Difference between pages "Chart of Accounts" and "Accounting Process"

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''' <span style="color: red"> In Progress'''
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Whether you are using leather bound books, excel or software, the accounting/bookkeeping process remains the same.
  
The chart of accounts is where all the financial transactions from the [[General Ledger]] are organised. These accounts are then use to enable the creation of financial statements.
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It is simply the recording of all financial transactions within a business and then organising it a meaning full way for compliance and business analysis.
  
The chart is generally listed in the following order:
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All bookkeeping is still based on double entry accounting. All the software still works this way, its just that we don't see much of it anymore. Understanding the process though is one major difference between a data entry person and a great bookkeeper.
  
'''Balance Sheet Accounts'''
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All accounts must be either debited or credited '''NOTE:''' Some accounts are increased by debits, others are increased by credits
* Assets
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* Liabilities
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* Owners Equity
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'''Profit and Loss accounts (income statement)'''
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{| class="wikitable" style="width: 25%;"
* Revenue accounts
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|-
* Expense accounts
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|'''Account''' || '''Increased By''' || '''Decreased By'''
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|-
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|Assets|| ''Debit''|| ''Credit''
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|-
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|Expenses||''Debit''||''Credit''
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|-
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|Liabilities||''Credit''||''Debit''
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|-
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|Equity||''Credit''||''Debit''
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|-
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|Revenue||''Credit''||''Debit''
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|}
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These are generally the steps taken:
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* [[General Journal]] - All the financial transactions are recorded in chronological order where each transaction affects at least two accounts, and they ''must'' balance.
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* [[General Ledger]] - The transactions are now posted to the accounts identified in the Journal entry
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''' <span style="color: red"> more to come'''

Revision as of 06:05, 15 November 2018

Whether you are using leather bound books, excel or software, the accounting/bookkeeping process remains the same.

It is simply the recording of all financial transactions within a business and then organising it a meaning full way for compliance and business analysis.

All bookkeeping is still based on double entry accounting. All the software still works this way, its just that we don't see much of it anymore. Understanding the process though is one major difference between a data entry person and a great bookkeeper.

All accounts must be either debited or credited NOTE: Some accounts are increased by debits, others are increased by credits

Account Increased By Decreased By
Assets Debit Credit
Expenses Debit Credit
Liabilities Credit Debit
Equity Credit Debit
Revenue Credit Debit

These are generally the steps taken:

  • General Journal - All the financial transactions are recorded in chronological order where each transaction affects at least two accounts, and they must balance.
  • General Ledger - The transactions are now posted to the accounts identified in the Journal entry

more to come