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ACCOUTING ESSENTIALS - Coggle Diagram
ACCOUTING ESSENTIALS
Key accounting term
Chart of Accounts
Used in the general ledger
Depending on the size
List as few as 30 accounts
Or as many as thousands
Double Entry Bookkeeping
Recorded in at least 2 accounts
the other account is credited
one account is the debited
All debits must equal credits
Account
Classified
Various accounts
Accounting Practice
implementation of accounting polices
Carry out their daily work
Accountants
Auditors
Entry
Recorded
Written form
Accounting policies
Principles
Procedures
specific rules
Consistently
Journal (book of original entry)
Appropriate
General ledger
Debit and Credit Entries
debit and credit
the same amout
Transaction
Financial position
records in the book of accountant
Journal
Ledger
Ledger (Book of Final Entry)
Complete record of financil transaction
Financial Records
Preparing
Examining
Maintaining
Inspecting
Keeping
Interpreting
Accounting records
Fiscal year
Twelve-month
Doesn't have to coincide with the calendar year
Accounting Cycle
Preparing an unadjusted trial balance
drawn up at the end accounting period
an internal company document
arranged in one report
extracted from the ledger
Making adjusting entries
update
summarized
started in one accounting period and finished in a later period
Posting entries to the general ledger
The debit and credit values of journal entries are transferred to relevant ledger accounts
caculated
Preparing an adjusted trial balance
created after the adjusting entries
made and post to ledger accounts
list of balance of ledger accounts
Recording transactions into the general journal
The first step
exemine
decided what accounts will be affected
The second step
decided what accounts will be
debited
credited
The third step
Actually documents the transaction in a journal
journal
a book ( paper or electronic)
transactions are first recorded.
Organizing the accounts into the financial statements
Financial statements can be prepared
update and equality
between debits and credits
The end- products of accounting process
Gather source documents for all transactions
source documents
the Evidence that the transaction has occurred
records of financial transactions
examples
bank statements
deposit slips
cash receipts
Cheques
Cash register tapes
Customer invoices
suppliers invoices
purchase orders
Payroll reports
Employee time card
Closing the books
The process of transferring balances from temporary to permanent accounts
Purpose
start a new cycle
detect errors
measure a company's business performance
Getting back to basics
Accounting software
Perform end-of-period procedures
Check for errors in classification
Adjust for errors
Count inventory
Typicial transactions
Sales
Purchases
Payroll
Prpare an adjusted trial balance
source documents
Payroll Master Files
Time cards
Purchase invoices
Credit card statements
Close the books at the end of every fiscal year
Types of Business Organizations
General and Limited Partnership
General partnership
profit and liabilities equally
partners manage,assume legal debts and obligations
Limited partnership
both general and limited partners
partners are only liable for the entity's debt to thr extent of their investment
Private Limited Company
incorporated
its shares are not offered to the general public
Sole Proprietorship(Sole Trader)
Easy to establish and run
subject to very little governmental
Unincorporated
not liable to corporate taxes
Public Limited Company
'going public' or 'floating the company'
securities are traded on stock exchange
shares to new investors
can be bought and sold by anyone
Year-End Closing Procedures
refers
transferring balance
temporary accounts
are not carried over from one accounting period to another
zero balance
perform year-end closing
ensure accounting records are accurate
prepare a company file for the coming year
enable prepare of accurate financial statemants
A typical closing procedures checklist
purging (removing)
recording adjusting entries
checking for errors
preparing an adjus trial balance
counting inventory
organizing
reconciling
closing the books
The concept of account
an acount
summarized record of transactions related to a person or a thing
2 sides
Debit (Dr)
Credit (Cr)
a ledger account
total debits and total credit
Types Of Accounts
The balance sheet
Liabilities
Equity
Assets
The income statement
Revenue and other income
Expenses