Skip to main content

ACCOUNTING EQUATION IT Notes

By


ACCOUNTING EQUATION

For every business enterprise, the sum of the rights to the properties is equal to the sum of the properties owned.  The properties owned by a business are called assets.  The rights to the properties are called equities.
Assets and equities are the basic elements of accounting.  We can express these elements by an equation known as “Accounting Equation”.
Assets = Equities

Or

Assets = Liabilities + Owner Equity.

CASH BOOK

A book in which we record all the transactions relating to cash is called cashbook.  Cash received from sales of goods, services or from any other source is recorded on the debit side of the cash book while payments made for the goods / assets purchased and expenses are recorded on the credit side.
Generally there are three kinds of cashbook.
·         Simple Cash Book / One Column Cash Book
·         Cash Book With Discount Column
·         Cash Book With Discount and Bank Columns.

CONTRA ENTRY

If an amount is entered on the debit side of an account, and the exact amount is again entered on the credit side of the same account, it is called a contra entry.

SPECIAL JOURNAL

In case of a small concern all the transactions of the business can be recorded in one journal.  But if the volume of transactions is large and it requires two or more bookkeepers, the use of a single journal is not feasible.  Therefore separate journals are used for recording the transactions.  This is called special journal.
The journals usually for recording the purchase and sale of merchandise are as under.
·         Purchase journal
·         Sales journal
·         Purchases Return and allowance journal
·         Sales return and allowance journal.
1.    Purchase Journal
All the invoices for the purchases of merchandise are recorded in a book called as purchases journal.
2.    Purchases Return And Allowance Journal
When merchandise purchased contains some defect in quality or due to any other reason, they are returned back to the supplier, these are called purchase return.
3.    Sales Journal
All the invoices for sales of merchandise are recorded in a book as sales journal.
4.    Sales Return And Allowance Journal

Merchandise sold on credit maybe returned by the customers or the customer may be allowed any reduction in prices due to short supply, etc.  This is called sales return and allowances journal.
Labels:

Comments

Post a Comment

Popular posts from this blog

Chrysler Deletes Its Dating Apps, Decides To Remain Single For Now

By
They say you can’t have a healthy relationship until you’re happy with yourself. That appears to be the new mantra for Fiat Chrysler: After several attempts to woo General Motors and more recently Volkswagen , the carmaker’s top executive says he plans to ditch his lovelorn ways to concentrate on his company’s bottom line.  Bloomberg reports that CEO Sergio Marchionne has turned his focus to eliminating FCA’s debt rather than eliminating its single status. Marchionne has set a goal of erasing FCA’s debt by 2019, the same year he’s set to retire. To do that, he says the company needs to do a little work on itself. “We need to be very careful that we don’t start unrealistic dreams about consolidation as we are on our way to achieve historically important results and a debt-free position,” Marchionne told investors at the carmaker’s annual meeting in Amsterdam, as reported by Bloomberg. “We are not at a point of time to discuss any alliance.” Yes, you heard that right: The man w...
Post a Comment
Read more

Study Claims 43% Of “Wild” Salmon In Stores & Restaurants Isn’t Wild At All

By
That wild salmon entrée calling to you from the menu at dinner might not be all it’s advertised. In fact a new study released Wednesday found evidence of mislabeling in nearly half of all salmon sold in restaurants and grocery stores.  The study [ PDF ] from international environmental advocacy group, Oceana, analyzed 82 salmon samples from restaurants and grocery stores, finding that 43% of the products were mislabeled. DNA testing confirmed that 69% of the mislabeled product consisted of farmed Atlantic salmon being sold as wild-caught product. According to the report, consumers satisfying their salmon craving in restaurants are misled about 67% of the time, while those who buy their seafood in a grocery store are misled 20% of the time. “Americans might love salmon, but as our study reveals, they may be falling victim to a bait and switch,” Beth Lowell, senior campaign director at Oceana, said . “When consumers opt for wild-caught U.S. salmon, they don’t expect to get a far...
Post a Comment
Read more

Introduction to Biology (IX Biology Notes Chapter 01)

By
Science: Our universe operates under certain principles. For understanding of these principles, the experiments are done and observations are made; on the basis of which logical conclusions are drawn. Such a study is called "Science". In brief science is the knowledge based on experiments and observations. Biology: The Scientific study of living organisms is called Biology. The word biology is derived from two Greek words "bios" meaning life and "logos" meaning thought, discourse, reasoning or study. It means that all aspects of life and every type of living organism are discussed in biology. Branches of Biology: Biology is divided into following branches: Morphology The study of form and structure of living organisms is called morphology. It can be further divided into following two parts: 1. The study of external parts of living organism is called external morphology. 2. The study of internal parts of living organism is calle...
Post a Comment
Read more