The Accountant and Accounting Clerk What is Accounting? There are five main activities that involve accounting: ACCOUNTING 101 By: Alexzandrea Hinds The Balance Sheet A balance sheet is a statement showing the financial position of a person, business or other organization. General Accepted Accounting Principles GAAP's are guidelines established by professional accountants to be followed in the preparation of accounting records and financial statements Debit and Credit Theory Debit Ledger Accounts The Journal The Two-Column General Journal Trial Balance A trial balance is a listing of the account balances in a ledger. Grade 11 learners can use X-kit Achieve! Accounting study guide throughout the year to prepare for and pass exams. Up-to-date, annotated Accounting tables. Income Statement Accounting is a system of dealing with financial information that provides for decision-making A knowledge of accounting can be beneficial when: Owning a own business Everyday Life On the job Making it a Profession gathering financial information preparing and collecting permanent records rearranging, summarizing and classifying financial information preparing information reports and summaries establishing controls to promote accuracy and honesty among employees TYPES OF BUSINESS 1. THE SERVICE BUSINESS Sells a service to the public i.e Hair Salon, Dental Clinic, Car Repairs etc. THE MERCHANDISING BUSINESS Buys goods and resells them to the public i.e Grocery Stores, Clothing Outlets etc. THE MANUFACTURING BUSINESS Buys raw materials and turns it into something new Produces raw materials i.e Farms, Steel mills, Construction Companies etc. THE NON-PROFIT ORGANIZATION Does not earn a profit but provides a social need i.e A Church, Community Center, Organization etc. Accounting Clerk vs Accountant The work of an accounting clerk is clerical in nature and deals with routine matters, making payroll calculations and records accounting entries in the books of the accounts The work of an accountant is to ensure all GAAP's are followed, prepares reports based on data produced by the accounting system, has a professional high-level position and participates in management meetings The Accounting Cycle Later on, the accounting cycle will be easier to understand because of everything learned but here is a sneak peak 1. Transactions occur 2. Transactions recorded in journal 3. Journal entries posted to the ledger accounts 4.Trial balance and interim financial statements prepared 5. Work sheet prepared 6. Formal financial statements prepared 7. Ledger accounts adjusted and closed 8. Post-closing trial balance prepared The first 4 are tasks done day to day and every month of the fiscal period. The other 4 are tasks done near the end of the fiscal period. I.e This is an example of a balance sheet on a spreadsheet Determining Financial Position Assets - a list and total of things that you own that have a dollar value Liabilities - a list and total of debts Owner's Equity - The difference of the total assets and the total liabilities. The difference is known as Capital. Fundmental Accounting Equation A = L + OE Derivatives A - L = OE A - OE = L Claims Against the Assets The Owner and the creditors have claims on the assets, however, creditors are settled first when closing down the business; the owner than can benefit off of what's left. (GAAP) There are multiple guidelines to learn and many will be added throughout the course GAAP - The Business Entity Concept The business entity concept provides that accounting for a business organization must be kept separate from the personal affairs of its owner, or from any other business of organization (The owner must keep all personal assets - personal.) All personal transactions made must be deducted from the business accounts GAAP - The Continuing Concern Concept The continuing concern concept assumes that a business will continue to operate unless it is known that it will not. This is also known as the going concern concept. The dollar value associated with a business that is alive and well are straightforward GAAP - The Principle of Conservatism The principle of conservatism provides that accounting for a business should be fair and reasonable Accountants are required to makes sure that all estimates and evaluations are accurate. They do it in a way that assets or profits are neither over or underestimated. GAAP - The Objectivity Principle The objectivity principle states that accounting will be recorded on the basis of objective evidence The department dealing with evidence will have the same values for transactions and only will record with facts not opinions Source documents back up the objectivity principle very well These are the steps made during the fiscal period; They are continous throughout the period is associated with the increases on accounts involving the assets, expenses and drawings in the business. I.e Supplies; Miscellaneous Expense; A.Hinds, Drawings. When credit accounts are debited, they decrease i.e Accounts Payable. Credit is associated with the increase on accounts involving the liabilities, capital and revenue. I.e Bank Loan; A.Hinds, Capital; fees earned. When debit accounts are credited, they decrease i.e.
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