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Done - Assignment - Fundamentals of Book-Keeping & Accountancy

Done - Assignment - Fundamentals of Book-Keeping & Accountancy

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Published by: IGuha on Jan 07, 2010
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06/21/2011

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FUNDAMENTALS OF BOOK-KEEPING & ACCOUNTANCY
Subject Paper Submitted By
Indradeep Guha
(Roll no: BIMS/AC/2/2008/6005)(Course: PGDIM)
*Answers to: Q1 (a/b), Q2 (a/b), Q4 (a/b), Q5(a/b) & Q6 (a/b/c/d/g)
 
Q1.(a) What is Book-keeping and Transaction? Explain Double Entry and Single Entry Book-Keeping.A.
A
transaction
is anagreement,communication, or movement carried out between separate entities or objects, often involving theexchangeof items of value, such asinformation, goods, services, and money.
Bookkeeping
is the recording of financial transactions. Transactions include sales, purchases, income, and payments by an individual or organization. Bookkeeping is usually performed by a bookkeeper. Bookkeepingshould not be confused withaccounting. The accounting process is usually performed by anaccountant. The accountant creates reports from the recorded financial transactions recorded by the bookkeeper. There are somecommon methods of bookkeeping such as theSingle-entry bookkeeping systemand theDouble-entry  bookkeeping system. But while these systems may be seen as "real" bookkeeping, any process that involves therecording of financial transactions is a bookkeeping process.Two common bookkeeping systems used by businesses and other organizations are thesingle-entry bookkeepingsystemand thedouble-entry bookkeeping system.Single-entry bookkeeping uses only income and expense accounts,recorded primarily in a revenue and expense journal. Single-entry bookkeeping is adequate for manysmall businesses. Double-entry bookkeeping requires posting (recording) each transaction twice, usingdebits andcredits.
Single-entry bookkeeping system
also known as
Single-entry accounting system
is a method of bookkeepingrelying on a one sidedaccountingentry to maintain financial information.Most businesses maintain a record of all transactions based on thedouble-entry bookkeeping system.However,many small, simple businesses maintain only a single-entry system that records the "bare-essentials." In somecases only records of cash,accounts receivable,accounts payableandtaxespaid may be maintained. Records of  assets,inventory, expenses,revenuesand other elements usually considered essential in an accounting system may not be kept, except in memorandum form. Single-entry systems are usually inadequate except whereoperations are especially simple and the volume of activity is low.This type of accounting system with additional information can typically be compiled into anincome statementand balance sheetby a professional accountant.Single-entry systems are used in the interest of simplicity. They are usually less expensive to maintain thandouble-entry systems because they do not require the services of a trained person.Demerits of Single-entry systems are as follows:1.Data may not be available to management for effectively planning and controlling the business.2.Lack of systematic and precise bookkeeping may lead to inefficient administration and reducedcontrol over the affairs of the business.3.Single-entry records do not provide a check against clerical error, as does a double-entry system. Thisis one of the most serious defects of single-entry systems.
4.
Single-entry records seldom make provision for recording all transactions. In addition, many internaltransactions, such asadjusting entriesare often not recorded.
2
 
5.Because no accounts are provided for many of the items appearing in both the Income Statement andBalance Sheet, omission of important data is possible.6.In the absence of detailed records of all assets, lax administration of those assets may occur.7.Theft and other losses are less likely to be detected.Sample revenue and expense journal for single-entry bookkeeping below
No.DtItemsRevenueExpenseSalesSalesTaxServicesInventoryAdvertFreightOffcSupplMisc
7/13
 Balance forward 
1,826.00835.001,218.0098.00510.00295.00245.00150.0083.5061.5010417/13Printer-Advertflyers450.00450.0010427/13Wholesaler - inventory380.00380.0010437/16officesupplies92.5092.50--7/17bank deposit1,232.00- Taxablesales400.0032.00- Out-of-state sales165.00- Resales370.00- Servicesales265.00 bank7/19bank charge23.4023.4010447/19petty cash100.00100.00TOTALS3058.001,880.902,153.00130.00775.00675.00695.00150.00176.00184.90
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