Published on 3 Oct 2019
School
Department
Course
Professor
Thinkswap Document
ACCT1006'
Principles*
• Monetary'principle+*dollar*amount*in*financial*statements*
• Accounting'entity'concept+*separation*of*the*business*from*the*personal*
transactions*and*making*sure*all*the*parts*related*to*accounting*entity*
• Accounting'period'concept+*the*life*of*a*business*can*be*divided*into*periods*to*
more*accurately*reflects*profits*
• Going'concern'principle+*organization*will*continue*into*the*future*unless*ceases*
trading*or*liquidation*
• Cost'principle+*recording*transactions*initially*at*costs*
• Full'disclosure'principle+*ensuring*that*we*disclose*everything*that*has*
implications*for*decision*making*for*users*
*
Process*
Transaction/event*occurs*
1.*Enter*into*the*JOURNAL*
2.*Post*to*the*LEDGER*
3.*BALANCE*each*of*the*ledger*accounts*
4.*Prepare*a*TRIAL*BALANCE'
Account*
An*account*is*an*individual*accounting*record*of*increases*and*decreases*in*a*specific*
asset,*liability*or*equity*item*
*
Normal*Balance*=*DR+*add*debit*side*first*(asset)*
Normal*Balance*=CR+*add*credit*side*first*(liability)*
ADD*normal*account*balance*first*
Missing*number+*closing*balance+*balancing*item*–*on*the*wrong*side!!*It*is*a*balancing*
item*
*
*
Trial*Balance*
• A*trial*balance*is*a*list*of*all*the*accounts*and*their*balances*at*a*given*time*listed*
in*order*as*they*appear*in*general*ledger*
• It*proves*the*mathematical*equality*of*debits*and*credits*after*posting*
• Steps*to*prepare*a*trial*balance*
*
1.List*account*numbers,*titles*and*balances*
2.Total*debit*and*credit*columns*
3.Verify*equality*of*debit*and*credit*columns*
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