Methew Lu - Profile


Advantages of double entry system accounting
Double Entry system is acknowledged as the best method of accounting in the modern world. The following advantages are derived from it:.
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Advantages of cash book
Generally cash transactions are numerous. What is credit transaction today will be transactions tomorrow..
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Treble or three column cash book
We know when cash is received from the debtors discount may be allowed to them..
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Sales returns journal book
A seller must expect in the course of business that some of his customers (buyers) will return as for sonic solid reasons (wrong color, wrong size....
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What is meant by reconciliation
If there is a dispute between two friends, or they fail to agree about some matter, the disagreement may temporarily end the friendship between them..
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Characteristics of journal entry
Journal is the first successful step of the Double Entry system. A transaction is recorded first of all in the Journal. So, Journal is called the book of Original Entry..
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How an account is opened with a bank
To open an account the depositor will have to apply to the bank in the prescribed form and deposit a sum of money..
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Sales journal book
When business supplies goods to a customer, an invoice of the type described earlier Is made out..
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Advantages of journal entries
Each transaction is recorded as soon as it takes place. So there is no possibility any transaction being omitted from the books of account..
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Advantages of opening an account with a bank
The following advantages are obtained by opening a bank account.
1. Money is kept safe--there is no risk of theft or dacoity..
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Single column cash book
It is a cash book in which only and only cash transactions are recorded..
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Double column cash book
At the beginning of this chapter, it has been discussed that Cash A/c and Bank Ale are two busiest accounts in ledger and they should be removed from the ledger to reduce its volume and size..
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Types of cash book
Cash Account and the Bank Account are two busiest accounts in a Ledger and it will be logical to remove these two accounts from the Ledger to reduce the volume of the Ledger..
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Simple entry and compound entry
Every transaction affects two accounts one account is debited and another account is credited..
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Features of ledger in accounting
It has two identical sides - left hand side (debit side) and right hand side (credit side)..
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Types of bill of exchange
The bills of exchange are classified on two different basis: (1) On the basis of period. (2) On the basis of object..
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Opening an account with a bank
Usually all concerns except a few small ones, open an account with a bank..
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Is cash book a journal or a ledger
From the above discussion it appears that the Cash Book is the substitute for the Cash Account..
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Cash book and bank reconciliation statement
We already know that a Ledger is a register in which the different accounts are kept. At least one page in this register is fixed for one account i.e. a page for Purchase Ale, a page for Sales A/c, a page for Salary A/c, a page for Rent A/c, a page for Cash A/c, etc..
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First phase of accounting cycle
In the previous chapter, we have discussed in detail that how the business transactions are analyzed and how different accounts are debited and credited..
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