOUNT 101.

PRINCIPAL OF DOUBLE ENTRY- SINGLE COLUMN.

Hey Guys, Happy Monday!!! Hope you enjoyed your weekend, cos I did. Any way its Monday again and we are here to learn something new. So let’s get started.

LEDGER is the final destination of all transactions in the subsidiary books (that is the sales day book, purchases day book etc). It is the most important book of account because it is the book that contains permanent records of all Transactions in a summarized and classified form. Transactions are recorded here, using the Double Entry System of Bookeeping.

RULES OF DOUBLE ENTRIES:

1.     For Every Credit Entry in an Account, there must be a Corresponding Debit Entry in another Account.

2.     For Every Debit Entry in an Account, there must be a Corresponding Credit Entry in another Account.

3.     All Transactions must be Credit and the other.

DIVISION OF LEDGER:

1.     Personal Ledger:  These are ledgers for Creditors Account and Debtors Accounts. For example, Purchases and Sales Ledger.

2.     General Ledger:  These are ledgers for Real and Nominal Accounts. For example, Expenses Account, Income Account, Sales Account, Purchases Account and Assets Account.

3.     Private Ledger:  These are Ledgers for Capital and Drawings Account of the Owner. The Book is divided into separate sections called Accounts, which may have one page or more. The Main Advantage of subdivision is to permit the clerks to attend concurrently to the various groups of

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COMMERCE 101.

             CLASSIFICATION OF RETAIL TRADE.

Hey Guys, we are here again to learn study, understand and have fun. Let’s get straight to the matter at hand.

                                             RETAIL TRADE

         SMALL SCALE TRADE                    LARGE SCALE TRADE

         -HAWKING                                           -CHAIN STORE

         -MOBILE SHOP                                    -DEPARTMENTAL

         -TRADING                                            -SUPERMARKET   

         -MARKET TRADE                                -DISCOUNT HOUSE

         -STREET/ ROAD                                  -VARIETY STORES

         -STORES (URBAN & RURAL)               –HYPER MARKET

                                                                  -RETAIL COOPERATIVE.

                    METHOD OF CLASSIFICATION OF RETAIL STORE.

1.     Type of Good offered for Sale.

2.     By Location for example Rural or Urban Areas.

3.     By Ownership for example Independent or Cooperative.

4.     Number of Employee’s.

5.     By the Size of Employee’s.

SMALL SCALE TRADE.

As the name implies, it involves types of trading that are small in nature. For examples

a.)  HAWKING- is a kind of Trade whereby the person moves from one place to another carrying the

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COMMERCE 101.

                                       HOME TRADE.

Hey Guys, New Day New Things and we are here to learn and understand. Let’s get started on our topic.

HOME TRADE is the act of buying and selling goods within a country. It is also known as DOMESTIC or INTERNAL TRADE. In this Home Trade the same currency is used for exchange. Home Trade comprises of:

1.      Retailing.

2.     Wholesaling.

RETAIL TRADE.

Retail Trade is the act of selling goods and services to the final consumer in small quantities. Retailing is the final link in the chain of distribution of goods and services.

The Retailer is a person whose business is to purchase goods from the wholesaler or producer in small quantity, and sell in smaller units directly to the consumer. In order words, A Retailer is any trader who directs his efforts towards selling to the final consumers for the purpose of making profit and finishing the chain of production.

CHARACTERISTICS OF RETAIL TRADE.

1.     Retailer sells in smaller units or quantities.

2.     They stock a wide variety of goods.

3.     They sell directly to the consumers.

4.     Retail Trade involves bringing the goods nearer to the consumers.

5.     They are the final link in the chain of Distribution.

6.     The Business location is open to the general consumers.

FUNCTIONS OF THE RETAILER.

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COMMERCE 101.

                                  EXCHANGE.

Hey Guys, It’s a new day to live, learn and make decisions. You have made the decision to learn today and you will not regret it because we are discussing the topic above, so sit back relax and let’s learn today.

EXCHANGE is the process of giving out value in order to have something of value in return. In the olden days Batter was the main system of exchange i.e. good for good, but nowadays one exchange money for goods. Exchange arises because of excess production of goods and services.

INTER-RELATIONSHIP AMONG PRODUCTION, SPECIALIZATION & EXCHANGE.

      Exchange is as a result of Specialization and Production. They are related in the sense that Production is enhanced by the broken down processes that are performed by different people. Division of Labor and Specialization creates room for Mass Production.

