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
A chart of accounts (CoA) is defined as a list of separate accounts a company owns, alongside the account type and balance which are shown in an order of appearance in the company's financial statements. Meanwhile, recall that an account is a unique record for assets, liabilities, equity, revenue and expenses.
It is worthy of note to state that the chart of accounts is an official accounting term that display accounting information such as balance-sheet accounts and income-statement accounts.
The orderly arrangement of each account in the chart of accounts shows that balance sheet accounts are listed first. These will include assets, liabilities and shareholders' equity. The accounts in the income statement revenues and expenses follows through.
Since an account is a unique record that represents each type of asset, liability, equity, revenue and expense; the chart of accounts is therefore a financial tool used by organizations to provide a complete listing of every account in the general ledger of a company, which are often divided into subcategories.
Each chart in the list of accounts is assigned an identity number in digits to help identify the account type. In general, a chart of accounts contain the accounts' names, identification codes and their brief description.
Understand that a small sized company can also have variety of accounts in its chart of accounts. Generally, the size and complexity of a company will determine its chart of accounts size. In this regard, accounting softwares have shown to be quiet efficient, accurate and fast in creating and maintaining chart of accounts.
The assets account in a small sized organization may include sub-accounts under the assets account. These will include:
Cash
Savings
Buildings
Vehicles
Prepaid insurance
Undeposited funds
Account receivable
Inventory assets
Petty cash balance
With regards to liabilities account, they may have the following sub-accounts:
Accrued liabilities
Payroll liabilities
Notes payable
Accounts payable
Company's credit card
Shareholders' equity account can be divided into the following accounts:
common stock
preferred stock
Retained earnings
The accounts of the income statement, alongside the revenues and expenses accounts could be further broken into the following accounts:
Operating revenues
Operating expenses
Non-operating revenues
Non-operating losses
It is highly recommended that the pattern of a company's chart of accounts should remain the same regardless the year. This will present an easy and accurate means of each account's comparison from time to time. However, it should be stated that reporting requirements may affect the structure of the company's chart of accounts.
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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