Write Short Note: Worksheet, Income Statement, Merchandising Operation, Bank Reconciliation , Inventories, Accrue basis Accounting, Accounting Cycle, Trail Balance, Classifying Inventory, Depreciation Question 1. What is Trial Balance? Explain Limitation of Trail Balance Question 2 Define the Bank reconciliation and Discuses the reasons for disagreement between Cashbook balance & Bank Book Balance. Worksheet: Informal document in which an accountant or auditor records the information for (1) adjusting trial balances prior to preparing financial statements, or to (2) substantiate his or her opinion regarding an account balance or a transaction. An accounting worksheet is a spreadsheet used to prepare accounting information and reports. Accounting worksheets are most often used in the accounting cycle process to draft an unadjusted trial balance, adjusting journal entries, adjusted trial balance, and financial statements. Worksheets are prepared at the end of an accounting period and usually include a list of accounts, account balances, adjustments to each account, and each accounts adjusted balance all sorted in financial statement order. As you can imagine, after a worksheet is completely filled out, preparing financial statements manually is quite simple. Most of the preparation work goes into drafting the worksheets. As with most working papers, accounting worksheets are designed for internal purposes only. External users like investors and creditors rarely if ever get to see a companys accounting worksheet. This means that the worksheet format can be flexible. Companies can customize the format of their worksheets to fit their internal demands and work flow needs. Bookkeepers and accountants use accounting worksheets for a variety of reasons. Worksheets make transferring t-accounts into an adjusted trial balance much easier. Worksheets also reduce the risk of errors making errors when producing financial statements. Worksheets can also be used for planning purposes. Since the worksheets are used to make adjusting journal entries, managers can examine the worksheets before the adjustments are posted to see their effect on the overall financial statements. Worksheets can also be helpful in preparing interim financial statements. Worksheets An accounting worksheet is a spreadsheet used to prepare accounting information and reports. Accounting worksheets are most often used in the accounting cycle process to draft an unadjusted trial balance, adjusting journal entries, adjusted trial balance, and financial statements. Worksheets are prepared at the end of an accounting period and usually include a list of accounts, account balances, adjustments to each account, and each accounts adjusted balance all sorted in financial statement order. As you can imagine, after a worksheet is completely filled out, preparing financial statements manually is quite simple. Most of the preparation work goes into drafting the worksheets. As with most working papers, accounting worksheets are designed for internal purposes only. External users like investors and creditors rarely if ever get to see a companys accounting worksheet. This means that the worksheet format can be flexible. Companies can customize the format of their worksheets to fit their internal demands and work flow needs. Bookkeepers and accountants use accounting worksheets for a variety of reasons. Worksheets make transferring t-accounts into an adjusted trial balance much easier. Worksheets also reduce the risk of errors making errors when producing financial statements. Worksheets can also be used for planning purposes. Since the worksheets are used to make adjusting journal entries, managers can examine the worksheets before the adjustments are posted to see their effect on the overall financial statements. Worksheets can also be helpful in preparing interim financial statements. Definition of Income Statement A financial statement that measures a companys financial performance over a specific accounting period. Financial performance is assessed by giving a summary of how the business incurs its revenues and expenses through both operating and non-operating activities. It also shows the net profit or loss incurred over a specific accounting period, typically over a fiscal quarter or year. Also known as the profit and loss statement or statement of revenue and expense. Income Statement A A A Filed Under: Financial Statements, Income Statement Definition of Income Statement A financial statement that measures a companys financial performance over a specific accounting period. Financial performance is assessed by giving a summary of how the business incurs its revenues and expenses through both operating and non-operating activities. It also shows the net profit or loss incurred over a specific accounting period, typically over a fiscal quarter or year. Also known as the profit and loss statement or statement of revenue and expense. Ads • Bangladesh Classified Ads olx.bd Buy and sell, its 100% free: Apartments, jobs, cars, anything! Investopedia explains Income Statement The income statement is the one of the three major financial statements. The other two are the balance sheet and the statement of cash flows. The income statement is divided into two parts: the operating and non-operating sections. The portion of the income statement that deals with operating items is interesting to investors and analysts alike because this section discloses information about revenues and expenses that are a direct result of the regular business operations. For example, if a business creates sports equipment, then the operating items section would talk about the revenues and expenses involved with the production of sports equipment. The non-operating items section discloses revenue and expense information about activities that are not tied directly to a companys regular operations. For example, if the sport equipment company sold a factory and some old plant equipment, then this information would be in the non-operating items section. Trail Balance: The trial balance is a report listing the ending debit and credit balances in all accounts at the end of a reporting period. The trial balance has three uses: • Debits equal credits. The total of all debits should equal the total of all credits, resulting a report balance of zero. • Worksheet. Depending on the report format, the trial balance can be used as a worksheet for planning adjusting entries. • Source of financial statements. The information on the report can be aggregated to create the financial statements, though accounting software handles this task automatically. Merchandising business 1. Small Business > 2. Managing Employees > 3. Business Management What Are Merchandising Operations? by Bert Markgraf, Demand Media Keeping inventory is a