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Answer Upon - Classification of Accounts - Hints for Journalizing - Advantages of Journal
The old image of the accountant might be best illustrated by Bob Cratchit sitting on his stool in the money changing firm of Ebeneezer Scrooge. He sits in front of his massive ledger book painstakingly entering figures with a stubby pencil. This does not reflect the current profession of Accounting. While the principles of Accounting might have remained much the same, the computer has revolutionized the way that these principles are applied. Computer training is essential to the accountant of today.In order to successfully complete any level of Accounting education will require being familiar with basic computer principles. Computer classes are a basic requirement for most professional training programs and Accounting is certainly one of these. Still, when the Accountant begins employment, more training is going to be needed. Each individual organization is going to have specific systems and training is going to be needed to bring the new Accountant online to these.Computer based training is one of the best ways to accomplish this goal. Often called CBT, Computer based training uses the Accountants actual computer as a training aide. The CBT programs are run right on the same unit that the Accountant will be using to do his work. The ability of a CBT training program to work through a training problem in a step by step manner using the actual visual screens used in the real application makes them extremely effective. The key to choosing the right computer training program is the matching of it to the actually spreadsheet
1. Treatment of cash/credit transaction.
Read carefully the following transactions:
(i) Purchased goods for Rs. 1,200 cash. . (ii) Purchased goods for Rs. 1,200. (iii) Purchased goods for Rs. 1,200 from Arun. (iv) Purchased goods for Rs. 1,200 from Arun on cash.
Transaction (i) and (iv) are clear as it has been specifically stated that purchases have been made on cash. Thus the entry is :
Purchases account Dr. 1,200 To Cash ac
Autodesk buys Alias, a privately held developer of three-dimensional graphics technology, for $182 million in cash. Toronto-based Alias posted revenues of $83 million for the year ended June 30. Its customers include car makers BMW and General Motors Corp. and game maker Nintendo. Alias is a leader in the Industrial Design Tool category, and also has offerings in 3D Animation / Entertainment Graphics Tools, where it competes with Autodesk.Just about a year back, Alias was spun out of SGI by Accel-KKR in a deal valued at $57.5 Million (1X revenue; 7X net income).Good deal for Accel-KKR, for sure. Whom else is it a good deal for?Well, it is a very bad deal for Adobe, whose 3D strategy is virtually non-existent. As THE leader in Content Production Tools, it is rather strange that Adobe sat in the sidelines, watching Autodesk walk away with Alias, strengthening its already strong 3D story.There is only one industrial strength 3D technology (with an independent kernel) left in the market now ... think3.I guess there is only one way left for Adobe to enter the 3D market, but if Autodesk rolls up the 3D space altogether before Adobe has a chance to act ... well then it’s game over!
Accounts recording transactions relating to individuals or firms or company are known as personal accounts. Personal accounts may further be classified as :
(1) Natural person's personal accounts: The accounts recording transactions relating to individual human beings e.g., Anand's A/c, Remesh's A/c, Pankaj's A/c are classified as natural person's personal accounts.
(2) Artificial person's personal account: The accounts recording transactions relating to limited companies. bank, firm, institution, club. etc. e.g. Delhi Cloth Mill; Hans Raj College; Gymkhana Club are classified as artificial persons' personal accounts.
(3) Representative personal accounts: The accounts recording transactions relating to the expenses and incomes are classified as nominal accounts. But in certain cases due to the matching concept of accounting the amount, on a particular date, is payable to the individuals or recoverable from individuals.
Such amount (a) relates to the particular head of expenditure or income and (b) represents persons to whom itis payable or from whom it is recoverable. Such accounts are classified as representative personal accounts e.g. "Wages Outstanding Account", Pre-paid Insurance Account. etc.
Real Accounts
The accounts recording transactions relating to tangible things (which can be touched, purchased and sold) such as goods, cash, building. machinery etc., are classified as tangible real accounts.
Whereas the accounts recording transactions relating to. intangible things (which do not have physical shape) such as goodwill, patents and copy rights. trade marks etc., are classified as intangible real accounts.
