FAR110 Financial Accounting 1 Topic 4 PDF

FAR110 FINANCIAL ACCOUNTING 1 TOPIC 4 JOURNAL, LEDGER AND TRIAL BALANCE LEDGER 2  TYPES OF LEDGER General classification 1)Personal ledger (consists of personal accounts, re headed with the name of a person or business. eg debtors or creditors) 2)Impersonal ledger...

FAR110 FINANCIAL ACCOUNTING 1 TOPIC 4 JOURNAL, LEDGER AND TRIAL BALANCE LEDGER 2  TYPES OF LEDGER General classification 1)Personal ledger (consists of personal accounts, re headed with the name of a person or business. eg debtors or creditors) 2)Impersonal ledger (Records transactions that are not headed with the name of any person) 3  TYPES OF LEDGER Types Contents Sales ledger all account receivables Purchase all account payable ledger General accounts other than the ledger account receivable and account payable Cash book cash and bank account 4  JOURNAL ENTRIES POST TO LEDGERS Dr Cash, Bank, Discount Allowed and Cash Receipts Journal Cr a/c stated in particulars Cash Payment Journal Cr Cash, Bank, Discount Received and Dr a/c stated in particulars Petty Cash Cr Petty cash a/c and Journal/ Cash book Dr respective a/cs General Journal Dr and Cr respective a/cs 5  JOURNAL ENTRIES POST TO LEDGERS Purchases Journal Dr purchases a/c, Cr creditors ind. a/c Sales Journal Dr debtors ind. a/c, Cr Sales a/c Return Inward Journal Dr Return Inward a/c, Cr debtors ind. a/c Return Outward Dr Creditors ind. a/c, Journal Cr Return Outward a/c 6  LEDGER – 3 COLUMN Eg: On 2/2 Paid electricity RM100 by cash Dr Utilities (electricity) RM100 Cr Cash RM100 Cash Date Particular Dr(RM) Cr(RM) Balance(RM) Feb 1 Balance b/d 1000.00 Feb 2 Utilities 100.00 900.00 Utilities Date Particular Dr(RM) Cr(RM) Balance(RM) Feb 2 cash 100.00 100.00 7 TRIAL BALANCE 8  TRIAL BALANCE 🞭 List off all ledger a/cs with balances at end accounting year. 🞭 Accounts with “zero” balances are excluded 🞭 Purpose ⮚ test equality of debit & credit balances ⮚ Help to localise error ⮚ Facilitate in preparing financial statements 9 HOW TO PREPARE TRIAL BALANCE 1. Write heading with title of companies and “Trial Balance as at...” 2. Transfer debit balance and credit balance on respective column – remember! Refer bal b/d side!! 3. Total up debit and credit column 10 LIMITATION OF TRIAL BALANCE 🞭 Trial balance not balance 1. Omission part of entry 2. Errors of transposition 3. Errors in addition in ledgers 4. Posting to incorrect sides of a/c 5. Errors in adding up Trial Balance’s total 🞭 Errors not shown by Trial Balance 1. Error of omission 2. Error of commission 3. Error of principle 4. Complete reversal of entries 5. Compensating errors 11  EXAMPLE AYUMANIZA ENTREPRISE TRIAL BALANCE AS AT 30 JUNE 2017 DEBIT CREDIT (RM) (RM) CAPITAL 20,000 CASH 6,000 ACCOUNT PAYABLES 2,000 ACCOUNT RECEIVABLES 4,000 SALARIES 15,000 SALES 20,000 PURCHASES 12,000 FURNITURES 5,000 42,000 42,000 12 FINANCIAL STATEMENTS 13  Preparing financial statement TB to FS E, R, Opening and closing inventory …….. SOPL A (including closing inventory), O, L ……… SOFP