Alfred Ajibola
- Fri, 03rd April, 2020 @ 09:40 AM
Topics in Accounts
Characteristics of Double Entry System Examples on the principle of double entry system Advantages and limitations of double entry system Scheme of work, Financial Accounting, SS1, Third Term Scheme of work, Financial Accounting, SS1, Second Term Scheme of work, Financial Accounting, SS1, First Term Differences between Bookkeeping and Accounting Journal explained with its contents, format, characteristics and advantages Bank Wire and Wire Transfer Chart of Accounts Balance Sheet ReconciliationsAcademic Questions in Accounts
According to the principles of the dual entry system, an increase in asset is credited.
A. True
B. False
The followings are true on the double entry system of accounting except _____.
A. Errors can't be made
B. It can be time consuming
C. It can be used as an accounting reference
D. It can be used to control a company's expenditure
E. There is completion of account transaction
F. It isn't difficult to implement
With regards to bookkeeping and accounting, which of the following statement is incorrect?
A. Accounting covers the entire practice of finance management
B. Bookkeeping is a branch of accounting
C. Bookkeeping is a necessary requirement when making financial statement of account
D. Bookkeepers record financial transaction in a chronological order
E. Accountant earn higher salaries than bookkeepers
F. Accounting reports assist business managers in making a more detailed decision
The debited and credited accounts are written in which column of a journal?
A. Date
B. Particulars
C. Folio
D. Ledger
E. Amount
F. None of the above
A journal may also be referred to any of the following except _____.
A. Book of original entry
B. Book of primary entry
C. Book of first entry
D. Initial book
E. Day book
F. Chronological book
Which of the following statement is true concerning bank wire?
A. Another name for bank wire is cash transfer
B. The term 'wire' in bank wire signifies a computer based programmed message sent to a bank customer in regards to their account information, transaction and other important financial notifications
C. The International Bank Account Number (IBAN) must always be involved when carrying out a bank wire process
D. The term bank wire has no significant relationship with wire transfer
E. Cyber criminals cannot utilize bank wire threats like CSRS, phishing and whaling to achieve their fradulent act
F. All the above statements are true
The following are recommendations to follow during the process of balance sheet reconciliation EXCEPT _____.
A. All balance sheet accounts should be reconciled periodically, quarterly or annually
B. Comparing the trial balance of both the payables and receivables with the respective aging schedule
C. Analysis of enteries and relocating them to a sub-ledger if need be
D. Comparing the general ledger trial balance of the account to another source; for instance, a bank statement
E. Analysis of the differences in both accounts and making appropriate correction to ensure the correctness of entered information
F. None of the above
An understanding on the processes and principles of double entry system in accounting is fundamental to every accounting student.
By definition, the double or dual system of accounting is one that shows recorded transactions at both sides (Debit - Dr.) and (credit - Cr.) of the entries with both having equal values. This is summarized in the image below:
Through the records shown in a double entry, we can easily map out the direction of a business. In fact, the accountants or bookkeepers of a business will often record what goes in and out of the business in order to effectively carry out their duty. This dual recordings done by accountants is exactly what the double system of accounting entails; and this must follow certain principles.
Please read on the principles of double entry here.
Below are the advantages of the double system of accounting:
There is completeness of account transactions.
You can read on balance sheet reconciliation here.
It can be used to determine the profit or loss of a company.
Please read on the concept and types of cost here.
It can be used to determine the number of assets and liability.
Please read on the concept of business studies here.
It can be used to control a company’s expenditure.
Please read on business structure (Sole Proprietorship), its advantages and disadvantages here.
It helps businesses to run smoothly by giving accurate information.
Please read on scale of preference and opportunity cost here.
It is not difficult to implement.
It helps a business to understand the price of various commodities.
Please read on the elasticity of supply here.
It prevents account manipulation.
It can be used as an accounting reference.
Below are the limitations or disadvantages of the double entry system of accounting:
Increased usage (and cost) of books of accounts.
The accounting process can become complex.
You can read on the differences between bookkeeping and accounting here.
Mistakes are possible.
Recruitment and payment of a professional may be required.
It can be time consuming.
You can read various examples on the principle of double entry here.
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Amazing facts in Accounts
It is believed that bookkeeping is the only English word to contain three sets of double letters repeatedly
Notable points in Accounts
Below are the limitations or disadvantages of double entry system of accounting:
Increased usage (and cost) of books of accounts.
The accounting process can become complex.
Mistakes are possible.
Recruitment and payment of a professional may be required.
It can be time consuming.
Double entry system of accounting is defined as one that shows recorded transactions at both sides (Debit - Dr.) and (credit - Cr.) of the entries with both having equal values.
Double entry system is also termed as Dual system of accounting.
Bookkeeping can be defined as all the activities that have to do with the orderly classification and recording of financial data or business transaction.
Bookkeeping assist the process of accounting via the taking of an accurate record keeping.
Accountingis a field of study that covers the entire process and practice of managing the finances of an individual or an organization.
In smaller organizations, a bookkeeper’s job may go beyond simple transaction recording, as they may also be involved in the accounting process of the organization. On the other hand, accountants may have to record financial transaction in addition to analyzing financial transaction.
Please read more on bookkeeping and accounting alongside their differences here
Below are the importance of bookkeeping in any organization:
It brings accuracy into the recordings of the daily business transaction.
They provide the information on which financial accounts are prepared.
Aside from its importance in business organizations, it can also be used by nonprofit organizations and individuals.
It can also take record of liabilities, assets and loans. This function of bookkeeping can be crucial for many businesses.
A journal, also called book of original entry or book of primary entry or book of first entry or day book or chronological book is a book where daily transactions are recorded in a chronological order (the order of occurrence).
A journal contains the total record of all transactions made by a company. It can be distinguished into different types which will include:
Sales Journal: For recording inventory and sales.
Cash Receipts Journal: For recording money received from sales or cash inventory.
Purchase Journal: For recording all purchases made by a company.
General Journal and so on.
The content of a journal include the followings:
The date when the transaction occurred.
The description of the transaction.
Debits
Credits
Accounts affected