Nominal Accounts
The accounts recording transactions relating to the losses, gains. expenses and incomes e.g., Rent, salaries, wages, commission, interest, bad debts etc. are classified as nominal accounts. As already discussed, wherever a nominal account represents the amount payable to or receivable from certain persons it is known as representative personal account.
Rules of Debit and Credit (classification based)
1. Personal Accounts: Debit the receiver, Credit the giver (supplier)
2. Real Accounts: Debit what comes in, Credit what goes out
3. Nominal Accounts: Debit expenses and losses, Credit incomes and gains.,
Hints for Journalizing
The following discussion will help in diagnosing the transaction with a view to find out which accounts are relevant for passing the journal entry.
1. Treatment of cash/credit transaction.
Read carefully the following transactions:
(i) Purchased goods for Rs. 1,200 cash. . (ii) Purchased goods for Rs. 1,200. (iii) Purchased goods for Rs. 1,200 from Arun. (iv) Purchased goods for Rs. 1,200 from Arun on cash.
Transaction (i) and (iv) are clear as it has been specifically stated that purchases have been made on cash. Thus the entry is :
Purchases account Dr. 1,200 To Cash acc
Big business understands the leverage and reach available through Joint Ventures. H&R Block Inc. and 7-Eleven Inc. signed a three-year agreement Wednesday that enables Block customers to cash refund loan checks at 1,100 7-Eleven stores in the United States. Don’t create a competency or distribution channel - borrow one! Share the love, as it were.Online dating is growing in popularity. And people who meet online typically like to meet for the first time in a coffee house like Starbucks. Armed with that data, Starbucks teamed with Yahoo! Personals to produce an "Espresso Dating Guide" that can be found exclusively online at http://personals.yahoo.com/espressodating. The guide offers advice such as what to wear on a first date, what to talk about and, if necessary, how to end the date gracefully. Starbucks is running a print ad campaign to support the online site.The ego-driven, “Lone Ranger” mentality of the typical small to medium business owner is expensive and risky. Big business has been using Joint Ventures for a long time because they have the ability to be objective, bottom line oriented and unthreatened. Now it’s time for small and medium businesses to benefit as well. After the Joint Venture Broker Bootcamp I presented in Toronto on Sunday, one of the Delegates, the owner of a well known eatery on Bloor street, reacted fast and immediately started arranging Joint Ventures that will bring him serious profit with very little risk and negligible cost.The good news is that you don’t even need a business to ben
(3) Representative personal accounts: The accounts recording transactions relating to the expenses and incomes are classified as nominal accounts. But in certain cases due to the matching concept of accounting the amount, on a particular date, is payable to the individuals or recoverable from individuals.
Such amount (a) relates to the particular head of expenditure or income and (b) represents persons to whom itis payable or from whom it is recoverable. Such accounts are classified as representative personal accounts e.g. "Wages Outstanding Account", Pre-paid Insurance Account. etc.
Real Accounts
The accounts recording transactions relating to tangible things (which can be touched, purchased and sold) such as goods, cash, building. machinery etc., are classified as tangible real accounts.
Whereas the accounts recording transactions relating to. intangible things (which do not have physical shape) such as goodwill, patents and copy rights. trade marks etc., are classified as intangible real accounts.
Nominal Accounts
The accounts recording transactions relating to the losses, gains. expenses and incomes e.g., Rent, salaries, wages, commission, interest, bad debts etc. are classified as nominal accounts. As already discussed, wherever a nominal account represents the amount payable to or receivable from certain persons it is known as representative personal account.
Rules of Debit and Credit (classification based)
1. Personal Accounts: Debit the receiver, Credit the giver (supplier)
2. Real Accounts: Debit what comes in, Credit what goes out
3. Nominal Accounts: Debit expenses and losses, Credit incomes and gains.,
Hints for Journalizing
The following discussion will help in diagnosing the transaction with a view to find out which accounts are relevant for passing the journal entry.
1. Treatment of cash/credit transaction.
Read carefully the following transactions:
(i) Purchased goods for Rs. 1,200 cash. . (ii) Purchased goods for Rs. 1,200. (iii) Purchased goods for Rs. 1,200 from Arun. (iv) Purchased goods for Rs. 1,200 from Arun on cash.