Since individuals are not capable of producing all his requirements, the need for exchange arises.

                          HISTORY OF DIVISION OF LABOR.

One of the Forefathers of Economics, Adam Smith who further explained the Theory of Division of Labor in 1776, in his book “The Wealth of Nations.” Adam Smith visited a place where Pins were made and found out that Pin-Making involved eighteen different processes at that time.

He also found out that one man was coordinating all the processes of Pin-Making alone; as a result of this rigorous and slow process he was producing 20pins per day. Adam Smith came to a conclusion that if these Eighteen Pin-Making Processes were handled by different people, more pins will be produced.

      The idea of Division of Labor thought out by Smith was applied as a result, 48,000 Pins were

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COMMERCE 101.

                       DIVISION OF LABOR.

Hey Guys, A New Day it is to learn, understand and to live. Gratitude should Therefore go to God for the Grace to see this day. Today we are concentrating on the above mentioned topic.

Division of Labor is the breaking down of  Production process into smaller duties, in order for it to be performed by more than one person and in a faster way. In Order words, when work is shared among more than one person, it is Division of Labor.

Specialization is the concentration of a worker in the performance of a particular job. A typical example, is when a person goes to the university to become a specialist in Law and then goes forward to defend people in court, that is Specialization.

ADVANTAGES OF DIVISION OF LABOR.

1.    Increase in Output- It provides more hands to do a job and thereby more result will be gotten.

2.     Time saving- It saves time by reducing time used in one process of production. For example, the harvesting of tomatoes for the making of Tomato Paste, if more than one person does it , it will be completed in no time and then it would be easier to move to the next stage of production of tomato paste.

3.     Creation of Employment- when more hands are needed, more employment will be created and more Families will move up the Financial Ladder otherwise called Standard of Living.

4.     Increases Skills- when a person does a thing continuously everyday, he/she becomes an expert at it. So it is no longer a hassle to do your duty.

5.     Encourages Specialization- Division of Labor encourages specialization because when you keep

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FINANCIAL ACCOUNT 101.

MORE ILLUSTRATIONS ON THE SUBSIDIARY BOOKS.

EXAMPLE 1:

Write up the purchases journal of Jason & sons, and post to the ledgers for the month of Sept 2013.

Sept 10-Bought from Coca cola, 12 crates of coke @ N250 each and 5 crates of Fanta @ N150 each. Trade Discount of 20%.

Sept 12-Bought from PZ Ltd, 140 bags of flour @ N20 each and 400 bags of sugar @ N5 each. Trade Discount of 10%.

Sept 14-Bought from Samsung, 2 sets of IPads @ N500 each and 3 sets of LCD TV’S @ N650 each. Trade Discount of 15%.

Sept 16-Bought from Drumsticks Restaurant, 5 packs of Roasted Chicken @ N470 each and 3 Bottles

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FINANCIAL ACCOUNT 101

                                    SUBSIDIARY BOOKS CONTD.

Hey Guys Welcome, hope you tried out what we learnt on your own? The key to being the best is practice, so practice as much as you can. Today we are going to continue from where we stopped Yesterday.

                    RETURNS INWARD JOURNAL.

It is otherwise called SALES RETURN JOURNAL, and is used to record goods previously sold but later returned to the supplier or seller by the customer, for wrong color, wrong type, inferior quality or breakage. In the Ledger the Returns inwards account is debited, while the customer’s account is credited. I t looks like this.

Date	Particulars	F	Details	Total

                     RETURNS OUTWARD JOURNAL.

It is otherwise called PURCHASES RETURN JOURNAL, and is used to record goods returned to the supplier by a seller as a result of one reason or the other, like damages to the goods etc. In the

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COMMERCE 101

                                     PRODUCTION.

Hey  Guys, Today is a new day. We are going to learn something new. We are focusing on the above mentioned topic today, so sit back, relax and learn something today.

PRODUCTION.

Production is any activity engaged in to create goods and services, and to distribute these goods and services till it reaches the final consumer. In order words, It is making of goods and services available to the consumers who are willing to pay for them in order to satisfy human wants. It is also the creation of utility.

STAGES OF PRODUCTION.

There are three stages of production and they include:

1.      PRIMARY STAGE OF PRODUCTION- It is a process of obtaining raw materials/resources from the Land, Sea or River. It is also called EXTRACTIVE STAGE. This mostly involves agricultural produce or Petroleum produce, for example Farming, Fishing, Mining etc.

