Accounting: Journal Book and Subsidiary Books

Financial Transactions and Journals

• Financial transactions are recorded in original entry books called Journal Books.
• Journal Books are subdivided into specialized books due to varying transaction categories.
• Types of subsidiary books include Cash Book, Purchase Book, Purchases Return Book, Sales Book, Sales Return Book, Bills Receivable Book, and Bills Payable Book.

Types of Cash Books

• Single Column Cash Book: One column per side for cash receipts and payments.
• Two Column Cash Book: Two columns per side for cash and bank transactions.
• Three Column Cash Book: Three columns for cash receipts, bank receipts, and cash discounts (allowed on debit side, received on credit side).
• Additional columns can be added for multiple bank accounts.

Specialized Journals

• Purchases Book: Records credit purchases of goods or raw materials.
• Purchases Return Book: Records returns of purchased goods.
• Sales Book: Captures credit sales of goods.
• Sales Return Book: Records returns of sales.
• Bills Receivable Book: Documents received bills receivable.
• Bills Payable Book: Tracks issued bills payable.

Classification and Ledger

• Classification involves grouping transactions of similar nature into account heads.
• Transactions recorded in the Journal or Subsidiary Books are posted to the Ledger.
• The Ledger contains individual account heads for consolidated financial transactions.

Stakeholders in Financial Accounting

• Trade Unions: Utilize financial reports for negotiating better wages and conditions.
• Researchers: Analyze financial data to study market trends and business practices.

Types of Accounting

• Financial Accounting: Prepares statements for external users; offers historical financial insights.
• Managerial Accounting: Aids internal decision-making through budgeting and analysis.
• Cost Accounting: Focuses on cost control related to goods or services.
• Tax Accounting: Manages tax return preparation and compliance.
• Auditing: Independent examination of financial statements for accuracy.
• Forensic Accounting: Investigates financial discrepancies and fraud.
• Government Accounting: Manages financial operations of government entities.
• Fund Accounting: Used by non-profits for tracking fund usage.
• International Accounting: Addresses global accounting practices and standards.
• Environmental Accounting: Focuses on ecological impacts in accounting.

Objective Evidence Concept

• Ensures accounting is free from bias; relies on verifiable evidence.
• Supporting documents like cash memos and invoices validate transactions.

Five Elements of Financial Statements

• Assets: Resources controlled by an entity expected to generate future benefits (e.g., cash, inventory).
• Liabilities: Existing obligations requiring resource use for settlement (e.g., loans, accounts payable).
• Equity: Remaining value after liabilities are subtracted from assets; represents ownership stake.
• Income: Economic benefits realized during an accounting period (e.g., sales revenue, interest income).
• Expenses: Costs leading to a decrease in equity during an accounting period (e.g., salaries, rent).

Accounting Integration with Other Disciplines

• Accounting is interconnected with various disciplines, enhancing business operations and decision-making.