key merchandising operation. As a merchandising company, you can divide your activities into separate operations and determine how efficiently each one carries out its work. Your company buys products, places them into storage and sells them again for a profit. Each of the merchandising functions required for this process operates as a separate unit. These merchandising operations represent the steps required for the company to carry out the merchandising business and coordinate its functions. Ads by Google Wholesale Connect to suppliers & exporters from China and Hong Kong. hktdc Purchase Purchasing your merchandise involves identifying suppliers who can meet your price and quality targets, ordering the appropriate quantity, arranging for shipment to your warehouse, receiving and inspecting the merchandise and placing it into inventory. This part of your operations generates the largest part of your costs, making cost control of purchased merchandise a key factor in the profitability of your merchandising company. Inventory A merchandising business has to manage inventory to make sure the merchandise stays in good condition and to track goods so they are available when they are to be sold. Inventory can be perpetual, which is a control method that tracks merchandise purchased and sold in a continuous fashion, or it can operate cyclically, with inventory taken periodically and costs calculated and assigned at the end of each period. In either case, inventory operation requires the merchandiser to decide how much inventory to carry, where to store it and how to optimize use of available space. Related Reading: What Is Sales Focused Merchandising? Sales The sales operation of your merchandising company determines the sales strategy and the product mix. The sales department considers the expected demand, the actions of competitors, the promotional strategy, the image to be presented and the features sales personnel can use to sell the products. When the sales department operates effectively, the company has inventory corresponding to the projected sales and achieves those sales, generating the expected profit. Presentation While the sales department develops the overall sales strategy, a merchandising company often has a separate operation in charge of the retail presentation of the products. For fashion retailers, for example, the in-store arrangement of manikins, clothing, promotional material and displays is important. This part of the merchandising operation executes the sales strategy in a creative way to attract customers and encourage them to purchase the offered merchandise. Administration The three parts of a merchandising business that determine profitability are the purchasing function, which generates the costs of goods; the sales function, which produces revenue; and administration, which is the overhead. Since your profit is revenue minus cost of sales and overhead, profitability increases when you increase sales but keep overhead increases low. Controlling overhead costs while implementing a sales strategy to increase revenue is an effective method of raising profitability for merchandising companies. Ads by Google A commercial enterprise dedicated to the purchase of finished goods and their resale for a profit. A merchandising business will generally buy their products from a wide range of distributors domestically and internationally and market their products in huge consumer shopping facilities. Definition of Bank Reconciliation Statement A form that allows individuals to compare their personal bank account records to the banks records of the individuals account balance in order to uncover any possible discrepancies. Bank Reconciliation Statement A A A Filed Under: Retail Banking Definition of Bank Reconciliation Statement A form that allows individuals to compare their personal bank account records to the banks records of the individuals account balance in order to uncover any possible discrepancies. Buy and sell, its 100% free: Apartments, jobs, cars, anything! Investopedia explains Bank Reconciliation Statement Since there are timing differences between when data is entered in the banks systems and when data is entered in the individuals system, there is sometimes a normal discrepancy between account balances. The goal of reconciliation is to determine if the discrepancy is due to error rather than timing. Inventory A A A Filed Under: Balance Sheet, Financial Statements Definition of Inventory The raw materials, work-in-process goods and completely finished goods that are considered to be the portion of a businesss assets that are ready or will be ready for sale. Inventory represents one of the most important assets that most businesses possess, because the turnover of inventory represents one of the primary sources of revenue generation and subsequent earnings for the companys shareholders/owners. Investopedia explains Inventory Possessing a high amount of inventory for long periods of time is not usually good for a business because of inventory storage, obsolescence and spoilage costs. However, possessing too little inventory isnt good either, because the business runs the risk of losing out on potential sales and potential market share as well. Inventory management forecasts and strategies, such as a just-in-time inventory system, can help minimize inventory costs because goods are created or received as inventory only when needed. Definition of accrual basis accounting in accounting An accounting method that measures the performance and position of a company by recognizing economic events regardless of when cash transactions occur. The general idea is that economic events are recognized by matching revenues to expenses (the matching principle) at the time in which the transaction occurs rather than when payment is made (or received). This method allows the current cash inflows/outflows to be combined with future expected cash inflows/outflows to give a more accurate picture of a companys current financial condition. Accounting Cycle A A A Filed Under: Accounting, Bookkeeping, Ledgers & Journals Definition of Accounting Cycle The name given to the collective process of recording and processing the accounting events of a company. The series of steps begin when a transaction occurs and end with its inclusion in the financial statements. The nine steps of the accounting cycle are: 1. Collecting and analyzing data from transactions and events. 2. Putting transactions into the general journal. 3. Posting entries to the general ledger. 4. Preparing an unadjusted trial balance. 5. Adjusting entries appropriately. 6. Preparing an adjusted trial balance. 7. Organizing the accounts into the financial statements. 8. Closing the books. 