2.      SECONDARY STAGE OF PRODUCTION- It is the process of turning these raw materials into finished goods by way of Manufacturing. For example, the process Tomato Fruit undergoes in the factory to become Paste that is put in tin as Tin Tomato etc.

3.      TERTIARY STAGE OF PRODUCTION- It is the distribution of finished goods and services to the consumers. The people involved in this are:

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FINANCIAL ACCOUNT 101

THE ACCOUNTING EQUATION & INTRODUCTION TO THE BOOKS OF ACCOUNT.

Hey Guys, Happy Eid-El-Kabir Celebration. Today is a new day and we are going to have fun on the above mentioned Topics.

THE ACCOUNTING EQUATION.

The Accounting Equation is the Fundamental Equation of the entire financial account. In order words, it the beginning of all equations in account as a whole, the Foundation.

1.     Assets are properties of a business. They are things owned by a business and are expected to be of Future Benefit. For example, Motor Van, Furniture & Fitting, Stock etc.

2.     Capital is the Total amount invested by the owner of a business. It is the Net Worth of a business.

3.     Liabilities are amounts of money owed by a business to outsiders. For example, Bank Overdraft, Creditors etc.

Therefore, the account equation is:

Assets= Capital + Liabilities

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FINANCIAL ACCOUNT 101.

         INTRODUCTION TO ACCOUNTING.

Hey Guys, we are starting a new Subject Today. For the Commercial Class People, other subjects will be introduced as time goes on, so sit back and enjoy.

WHAT IS FINANCIAL ACCOUNTING?

   Account can be as the Recording, Classifying, Creating, Summarizing and Communicating of Financial Information to interested Parties, to help in making specific Business Decisions. In Order words, it includes all processes involved in preparing a Financial Document.

Book Keeping is the act of Recording and Classifying Financial Transactions on a Daily Basis into Appropriate Books. It is a Part of Accounting; it is done using the Double Entry System.

IMPORTANCE OF BOOK KEEPING & ACCOUNTING.

1.      Accounting Information can be used for Decision-Making.

2.      It Provides Permanent Records for all Transactions.

3.      It Helps to Ascertain the True Position of the Business.

4.      It Helps to Prevent Fraudulent Practices.

5.      It is used for Tax Assessment.

6.      It Helps to Ascertain the Assets and Liabilities of the Business.

7.      It Shows the Income and Expenditure of the Company.

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COMMERCE 101.

               OCCUPATION & CLASSIFICATIONS.

Hey Guys, Hope you all had a Wonderful weekend? Cos I did, it’s still good to be back today. So let’s get started on our topics for today.

OCCUPATION:

      Occupation is any Economic Activity which people engage in, to create Goods & Services in order to make a Living. In Order words, what a person engages in, to make money as a Salary or Wage. For example, Teaching by Teachers, Banking by Bankers, Selling by Traders and Business People etc.

CLASSIFICATIONS OF OCCUPATION.

Occupation can be classified into three main groups namely:

1.     Industry

2.     Commerce

3.     Services.

INDUSTRY.

This is all the Segments involved in Producing a Good or Service housed under one Umbrella. In Order words, it can be defined as all that concerns the Physical Production of Goods & Services, which include-Extracting Raw Materials and the

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COMMERCE 101.

                        FOREIGN TRADE & AIDS TO TRADE.      

Hey Everyone, Its Been a while-Right?. I know and am sorry it took this long to post again. It’s just that when you start something NEW, you face a lot of oppositions, but not to worry am here now and we will pick up from where we stopped.

So we stopped at Home Trade, Today we continue from FOREIGN TRADE.

FOREIGN TRADE:

Foreign Trade is simply when a business Transaction happens between people living in two or more Countries. For Example, Nigeria as a Country sells Oil to countries like the USA (United States of America), in exchange for money. When we buy things like Clothes, Shoes etc on the internet from London or Paris in exchange for money using our Master Cards, we are engaging in FOREIGN, INTERNATIONAL or EXTERNAL TRADE. Moving on there are types of Foreign Trade, and they include:

1.    Bilateral Trade- which is a type of Trade between only two Countries, like our example above about Nigeria & USA. It is between only (2) Countries.

2.    Multilateral Trade- is a trade between more than two Countries, like a Trade between Nigeria, Ghana & South Africa.

DIVISIONS OF FOREIGN TRADE:

1.    Import: is the act of buying goods from a country. For Example Buying Cars from the US is IMPORT.

2.    Export: is the act of selling goods to another country. For Example Selling Oil to the US as mentioned earlier.

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