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Gb518 Week 4 Financial Accounting Essay

2292 Words10 Pages

GB518 Assignment 1

Kiran Deo student ID 122456

PART A
( a)Discuss the difference in the role of the journal and the ledger in capturing accounting information efficiently and effectively.
We know that accounting is the process of recording, classifying and presenting of business transaction in accordance with general rules and financial practices. In a business entity many transaction takes place, mostly financial transaction. These transaction are required to properly captured and recorded to present a true and fair view of state of affairs of the company. The following steps or process flow is followed from recording to presenting.
Transaction

Journal Entries

Ledgers

Trail Balance

Trading & P&L A/c

Balance Sheet
From the above …show more content…

In this step all the transaction are recorded in statement. The format of which is given below with the help of an example:
Z Inc. made a sales of $ 500,000 on 1st January, 2012 in cash. Its journal entry will be:
In the books of Z Inc. Debit Credit
Date

Particulars L.F Amount ($) Amount ($)
01.01.2012
By
Bank/ Cash A/c
Dr.

$ 500,000.00

To
Sales A/c

$ 500,000.00

( Being goods sold for $ 500,000)

Here all the transaction, irrespective of their nature, are recorded date wise.
Ledgers Entries
This is the second step. In this case the entries made in the Journal Ledger are transferred in their respective ledger account. For example, let’s continue with the above example, while making sales Z Inc. gives a cash discount of $ 500. In such a condition relevant ledgers will be:
In the books of Z Inc.
Sales A/c
Debit
Credit
Date

Particulars
J/F
Amount
Date

Particulars
J/F
Amount

01.01.2012
By
Cash A/c $ 499,500.00

01.01.2012 Cash A/c $ …show more content…

A transaction which is completely (both debit and credit) fails or omitted to be recorded in the books of account. This will not result in disagree of trial balance. For example a sales entry is omitted from journal entry.
2. If an error is compensated by another error. For example sales and purchase account both are understated by $ 400.
3. Recording of transaction on correct side but on the wrong account. For example sales made to John is recorded in Jackson account.
4. Making entry in wrong class of account. For example recording of personal expenses.
5. Making entry (both debit and credit) in wrong amount.
References
http://www.angelfire.com/journal2/sayfol/Reading/03TrialBalance.htm http://kfknowledgebank.kaplan.co.uk/KFKB/Wiki%20Pages/The%20Trial%20Balance%20and%20Errors%20in%20the%20Financial%20Reporting%20System.aspx (d) Provide examples of two transactions and examine the application of the debit and credit rule.
On 01.01.2012 Z Inc. Purchase material worth $ 10,000 in credit from L Inc.
On 12.01.2012 Z Inc. made a sales of $ 500,000 in cash and $ 10,000 in credit to Mr. A.
Solutions:
In the books of Z Inc. Debit Credit
Date

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