Difference between revisions of "Accounting Process"

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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.
 
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.
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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 Bookkeeper and a great Bookkeeper.
  
 
All accounts must be either debited or credited '''NOTE:''' Some accounts are increased by debits, others are increased by credits
 
All accounts must be either debited or credited '''NOTE:''' Some accounts are increased by debits, others are increased by credits

Revision as of 03:42, 16 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 Bookkeeper 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