Basic Accounting Assignment Essay

Generally Accepted   Principles, Balance sheet, Accounts receivable, Income statement, Debt, Liability, Double-entry bookkeeping system, Accounts payable 1- Explain the collecting, recording, classifying, summarizing, analyzing and reporting process of accounting. – Collecting:- Data obtained from various sources with the help of appropriate measures is called collection of data. – Recording:- Arranging the data into its chronological form is called recording of data. – Classifying:- Division of data according to nature of events is called classification of data. – Ledger is used for classifying transactions – Posting is the process of transferring transactions from journal to ledger. Summarizing:- This involves presenting the classified data in a manner which is understandable and useful to the management and other interested parties. Follow statements are prepared:- – Income statement – Balance Sheet – Cash flow statement – Analyzing:- The comparison of data in a business is called analyzing of data. For example, analyzing of present data with past data, or actual data w ith projected data. – Reporting:- Forwarding the results to financial users like chairman, directors, managers etc. is called reporting of data. – Discuss in detail the nature of accounts i. e. assets, expenses, liabilities, revenues and capital by giving examples. – Assets:- The resources of a business are called assets. They are of two types:- – Fixed Assets: Land, Building, Equipment, Vehicle etc. – Current Assets: Cash, cash at bank, A/c receivable, debtors, prepaid expenses. – Expenses:- The amount spent in a business with a view to gain profit in the future is called expense. Examples are rent expenses, salaries expenses, advertisement expenses etc. – Liabilities:- The financial responsibilities of the business for which it is liable are called liabilities. They are divided into two types:- – Fixed Liabilities (Bank Loan, Bonds Payable, Mortgage Payable. ) – Current Liabilities (Notes Payable, Unearned Income, Creditors. ) – Capital:- The amount of money invested by the owner in the business is called capital. – Revenue:- The incomes and the profits earned in the business through selling are called revenues. For example, Sales, Service revenue, Interest, commission earned. – Drawings:- The amount of money taken away by the proprietor for personal benefits is called Drawings. 3- Describe the accounting rule of debit and credit for accounts like assets, expenses, liabilities, revenues and capital. – Assets – Increase in Asset is debit. – Decrease in Asset is credit. – Liabilities – Increase in liabilities is credit. – Decrease in liabilities is debit. – Revenues – Increase in revenues is credit. – Decrease in revenues is debit. – Expenses – Increase in expense is debit. – Decrease in expense is credit. – Capital – Increase in capital is credit. – Decrease in capital is debit. – Select any twenty categories from the above and identify a transaction that will have the required effect on the business. 1- Purchased Goods on credit 25,000. 2- Gave services for cash 5,000. 3- Brought cash in business 65,000. 4- Adjusting entry of out standing salaries 9000. 5- Wa ges wrongly debited to Sales 400. 6- Salaries wrongly debited to Drawings 600. 7- Paid to accounts payable in cash 1500. 8- Goods returned by customer worth 650. 9- Withdrew cash for personal use 550