Business Accounting

Accounting Cycle (Accounting Process)

noreply@blogger.com (Muhammad Younus Morty) — Fri, 17 Jul 2009 06:17:00 +0000

The accounting procedures described the accounting cycle may be summarized in eight step as follows.

1. Journalize Transaction (General Journal):
Enter all transaction in the general journal thus creating a chronological record of event.

2. Post to Ledger Accounts:
Post debit and credit from the general journal to the proper ledger accounts, thus creating a record classified by accounts.

3. Prepare a Trial Balance:
Summarizing the ledger accounts and testing the recording accuracy.

4. Adjusted Entries:
Draft adjusting entries in the general journal and post to ledger accounts.

5. Adjusted Trial Balance:
Prove again the equality of debits and credits in the ledger.

6. Financial Statements (Income Statement):
An income statement is needed to show the results of operation for the period. A balance sheet is needed to show the financial position of the business at the end of the period.

7. Balance Sheet:

8. Journalize and post closing entries:
the closing entries clear the revenue, expense and drawing accounts, making them ready for recording the event of the next accounting period. the closing entries also transfer the net income or loss of the completed period to the owner's capital account.

9. Post Closing Trial Balance:
This step ensures that the ledger remains in balance after posting of the closing entries.

these procedures represent a complete accounting cycle. some time it vary in some accounting books but basics are same.

Expenses

noreply@blogger.com (Muhammad Younus Morty) — Mon, 13 Jul 2009 05:56:00 +0000

Any amount incurred (paid / payable ) for running business is called expenses.

Purchase
Electricity Expenses
Salaries / Wages Expenses
Insurance Expenses
Rent Expenses

Revenue / Income

noreply@blogger.com (Muhammad Younus Morty) — Mon, 13 Jul 2009 05:56:00 +0000

Total receipt / receivable from earning are called revenue.
Total excess of expenses in revenue is called income.

Sale
Commission Revenue / Income
Interest Revenue / Income
Rent Revenue / Income
Services Revenue / Income
Fee Revenue / Income

Owner Equities

noreply@blogger.com (Muhammad Younus Morty) — Mon, 13 Jul 2009 05:55:00 +0000

The excess over liabilities in the assets is called owner's equity / capital / proprietor.
Capital = Assets - Liabilities.

Liabilities

noreply@blogger.com (Muhammad Younus Morty) — Mon, 13 Jul 2009 05:53:00 +0000

An amount of money in a company that is owed to someone and has to be paid in the future, such as tax, debt, interest, and mortgage payments

Quality of Liabilities,

Due / obligation in result of past events
To be settled in future.

Type of Liabilities.

Current Liabilities those should be settled within year.
Non-Current those will be settled after year.

Current Liabilities

Account Payable
Note Payable
Bank Loan
Bank Over Draft
Unearned
Short Terms Liabilities
Accrued Expense

Non-Current Liabilities

Mortgage Payable
Debenture Payable
TFC & PTC.
Long Term Liabilities.

Assets

noreply@blogger.com (Muhammad Younus Morty) — Mon, 13 Jul 2009 05:50:00 +0000

A resource control by the entity in result of past event and from which the future economic benefit are expected to flow to the entity.

Quality of Assets.

Own due to past event.
provide economic benefits in future.

Type of Assets.

Current Assets: Those assets gives benefits within one year.
Non-Current / Fixed Assets: give benefits for more then one year.

Current Assets:

Cash in Hand
Cash in Bank
Account Receivable.
Note Receivable
Merchandise Inventory
Supplies
Prepaid
etc

Non-Current /Fixed Assets:

Tangible

Land & Building
Furniture & Fixture
Plant & Machine
Equipment
Vehicle

Intangible

Goodwill
Copy Right
Trade Mark
Patent
Software

Head Of Accounting

noreply@blogger.com (Muhammad Younus Morty) — Mon, 13 Jul 2009 05:45:00 +0000

Heads of Accounting:

Assets
Liabilities
Owner Equities (Capital or Proprietor)
Revenue (income)
Expenses

Accounting Equation

noreply@blogger.com (Muhammad Younus Morty) — Mon, 13 Jul 2009 05:44:00 +0000

The Accounting Equation is:
Assets = Liabilities + Owner's Equity + (Revenue - Expenses)

What is Accounting?

noreply@blogger.com (Muhammad Younus Morty) — Fri, 03 Jul 2009 10:44:00 +0000

There are deferent definition about Accounting but all make same sense.

1). Accounting is Language of *Business.
2). The recording, classifying, summarizing and interpreting in a significant manner and in terms of money, transactions and events of a financial character.

I personally agreed with both.

*Business: there are many Definitions of Business but basic & simple Definitions of Business is Exchange of Goods & Services for Profit.
*Transactions : Exchange of Value.

About Me

noreply@blogger.com (Muhammad Younus Morty) — Fri, 03 Jul 2009 05:11:00 +0000

I Started my education after 8 years again from B-Com I . Main topic of B-Com (Business Commerce) is Accounting. Due to impotence of this topic i try to search on net about some good learning resources. But didn't found what i wanted. Anyway i don't blame that there is no source out there. There should be but not coming in my search. As per real counting its my 3rd year in Commerce. when i completed my Intermediate (2 years) before 8 years (in 2000) after that i didn't got chance to complete it so i left there now i am starting again in 2009 from B-Com I. As now i m working on blogs plus i have good knowledge about computer so i can make more easy work for those who are searching about it. i will try to make those formats in Microsoft Excel form so you can download it. All this will not be in one shot this will go as my study go Step-By-Step.