Topics in AccountsCharacteristics 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 Reconciliations
Academic Questions in Accounts
According to the principles of the dual entry system, an increase in asset is credited.
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?
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
Let me begin by stating that a bank wire does not involve the transfer of money or payment. The term 'bank wire' refers to a messaging system that allows banks to communicate the various events occurring on a clients’ account. As an instance, when your account is credited by someone, you may get a notification from your bank with details concerning such transaction. Such notification(s) from the above instance is a function of bank wire.
The term 'wire' in bank wire signifies a computer based programmed messages that are sent to the bank customers regarding their account information, transactions and other important financial notifications. These messages are always secured and may be encrypted along the wire.
Please read on the top programming languages to learn here.
Another important aspect of bank wire is to inform the bank or financial institution about an event on a customer’s account. In this regard, if someone had credited your account from a different financial institution, your bank will be notified with the details of such deposits. Your bank getting this notification is a function of the bank wire.
Have you ever transferred money to (or received money from) someone in another country without going to a bank. If yes, then you are very likely to do it over a network (that is, the internet).
A wire transfer is simply an electronic transfer of money across a network.
We live in a digital age where millions of people safely send and receive money from the comfort of their homes. It is important to note that no physical exchange of money happens between the banks in wire transfer. Rather, there is transfer of information concerning the sender and the receiver. Such information entails the sender’s name, receiver’s name, bank account number and the amount of money sent or received.
Importantly, the International Bank Account Numbers (IBAN) may be involved in some complex bank wire transfers.
Please read on the methods of payments through commercial Banks here.
In reality, our lives have been made much easier with the introduction of wire transfer. However, a major disadvantage faced is the involvement of cyber criminals whom may interfere with the processes of wire transfer, thus diverting funds into their own accounts.
Note: Cyber threats are on the high as many online financial services are negatively impacted daily.
Several methods have been implemented by cyber criminals to break into various wire transfers (online transactions). Some of these include:
Cross Site Request Forgery (CSRF or XSRF) or Sea Surf: In a CSRF attack, an attacker abuses the trust that a web application has with an authenticated victim’s browser.
Phishing: It occurs when an email with a clickable link is sent to a person or an organization. If the link within the email is clicked, a person may be redirected to a fake website and may enter his or her financial details into such criminal website.
Whaling: Whaling is similar to phishing but the difference is the target. In whaling, highly placed executives like the Chief Executive Officers (CEO) and Executive Directors (ED) becomes the target of the clickable scam email.
Denial of Service (DOS): This attack will prevent the legitimate user from assessing an application or a system. One way the cybercriminals go about this is to enter the wrong password to an account many times until the legitimate user is blocked out of the account. Also, the criminals may block network connectivity to a legitimate financial website while simultaneously directing users to a fake website where they can collect the financial details of these users.
Please read more on computer networks here.
Backdoor attacks: These attacks can come in the form of keyloggers, trojan horses and viruses. One way an attacker uses a keylogger is by placing a small device on the client’s computer. The keylogger will capture every keystroke entered on such computer by whomever operates it. (The user may have entered financial details while using such computer). The attacker gets all the entered keys through a network backdoor created by the keylogger.
Direct Attacks: Includes malicious software like viruses and trojan horses that infects computer systems. These malware may copy or modify a system’s financial information after gaining access into it.
Please read on the internet of things here.
Individuals are target for cyber attacks although large financial institutions are even bigger targets. Most financial institutions attempt to prevent financial fraud by employing cyber security analyst (CSA) and certified ethical hackers (CEH)
In some advanced countries like the USA and Switzerland, it is very difficult to scam a person via wire transfer. This is the case because you must be registered by your bank and the law enforcement agency in order to run a wire transfer. With these security measures, even when the scam transfer was successful, there is a 99% chance that such cyber criminals will be caught.
Importantly, one has to be careful when a stranger intends to use his or her bank account for wire transfer because the funds intended to be transferred may be stolen.
Also, if money is wired to an institution that pays out money in cash, for instance, western union; it becomes somewhat difficult to verify whether the ideal recipient got the money because anyone with a fake identity card will be able to withdraw such money.
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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.