Transaction (i) and (iv) are clear as it has been specifically stated that purchases have been made on cash. Thus the entry is :
Purchases account Dr. 1,200 To Cash ac
Should you gotten hundreds of emails and wondered how do they get into your inbox? You might think that someone you subscribed with had sold your email for a buck profit.Well. dear valued reader, you're wrong in that aspect. No one in his or her right mind. Or any Internet vendor will commit such horrendous and stupid act. Why? Insomuch as an opt-in lists is a precious asset for anyone doing business on the Internet.Let's say I'm an Internet user and I just got myself a new Internet account with an email address for my friends and family to get in touch. Now this is my personal and private email address. When a person decides to give that email address away to someone else, they expect that their privacy to be respected... That's why we got a privacy act.I like to give examples so you can get an idea what users on the Internet go through after they surrender their email address to a Safelists . What is a Safelists?? A Safelists is a group of people who let agreed to receive email opportunities from along with members in return for sending their own fortuity to all members.Back to the example. We are going to call this user "Joe". When Joe is surfing the Internet he finds something that call his attention, but to get more information he has to give up that private and personal email address to someone that is not a family member or a friend.After singing in on the subscription box, next thing it happens is that Joe gets a confirmation email asking him to confirm his email address. All Safelists a
Real Accounts
The accounts recording transactions relating to tangible things (which can be touched, purchased and sold) such as goods, cash, building. machinery etc., are classified as tangible real accounts.
Whereas the accounts recording transactions relating to. intangible things (which do not have physical shape) such as goodwill, patents and copy rights. trade marks etc., are classified as intangible real accounts.
Nominal Accounts
The accounts recording transactions relating to the losses, gains. expenses and incomes e.g., Rent, salaries, wages, commission, interest, bad debts etc. are classified as nominal accounts. As already discussed, wherever a nominal account represents the amount payable to or receivable from certain persons it is known as representative personal account.
Rules of Debit and Credit (classification based)
1. Personal Accounts: Debit the receiver, Credit the giver (supplier)
2. Real Accounts: Debit what comes in, Credit what goes out
3. Nominal Accounts: Debit expenses and losses, Credit incomes and gains.,
Hints for Journalizing
The following discussion will help in diagnosing the transaction with a view to find out which accounts are relevant for passing the journal entry.
1. Treatment of cash/credit transaction.
Read carefully the following transactions:
(i) Purchased goods for Rs. 1,200 cash. . (ii) Purchased goods for Rs. 1,200. (iii) Purchased goods for Rs. 1,200 from Arun. (iv) Purchased goods for Rs. 1,200 from Arun on cash.
Transaction (i) and (iv) are clear as it has been specifically stated that purchases have been made on cash. Thus the entry is :
Purchases account Dr. 1,200 To Cash ac
Retail fasteners are available at any hardware store in the market and on the Internet. There are myriad varieties of fasteners ranging from tiny washers to huge bolts and nuts that are used in industries. Fasteners can be made from plastic and steel and the use that they are put through dictate the type of raw material used for manufacturing them.Other types of fasteners (according to their functions) include anchors, bits, bolts, nuts, panel fasteners, and pipe plugs. Fasteners are usually very cheap but it is advisable to buy good quality fasteners as the structures made from these literally hinge on these fasteners. There have been many inventions and innovations in this industry and more and more inventions are being made as new building structures are erected.The price of a fastener depends upon the type and make of the same. A titanium fastener is costlier compared to a stainless steel one and industrial fasteners are more expensive and heavy compared to fasteners used in residential buildings. The price of a fastener also depends upon the company that manufactures them. An international company that is reputed sells quality fasteners at higher rates compared to a domestic one.Fasteners that are used in airplanes cannot be found in retail shops but have to be custom made in order to withstand the extreme weather conditions and low pressures at high altitudes. Fasteners that are used in fighter planes undergo microscopic scrutiny because the life of the pilot and the aircraft depend on the fasteners used in
Rules of Debit and Credit (classification based)
1. Personal Accounts: Debit the receiver, Credit the giver (supplier)
2. Real Accounts: Debit what comes in, Credit what goes out
3. Nominal Accounts: Debit expenses and losses, Credit incomes and gains.,
Hints for Journalizing
The following discussion will help in diagnosing the transaction with a view to find out which accounts are relevant for passing the journal entry.
