Accounting Treatments | Accounting

Running head: ACCOUNTING
Accounting
Name of the Student:
Name of the University:
Author’s Note:

1ACCOUNTING
Table of Contents
Accounting treatments:....................................................................................................................2
Purchas of goods for cash............................................................................................................2
Providing services for cash..........................................................................................................2
Providing services on account.....................................................................................................2
Purchase services on account.......................................................................................................3
Payment of previously recorded expenses...................................................................................3
Receipts of previously recorded revenue.....................................................................................3
If the above transaction is not recorded and posted.....................................................................4
Bibliography:...................................................................................................................................5

2ACCOUNTING
Accounting treatments:
Purchas of goods for cash
ABC Security Limited purchased security instruments for cash from the BM Equipment
Limited for a cash of $10,000. The evidence required for entering this transaction is the sales
invoice raised by the BM Equipment and the cash receipt issued by them.
To record this transaction Equipment account is to be debited by $10,000 and the cash
account is to be credited by $10,000. Hence, a fixed assets account will be increased and a
current assents account will be decreased.
Providing services for cash
ABC Security Limited provided security services to XYZ housing society on an event for
cash of $5,000. The source document required for recording the transaction is the invoice raised
to the XYZ housing and the cash receipts issued to the XYZ housing.
For the above transaction the cash account is to be debited by $5,000 and the service
revenue account is to be credited by $5,000. Therefore, an assets account will be increased and a
revenue account will be increased in contrast.
Providing services on account
ABC Security Limited provided security services to PQR bank for the month of
December 2019 on account for an amount of $15,000. To record this transaction the invoice
raised to the PQR bank is needed as the evidence.
For the above transaction, the Accounts receivable account is to be debited and the
service revenue account is to be credited by $15,000. Hence, an asset account will be increased
and a revenue account will be increased too.

3ACCOUNTING
Purchase services on account
ABC Security Limited consumed electricity services from the state electricity provider.
The state electricity provider raised a bill for the last month of an amount of $500. Hence, to
record this transaction the electricity bill raised by the state electricity company is needed.
To record this transaction, the electricity expenses account will be debited and the
electricity payable account is to be credited. Hence, an expenses account will be increased and a
current liability account will be increased.
Payment of previously recorded expenses
Paid electricity bill for the last month to the state electricity company for an amount of
$500. The receipt issued by the state electricity company is needed for recording this transaction
as an evidence.
To record this transaction, the electricity payable account is to be debited and the cash
account is to be credited. Hence, the liability account will be decreased and the current assets
account will be decreased.
Receipts of previously recorded revenue
Received the payment from the PQR bank for the services provided in the last month for
an amount of $15,000. The cash receipts issued to the company is needed as an evidence for
recording this transaction.
To record this transaction, the cash account is to be debited and the accounts receivable
account is to be credited. Hence, an assets balance will be increase and on the contrary another
assets account will be decreased.

4ACCOUNTING
If the above transaction is not recorded and posted
If the above transaction of receipts from the PQR bank is not recorded and posted in the
books of accounts, then the accounts receivable account will be overstated and the cash account
will be understated. There will be no impact on the total assets as the transaction involves both
the current account. Therefore, the trial balance will not be affected at all.

5ACCOUNTING
Bibliography:
Harrison Jr, W. T., Horngren, C. T., & Thomas, C. W. (2014). Financial accounting. Pearson
Education.
Henderson, S., Peirson, G., Herbohn, K., & Howieson, B. (2015). Issues in financial accounting.
Pearson Higher Education AU.
Schroeder, R. G., Clark, M. W., & Cathey, J. M. (2019). Financial accounting theory and
analysis: text and cases. John Wiley & Sons.
Weygandt, J. J., Kimmel, P. D., & Kieso, D. E. (2019). Financial accounting. Wiley.