Outstanding Expenses

Closing accounts

Cash Book
The outstanding expense means when we avail the services of someone but we did not pay him yet. In
simple, ‘Amount due for expense but not paid yet’.

In accounting, closing a period means that all the balances that are in temporary accounts are
transferred to permanent accounts. This zeroes out the temporary accounts so that they can be used in
the next accounting period.

Cash Book is both a book of prime entry and a book of secondary entry. This is because all cash
transactions are first recorded in the Cash Book and it is from the Cash Book only that the balance of cash
is recorded in the final accounts. Cash book is thus both a jounal and a ledger. Hence Cash Book is a
JOURNALISED LEDGER.
Accounts payable control account
Accounts receivable control account
discount allowed
discount revenue
credit sales
credit purchases
cash sales
cash purchases
amounts paid to Accounts payable
bad debts
cash refund requested for a credit sale returned
amounts received from debtors
posting from the journals GL accounts

Contra Account

contra revenue account

allowance for doubtful accounts

liability decreased = a debit.

expense increased = a debit.

revenue increased = a credit

Contra Account is an opposite entry which offsets the original value of a related
account in the ledger. It is an entry that is contrary to an original account and
opposite balance also. Sales Discount is an Contra a/c. It is opposite to sales a/c.

A contra revenue account is a revenue account that is expected to have a debit

balance (instead of the usual credit balance). In other words, its expected
balance is contrary to—or opposite of—the usual credit balance in a revenue
account. A contra revenue account allows a company to see the original amount
sold and to also see the items that reduced the sales to the amount of net sales.

Allowance for doubtful accounts means creating an allowance(means reduction)

for a particular account that may be uncollectible and will become like bad debt.
L.F- Ledger folio

Posting

ledger/Accounting Ledger

General Ledger

subsidiary ledgers or books

Control accounts

nominal ledger

Nominal Accounts

Purchase Ledger

Sales Ledger

permanent or Real accounts

Temporary accounts

Current liabilities
To Balance c/d

Balance b/d

Balance C/F

Balance B/F

Trial balance

suspense A/c

Accumulated depriciation

Contra Account
Control Accounts

Bank overdraft a/c- OD a/c

Ledger folio no. is one of the column heading in the Journal Book. Similarly there is a Journal Folio no.
column in the Ledger Book.
Ledger folio in Journal indicates the page no. where the corresponding entry can be found in Ledger
book. Vice versa in case of Journal folio.
Used to ease the work of cross-verification, so that there are no full/partial ommition of any entry(ies).

The Classifying Phase in accounting. It involves transferring of debits and credits from journal book to
the ledger accounts, if an account in a journal entry has been debited it will be posted in the ledger
account by entering the same amount on the debit side/column of the respective ledger account.
Similarly, if an account in a journal entry has been credited it will be posted to the ledger account by
entering the same amount on the credit side/column.

The main or "The principal book of accounts". transactions are transferred into concerned accounts
known as Ledgers. Ledger means after the journal entry, posting of similar transactions to particular
account relating to personal, asset, revenue, liability or expense. Ledgers, in accounting , often refers
to the general ledger. The entire group of ledger accounts is referred to as “Chart of Accounts".
Note:cash sales and purchases are not recorded in the accounts receivable and accounts
payable ledgers.

The general ledger is the principal set of accounts or Ledgers or master accounts listed in the chart of
accounts. General Ledger have five types of a/cs. Assets are the first category on the balance sheet, so
assets are the first division for GL. Liabilities, owners equity, revenue and expenses are other
categories of division. GL are listed in the Trial Balance at the end of an accounting period.

supporting ledgers predominantly customer accounts not included in GL &Final a/cs. It is not possible
to record all transactions in general ledger hence transactions are recorded in subsidiary ledgers in
different accounts and their total sum is reflected in (control a/c)general ledger. (eg. a Sales ledger,
Purchase ledger,cash,bank accounts, and fixed assets. See Control Accounts.
A control account is a main or summary-level(controls) account in the GL. Used by large organizations.
Under a Controlling a/c corresponding subsidiary ledgers are created. The total should equal the sum
of similar a/cs. If the totals do not agree, then a reconciliation of the control accounts and subsidiary
ledgers must be made. Common expl for control accounts are a/c payable &receivable(sundry a/cs).
Accounting software posts transactions to the Control accounts in either summary or detail modes.
Common expl for control a/c: cash,a/c payable,inventory,fixed a/c.

nominal accounts are the general ledger accounts like, revenue, expense, and dividend accounts;
except for dividends, they appear on the income statement. Companies periodically close nominal
accounts; they do not close real accounts. As a result, the nominal accounts are also referred to as
temporary accounts.