9. Preparing a post-closing trial balance to check the accounts. Also known as bookkeeping cycle. Investopedia explains Accounting Cycle The accounting cycle is a methodical set of rules to ensure the accuracy and conformity of financial statements. Computerized accounting systems have helped to greatly reduce mathematical errors in the accounting process, but the uniform process of the accounting cycle also helps reduce mistakes. Trial Balance Definition: The trial balance is a report listing the ending debit and credit balances in all accounts at the end of a reporting period. The trial balance has three uses: • Debits equal credits. The total of all debits should equal the total of all credits, resulting a report balance of zero. • Worksheet. Depending on the report format, the trial balance can be used as a worksheet for planning adjusting entries. • Source of financial statements. The information on the report can be aggregated to create the financial statements, though accounting software handles this task automatically. Inventory A current asset whose ending balance should report the cost of a merchandisers products awaiting to be sold. The inventory of a manufacturer should report the cost of its raw materials, work-in-process, and finished goods. The cost of inventory should include all costs necessary to acquire the items and to get them ready for sale. When inventory items are acquired or produced at varying costs, the company will need to make an assumption on how to flow the changing costs. See cost flow assumption. If the cost to replace inventory is less than the actual cost of the inventory, it may be necessary to reduce the inventory amount. See lower of cost or market. Classification of inventory Classification of inventory Inventory items are classified based on --> where they are in the production process 1. Merchandise --> goods purchased from other entities --> for the purpose of reselling to customers 2. Raw materials --> materials and parts purchased from other entities --> for the purpose of using them in the production process 3. Work in process --> materials and parts currently in the production process 4. Finished goods --> goods that completed the productions process --> goods that are ready for sale to customers Definition of Depreciation 1. A method of allocating the cost of a tangible asset over its useful life. Businesses depreciate long-term assets for both tax and accounting purposes. 2. A decrease in an assets value caused by unfavorable market conditions. Definition of Depreciation 1. A method of allocating the cost of a tangible asset over its useful life. Businesses depreciate long-term assets for both tax and accounting purposes. 2. A decrease in an assets value caused by unfavorable market conditions. Investopedia explains Depreciation 1. For accounting purposes, depreciation indicates how much of an assets value has been used up. For tax purposes, businesses can deduct the cost of the tangible assets they purchase as business expenses; however, businesses must depreciate these assets in accordance with IRS rules about how and when the deduction may be taken based on what the asset is and how long it will last. Depreciation is used in accounting to try to match the expense of an asset to the income that the asset helps the company earn. For example, if a company buys a piece of equipment for $1 million and expects it to have a useful life of 10 years, it will be depreciated over 10 years. Every accounting year, the company will expense $100,000 (assuming straight-line depreciation), which will be matched with the money that the equipment helps to make each year. 2. Currency and real estate are two examples of assets that can depreciate or lose value. During the infamous Russian ruble crisis in 1998, the ruble lost 25% of its value in one day. During the housing crisis of 2008, homeowners in the hardest-hit areas, such as Las Vegas, saw the value of their homes depreciate by as much as 50%. Definition of Inventories and classifying of Inventories in accounting Definition of Classifying Inventory in accounting What are the limitations of Trail Balance A trial balance only enters the totals of credits against the total of debits. The fact that a trial balance tallies is only a basic assurance that there are no mathematical errors in the preparation of accounts. There are limitations to a trial balance. Errors which cannot be detected through a trial balance are: Errors of Omission: An error of omission occurs when a transaction is not recorded in the books of entry. In such a case the credits and debits for the transaction would balance and omitting to record it would have no impact on the trial balance. Errors of Commission: These are errors made by the accounting staff while recording the transactions. These errors generally involve cases where the amount entered and the side (debit or credit) are correct but the head is wrong. For example, putting postage expenses under the head of fuel expenses would be termed as an error of commission. Compensating Errors: Errors of this type have a tendency to nullify the effect of errors committed earlier. This is a case of multiple errors, where the errors put together tend to cancel out each other. Errors of Principle: This category refers to instances where an income or an expenditure is not allocated correctly between the capital and revenue heads. The other common errors that go unnoticed in a trial balance are: - Errors of Original - Errors of Reversal and - Errors while Transporting Discuses the reasons for disagreement between cashbook balance & bankbook balance Reasons For Disagreement Between Cash Book And Pass Book Balances The following are the important causes or reasons for the disagreement between the balances shown by the pass book and cash book. 1. Cheques issued but not presented for payment. 2. Cheques paid or deposited but not collected and credited by the bank. 3. Interest credited by the bank but entered in cash book. 4. Bank charges, commission and interest in overdraft debited by the bank but not entered in cash book. 5. Expenses directly paid by the bank on behalf of customer but not recorded in cash book. 6. Incomes directly collected by the bank on behalf of customer but not recorded in cash book. 7. Amount directly deposited into the bank by debtors but not entered in cash book. 8. Cheque deposited into the bank but dishonored. 9. Dishonor of bill discounted with the bank. 10. Errors committed in the cash book and pass book. ; Ji alhumdulillah valo achi.amr chele job kre MK corporetion e.and or off ghasful er paser building e.o akhn obosso india gese training e.ami dui din gesi ok off theke ante,ghas ful er off er samne onkkhn rikshai chilm.tai apnke giges korsi okhane achen naki.job pawa jabe ghasful e?
Posted on: Wed, 04 Jun 2014 10:48:13 +0000
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