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Accounting is being able to provide financial information on any economic entity.

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Introduction

Have you ever kept a journal on you're the items you've spent on? Do you allow loans and keep a list of them to know their status? If your answer to any of these questions is a yes then you already have an idea on what accounting is all about. Accounting is being able to provide financial information on any economic entity. Accounting is recording business transactions, classifying and summarizing information, communicating with users and interpreting any financial deals. Bookkeeping is different from accounting. Accounting is more on designing and managing the financial systems that are used by bookkeepers. Bookkeepers as picked up from there title record each and every transaction. Bookkeepers should be handled with great amounts of trust for they are the ones that know every single financial detail of your business. Hiring impotent or treacherous bookkeepers can result in bad debts or some times even bankruptcy since the owners of the business don't usually know the exact money flow of the company. The books of original are basically where bookkeepers record information. The primary purpose of books of original entry is to record all the accounting transactions as they come about. The books of original entry along with some extra records and T accounts make up the whole bookkeeping systemi. There are six types of books of original entry the cash book, the sales day book, purchases day book, returns inwards day book, returns outwards day book and the journal. ...read more.

Middle

SALES DAY BOOK What sales have been made? The Sales day book keeps a list of the sales that have been made within a certain amount of time. Most sales that are made asides from those of small business are made in credit, after purchases buyers are given a purchase invoiceiv that contains information like the details of the goods bought and the cost of the items. The sales day bookv should contain the date, name of customer, invoice number, folio column and the final amount of invoice. There is a separate ledger for any credit sale transactions, the Sales Ledger. The credit sales are then copied to the debit portion of each customer's personal account in the Sales ledger. The total of the credit sales that were made within a certain amount of time are recorded on the credit side of the sales account that was made in the General Ledger. PURCHASES DAY BOOK What purchases have so far been made this month? The purchases day book is quite similar to that of the sales day book. When a buyer receives the purchasing invoice the seller gets to keep one as well and on their side it is called the sales invoice. When recording in the books of the buyer information on their purchases is a purchases invoice. The purchases day book and the sales day book have the same format. ...read more.

Conclusion

Each month a statement is sent to each of the debtors who owe money on the last day of the month. The statement should show the amount owed at the start of the month, the amount of each sales invoice sent to the debtor during that month, credit notes sent during that month, cash and cheques received from the debtor during the month and the amount that the debtor owes at the end of that month. THE JOURNAL The journalviii is where all the items that did not pass through the previous five books are recorded. These items are usually more unique and complicated. Transactions relating to fixed assets, errors in former books that have been corrected and transfers involving capital are examples of items that are recorded in the Journal. The first line in the journal states the name of the account that is going to be debited. The second line is indented so that it will be obvious that it is the credit part of the double entry. The last line is the reason of the entry. i ii iii CASH BOOK Cash Bank Cash Bank 2003 Jan1 Capital 3000 Jan3 Rent 50 iv v Sales Day Book (page 21) Invoice No Folio Amount 2003 Php 14-Jul R Go 10051 15,320 16-Jul F Santos 10052 18,900 18-Jul C Baron 10053 16,250 21-Jul E Lua 10054 19,340 69,810 vi vii viii THE JOURNAL Date Details Folio Dr Cr The name of the account to be debited The name of the account to be credited The narrative ...read more.

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