They are termed 'nominal' because they don't usually relate to an individual person. The accounts
which make up a Profit and Loss account are nominal accounts (as is the Profit and Loss account itself),
whereas an account opened for a specific customer is usually held in a subsidiary ledger (the sales
ledger in this case) and these are referred to as personal accounts. the nominal ledger will usually
include a control account to show the total balance of the subsidiary ledger (a control account can be
termed 'nominal' because it doesn't relate to a specific person).

A subsidiary ledger which holds the accounts of a business's suppliers. A single

control account is held in the nominal ledger which shows the total balance of all the accounts in the
purchase ledger.

A subsidiary ledger which holds the accounts of a business's customers. A control account is held in the
nominal ledger (usually called a debtors' control account) which shows the total balance of all the
accounts in the sales ledger.

The permanent accounts are classified as (balance sheet a/cs )asset, liability, and owner's equity
accounts, with the exception of the owner's drawing account. The reason why they are called
permanent accounts is because they are never closed at the end of an accounting period. In a sense,
they are permanent or Real fixtures on the financial statements for ever.

Accounts that are used for a specific Tim period. These are closed at the end of every accounting
period to start a new period with a zero balance. This is done in order to avoid a mix-up of the balances
between two or more accounting periods. Temporary accounts are revenues, expenses, and income
summary. It helps to see the profits or income for a particular period.

the liabilities of a company which are supposed to be paid within twelve months or a year. These are
generally called as Short term Liabilities. list of Current Liabilities Accounting are: Accounts
payable,Interest payable ,Accrued Expenses.Dividends,,Taxes payable, Bank Account overdrafts,Bills
payable
When you total-up the debit & credit sides of an account & put the difference on the shorter side, so as
to agree the totals, if it is to be carried forward to; - next month or - a line below in the same page. The
balance of an account at the end of an accounting period, which will be taken forward to become the
balance at the beginning of a new period.
When you start recording any account with the balance from; - previous month or - that appearing
immediately above.

When you total-up the debit & credit sides of an account & put the difference on the shorter side, so as
to agree the totals, if it is to be carried forward to; - new books of account or accounting from next year
or - new page.

When you begin recording any account with the balance from; - old books of account or from previous
accounting year or - that appearing on the earlier page.

Trial Meaning = The act of testing something/Trying something to find out about it. A trial balance is a
statement of ledger account balances, at the end of any chosen period. The trial balance is a tool for
verifying the correctness of debit and credit amounts. It is an arithmatic check under the double entry
system and to help in locating errors.

It is a Temporary a/c when we are not sure where to record in general ledger entries. Sometimes when
we are not able to tally our Trial Balance, we place the difference in the Suspense A/c to temporarily
tally your Trial Balance. A suspense A/c could be a Personal, Real or Nominal A/c depending on the
situation. In Balance Sheet, it may be Asset or Liability.

Accumulated depreciation is the total value of depreciation of an asset up to a single point in its life.
Accumulated depreciation is a contra asset account, meaning its natural balance is a credit that
reduces the overall asset value.

A contra account is used in a general ledger to reduce the value of a related account when the two are
netted together. A contra account's natural balance is the opposite of the associated account. If a debit
is the natural balance recorded in the related account, the contra account records a credit. For
example,Accumulated depreciation.

This facility is given to the current account holders only. Interest will be charged for amount withdrawn
excessively. Bank overdraft is considered a current liability a/c for a company as Bank overdraft a/c.
journal entry for bank overdraft in firms book,When Money is withdrawal from the bank: we have to
credit to bank overdraft a/c and debit to cash a/c. Cash or Bank A/c Dr To Bank OD A/c Cr (Being
Overdraft received from Bank). When goods are purchased from Bank overdraft a/c: Purchased A/c Dr
To Bank OD A/c. When payment is made to the creditor, creditor A/c Dr To bank OD A/c (being
payment is made to the creditor)
It is a set of accounts. It contains all
accounts of business enterprises
whether real, nominal or personal.
Capital Expenditure
Revenue Expenditure

Deferred Revenue Expenditure

The expenditure incurred is shown as an asset on the Balance Sheet. The asset is depreciated over its
useful life, and the amount of depreciation debited to the Profit and Loss Account.
The expenditure is debited to the Profit and Loss Account in the year it is incurred.
The expenditure is shown as an asset and debited to the Profit and Loss Account in annual instalments
over the period for which it provides a benefit.