1. Treatment of cash/credit transaction.
Read carefully the following transactions:
(i) Purchased goods for Rs. 1,200 cash. . (ii) Purchased goods for Rs. 1,200. (iii) Purchased goods for Rs. 1,200 from Arun. (iv) Purchased goods for Rs. 1,200 from Arun on cash.
Transaction (i) and (iv) are clear as it has been specifically stated that purchases have been made on cash. Thus the entry is :
Purchases account Dr. 1,200 To Cash ac
Everywhere you look today, you see them. The logos are plastered all over the entryways into most business shops you see on the roads, you seem the at the bottom of every order form page online or in the paper, and even the olympics and the NFL!Visa and Mastercard logos are everywhere you want, or don't want them to be!With the country today spending so much money on credit, with the "buy now, pay later" mentality, accepting credit cards will truly increase your business simply by accepting these forms of payments.Debit cards are standard becoming the way younger adults pay. Cash is becoming also as obsolete as the 8 track!National Translink Corporation has conducted a survey all over 10,000 merchants that have been accepting credit cards for over 3 years. What the survey found, was that an astonishing 68% of the business owners stated an average of 45% increase in sales within 3 months of accepting all forms of payment. And that their customer base, was 60% of all customers used some type of payment other than cash.Don't limit your businesses ability to increase profits.Allow any customer to pay in whatever way they can, to truly help your business grow!Could you ever imagine Walmart not accepting credit cards?What types of losses would the WalMart company post if every store did not accept credit cards for one week.What makes your small business any different?
1. Treatment of cash/credit transaction.
Read carefully the following transactions:
(i) Purchased goods for Rs. 1,200 cash. . (ii) Purchased goods for Rs. 1,200. (iii) Purchased goods for Rs. 1,200 from Arun. (iv) Purchased goods for Rs. 1,200 from Arun on cash.
Transaction (i) and (iv) are clear as it has been specifically stated that purchases have been made on cash. Thus the entry is :
Purchases account Dr. 1,200 To Cash account 1,200
Transaction (ii) and (iii) are not specific as to whether the purchases are for cash or on credit. However transaction (ii) does not mention any name of the supplier; therefore it implies that the purchases are for cash. Similarly transaction (iii) mentions the name of the supplier but is silent regarding cash-it implies that purchases are on credit: Thus the entry for transaction (iii) is
Purchases account Dr. 1,200 To Amex 1200.
2. Treatment of payment on personal/expenses account.
When payment is made to a person against amount due to him as per his ledger account-the personal account of the creditor should be debited. However if the payment is being made to a person representing business expenditure then the particular expenditure (nominal) account should be debited.
3. Treatment of receipt on personal/ income account.
When amount is received from a person against amount recoverable from him as per ledger account-the personal account of the debtor should be credited. However if the amount received represents business income, then the particular income (nominal) account should be credited.
4. Treatment of trade discount.
In many cases the seller allows to the buyer deduction off the list price. Such deduction is known as 'trade discount'. Trade discount as such is not recorded in the books. The transaction is recorded with only the net amount i.e. (list price -trade discount).
5. Treatment- of cash discount (full settlement).
In some cases creditor may allow some concession to his debtor to prompt him to make the payment within the period of credit allowed. Such concession is known as 'cash discount'. It is allowed by the person receiving the payment and represents, expenditure. It is availed by the person making the payment and represents income.
6. Treatment of Bad debts (debtor becoming insolvent).
An amount due from a debtor may become irrecoverable either partially or wholly. Reason may be that he has been declared insolvent or any other. Such irrecoverable amount represents loss to the business and is debited to Bad debts amount.
7. Treatment of Bad debts recovered
It is evident from the above entry that whenever irrecoverable amount is written off the personal account is credited. If after some time any paymentis received against a debt previously written of then it represents income and as such should be credited to an account
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