Refer earlier article on the importance or role of source documents.
Some of the main data sources and records in an accounting system comprise:
• Sales Order
• Purchase Order
• Invoice
• Credit note
• Debit note
• Goods received note
The different function or role of each source document as follows:
Sales order
-A customer writes out or signs an order for goods or services he requires
Purchase order
-A business orders from another business goods or services
Invoice
-A document for billing the customers for goods or services. The invoice is a request for the customer to pay what he owes. The details in an invoice should tally with the details of a purchase order.
Major information shown in an invoice:
•Name and address of the seller and purchaser;
•Date of the sale
•Description of what is being sold
•Quantity and unit price of what has been sold
Credit note
-A document relating to RETURNED goods or refunds when a customer has been overcharged. It can be regarded as a negative invoice.
Debit note
-Issue to adjust an invoice already issue. Normally a debit note is issued to a supplier as a means of formally requesting a credit note.
Goods received note
-Record receipt of goods , commonly used in a warehouse. Used in addition to suppliers’ advice notes. Accounts department normally want this document as support of goods received before making any payment to the supplier.
Whenever a debtor cannot pay, it becomes a bad debt which in reality is an expense as it is a loss for the firm.
The basic bookkeeping rules or principles is simply to debit: Bad Debts Account and Credit Debtors Account
So how do we treat the books of accounts when a firm manages to receive money from a deliquient debtor?
Following is the BOOKKEEPING DOUBLE ENTRY RULES/PRINCIPLES for BAD DEBTS RECOVERED:
{ Remember that any bad debts recovered is a gain to the firm and should always be a credit entry.}
The journal double entry to record bad debts recovered are:
(a) Debit:Debtors
Credit:Bad debt recovered
[ this is to reinstate the debt previous owed by the debtor]
(b) Debit:Bank
Credit:Debtors
[ To record the receipt of debts from debtors]
Tags: bad debts recovery, bookkeeping double entry, double entries principles, double entry rules, how do we, treat
Basically there are two bookkeeping rules or principles of charging depreciation into the books of the accounts:
BOOKKEEPING DOUBLE ENTRY RULES/PRINCIPLES OF CHARGING DEPRECIATION:
YEARLY method:-
- Full year depreciation should be charged in the year of purchase and NO depreciation should be charged in the year of sale, irrespective whether the asset was used for 2 or more in the year of sale and purchase
MONTHLY method:-
- Depreciation is charged for the NUMBER OF MONTHS asset is used in the year of purchase and for the number of month asset is used in the year of sale
Next the following deals with how to record provision for depreciation in our books of accounts:
RECORDING OF PROVISION FOR DEPRECIATION:
(a) Double entry bookkeeping principle or system:-
Debit: Profit & Loss account
Credit: Provision for Depreciation
Note that the CURRENT year’s depreciation is transferred to the Profit and Loss Account Previous and current year is deducted from asset balance in the Balance Sheet
Lastly lets look at the bookkeeping double entry for DISPOSAL OF FIXED ASSETS:-
Journal double entries as follows:
(a) Debit: Asset Disposal Account
Credit: Fixed Asset Account
[ to transfer all the cost of the assets to an Asset Disposal Account so as to determine whether there is any gain or loss from disposing these fixed assets]
(b) Debit: Provision for Depreciation
Credit: Asset Disposal Account
[ to transfer the total depreciation charged on the asset to the Asset Disposal Account]
© Debit: Cash or Bank
Credit Asset Disposal Account
[ to post cash received from sale of asset to Asset Disposal Account]
Lcci Bookkeepng Nov 2001 Control Account Question
Lcci Bookkeeping Year Nov 2001 Answer To Control Question
Lcci Bookkeeping:Year 2001 Control Account Question
Lcci Bookkeeping Year 2001 Answer to Control A/c
LCCI Bookkeeping: 1997 Question on Sales & Purchases Control a/c
Lcci 1997 Answer to Question On Sales & Purchases Control A/c (Question above)
Tags: lcci;Control Account
As explained, it is also very important for those who keep books of account to understand accounting concepts. By understanding such accounting concepts, it will then reinforce the skills of the bookkeepers.
Append below are some True Or False Questions on Accounting Concepts:-
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1. |
The business entity concept does not apply to a sole proprietorship concern |
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2. |
If economic event cannot be measured in monetary terms, it is not considered part of the accounting data |
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3. |
As the question of sale of the business, the realizable or saleable values of its assets will not be relevant |
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4. |
It is the desire for objectivity that explains why historical cost rather than current market value forms the basis of valuation of assets |
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5. |
Consistency in accounting methods is observed to prevent misleading profits arising from differing accounting methods from being reported. |
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6. |
Prudence concept explains why closing stock is always valued at the lower of cost or market value so that profits are not overrated during the current period |
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7. |
The matching principle is base on the accrual concept of accounting |
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8. |
Accrual concept is when revenue is recognized when it is earned and expenses when they are incurred |
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9. |
Cash accounting recognizes revenue only when cash is received and recognizes expenses only when cash is paid |
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10. |
Source documents are examples of objective evidence of transactions that have taken place |
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11. |
The money measurement function eliminates important information like motivational level, inefficient management or poor working conditions |
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Below are two questions and answers on topics on Accounting Equation:
Question No 1: Fill In The Blank for the following:
| 1.0 |
Assets |
Liabilties |
Capital |
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a |
40,000 |
10,000 |
? |
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b |
15,000 |
? |
11,000 |
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c |
? |
5,000 |
10,000 |
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d |
11,000 |
8,000 |
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Answer:
1a $30,000 ($40,000-$10,000)
1b $4,000 ($15,000-$11,000)
1c $15,000 ($5,000+$10,000)
1d $3,000 ($11,000-$8,000)
Question No. 2:
The following is the summary data of XYZ Ltd for July presented in equation form. Describe each of the transactions that occurred during July.
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2.0 |
ASSET Cash |
ASSETS Supplies |
ASSETS Equipment |
= LIABILITIES |
+
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a |
+$10,000 |
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+$10,000 |
Capital |
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b |
-$2,000 |
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+$2,000 |
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c |
-$200 |
+$200 |
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d |
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+$700 |
$700 |
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e |
+$1,000 |
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+$1,000 |
Income |
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f |
-$600 |
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-$600 |
Salaries |
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g |
-$300 |
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-$300 |
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h |
-$100 |
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-$100 |
Drawing |
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$7,800 |
$200 |
$2,700 |
= $400 + |
$10,300 |
Answer:
2a The owner made an investment by injecting cash as capital
2b Equipment was bought and paid for
2c Supplies were bought and paid for
2d Additional equipment was bought on account creating a liability
2e The company recorded an income for work done for customers
2f The company paid salaries to the workers
2g Cash was paid to reduce amount owing to Accounts Payable(Liability)
2h Owner withdrew cash for her personal use.
Below are the answers to the various topics on Basic accounting questions on:
- basic accounting concepts,principles and double entry systems
- subsidiary books
- bank reconciliation statement
- ledger accounts
- final accounts
- depreciation accounting
Append below some questions to test the knowledge of those who have just studied topic on depreciation accounting:
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