REVISION OF FINANCIAL ACCOUNT 101 SO FAR.

Hey Guyz, Happy Monday. Easter is fast approaching when Jesus was crucified for our sins upon the cross of Calvary…. I pray God opens our eyes to see just how much he loves us…..

Okay so today we face Account and we are revising all we have done so far, in order to remind ourselves of the foundation of Account.

BOOK-KEEPING we said is the act of receiving and classifying financial transactions in a systematic way, in order to show the financial position of a business at anytime. It is carried out by using the Double Entry System.

ACCOUNTING is the recording, classifying, creating, summarizing and communicating of financial information to interested parties to help in making specific business decision.

It includes the design of the financial information system, preparation of financial statements, development of forecast and analysis, and interpretation of
accounting information to help decision making.

DIFFERENCES BETWEEN BOOK-KEEPING AND ACCOUNTING.

1. In Book-keeping, to be a proficient Book-keeper it requires a few weeks/months, where as to become a professional accountant requires several years of study and experiments.

2. Accounting goes beyond recording of Transaction, whereas Book-Keeping is a small part of the field of Accounting.

FORMULAR: Assets= Capital + Liabilities.

For Details on the History of Accounting click on this link http://edu-made-easy.blogspot.com/search?updated-max=2013-10-15T17:29:00%2B01:00&max-results=7&start=15&by-date=false

INTRODUCTION TO THE BOOKS OF ACCOUNT.

JOURNAL is a book of primary entry into which transactions are entered on a daily basis, and then classified into debit and credit sides and finally posted to the ledger.

JOURNAL-----------DEBIT/CREDIT SIDES--------------LEDGER

Transactions we said are done into two ways: a) Cash Transaction. b) Credit Transaction.

The Books necessary in the recording of Transactions are: a) Principal Books. b) Subsidiary Books.

Under Subsidiary Books we have:

a. Sales Day Book.

b. Purchases Day Book.

c. Returns Inward Journal.

d. Returns Outward Journal.

e. Petty Cash Book.

f. Bills Book.

g. Cash Book.

h. Journal Proper.

Discount we said is the reduction in the price of goods, to encourage bulk purchase and prompt payment. Types of Discount are- Trade Discount, and Cash Discount.

SALES DAY BOOK is for recording goods sold on credit to customers. This means that cash sales are not recorded in this book.

PURCHASES DAY BOOK is used to record goods purchased on credit from suppliers. Cash Purchases are not recorded in this book.

RETURNS INWARD JOURNAL is used to record goods and services previously sold but later returned to the customer due to damage or wrong color etc.

RETURNS OUTWARD JOURNAL is used to record goods and services bought from suppliers and returned back as a result of one reason or the other.

ILLUSTRATION:

Write up the Sales day, Purchases day, Returns inwards and Returns Outwards books of Tolu & Sons Ltd for the year ended 31^st dec. 1998 and post to the ledgers.

Dec 2^nd – Credit Sales: T. Thomas N 56, B. Becky N 148.

Dec 4^th – Credit Purchases: P. Henry N 144, H. Harry N 25.

Dec 8^th – Goods Returned by us (Returns Outwards/ Purchases Return): P. Henry N 12, B. Becky N 23.

Dec 10^th – Goods Returned to us (Returns Inwards/Sales Return): T. Thomas N 5, H. Harry N 11.

Date	Particulars	F	Amount
Dec 2nd	T. Thomas		56
	B. Becky		148
Dec 4th	P. Henry		144
	H. Harry		25
Dec 8th	P. Henry		12
	B. Becky		23
Dec 10th	T. Thomas		5
	H. Harry		11
			424

CASH BOOK is a double entry account used to record cash transactions and also transactions with the Bank.

PRINCIPLE OF DOUBLE ENTRY SINGLE, DOUBLE AND THREE COLUMN CASHBOOKS.

LEDGER is the principle book which contains permanent records of all the transactions of the business in a classified/ summarized form.

Remember the rule that states “For Every Credit Entry in an Account, There must be a corresponding Debit Entry in another account”.

EXAMPLE: This is a typical example of a Ledger.

Dr							Cr
Date	Particulars	F	Amount	Date	Particulars	F	Amount

DIVISIONS OF LEDGER:

1. Personal Ledger.

Under which we have- Sales Ledger and Purchases Ledger.

2. General Ledger.

Examples we have- Expenses Account and Income Account.

3. Private Ledger.

Examples we have- Drawings Account and Capital Account.

For more on them, click on this link http://edu-made-easy.blogspot.com/search?updated-max=2014-04-09T20:23:00%2B01:00&max-results=7

This concludes our session for today; we will continue tomorrow by God Grace. I Hope you had fun learning and revising these topics… For your comments leave them below and for your questions send them to- dividiamond@yahoo.com. Until we meet again remain ever blessed and don’t forget you are for SIGNS & WONDERS. God Bless u.