Financial Accounting: Double Entry Bookkeeping and Trial Balance

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Date particular PR Debit Credit
2016
01-06-
2016 bank a/c DR 65000
to capital a/c 65000
02-06-
2016 purchase a/c DR 8000
to Mohammad a/c 8000
07-06-
2016 cash a/c DR 4000
to sales a/c 4000
08-06-
2016 creditor a/c DR 4000
to bank a/c 4000
14-06-
2016 Mohammad a/c DR 75
to bank 75
15-06-
2016 Revenue a/c DR 12000
to inventory 12000
16-06-
2016 purchase a/c DR 10000
trade payable 10000
18-06-
2016 computer a/c DR 3000
to cash 3000
20-06-
2016 Rent a/c DR 150
to bank a/c 150
21-06-
2016 Revenue a/c DR 10000
to inventory a/c 10000
25-06-
2016 drawings a/c DR 100
to bank 100
30-06-
2016 stationary a/c DR 30
to cash 30
LEDGER ACCOUNT

DATE PARTICULAR J.F
AMOUN
T DATE PARTICULAR
01-06-
2016 BANK 65000
01-06-
2016 CAPITAL
02-06-
2016 PURCHASE 8000
02-06-
2016 MOHUMMAD
07-06-
2016 CASH 4000
07-06-
2016 SALES
08-06-
2016 CREDITOR 4000
08-06-
2016 BANK
14-06-
P2016 MOHUMMAD 75
14-06-
2016 BANK
15-06-
2016 REVENUE 12000
15-06-
2016 INVENTORY
16-06-
2016 PURCHASE 10000
16-06-
2016 TRADE PAYABLE
18-06-
2016 COMPUTER 3000
18-06-
2016 CASH
20-06-
2016 RENT 150
20-06-
2016 BANK
21-06-
2016 REVENUE 10000
21-06-
2016 INVENTORY
25-06-
2016 DRWAINGS 100
25-06-
2016 BANK
30-06-
2016 STATIONARY 30
30-06-
2016 CASH
Lo1 Record business transactions using double entry book-keeping, and be able to extract a trial balance.
P1 Apply the double entry book- keeping system of debits and
credits. Record sales and purchase transactions in a general
ledger.
double entry account is also called double entry book keeping . double entry accounting is the accounting
which requires all the transaction in all the business. Every credit will be matched with debit amount in
other words debit and credit must have equal amount it must also be equal in very book of transition either
it was profit and loss account, balance sheet, or ledger account. event to be recorded in two accounts that is
aerates and liabilities.
for example – when a company or business takes a loan from the bank it receives a cash from the loan and
creates a liability that can be repay in future in single traction affects both the assists and liability account.
in assists side when debit increases credit decreases and in liability when credit increases debit. The trail t
decreases and when the assists and liabilities it is equal to the equity and in equity debit decreases when
credit increases the debit entry gives the positive effect equal to the credit. the accounting and book
keeping records and measures all the transactions of day to day financial activity. under a systematic
account there are seven types of accounts assists, liability, equity, loss, gains, expenses, and revenues to
complete the debit and credit side the amount should be equal
D1 Correct recording of transactions and the production of an accurate trial balance by completing the balance
off of ledger accounts, checking that each transaction is recorded in line with accepted accounting principle
The trail balance shows the advantage double entry system built in error

M1 Analyse sales and purchase transactions to compile a trial
balance using double entry book keeping appropriately and
effectively.
trial balance is a closing balance of ledger accounts on an exact date it is generally prepared at the end of
the accounting period or in other words it was prepared at the end of the financial year. Assets and
expenses accounts written on the debit side of the trial balance whereas liabilities and income written on
the credit side of the trail balance. if all the transaction is measured correctly and all the amounts are
correct the then the total of trial balance of debit side will be equal to the total balance of credit side. trial
balance is the basic paper that accountants use when prepared a financial statement. if the total balance is
not equal the records must be rechecked or resolve before the before the financial statement. Trail balance
prepared for rectification and identification of mistakes and errors.
D1 recording of transactions and the production of an accurate
trial balance by completing the balance off of ledger Correct
accounts, checking that each transaction is recorded in line with
accepted accounting principle
The trail balance shows the advantage double entry system built in error trail balance shows the statement
the total of debit and credit balance of accounts . the total of debit amount shall be equal to the credit
amount. hence, the trial balance is accurate part of the accounts.
the errors which are in trail balance: mistake of amounts in the debit side and credit side of the balances
figure. these errors occur due to wrong amount, mistakes in totalling, wrong casting of the day books. this is
called error of commission. Preparation of the trial balance is the third step in the process of accounting.
Firstly, the transaction is recorded in journal then trial balance will be prepared for check the exact amount of
debit and credit side that debit amount is equal to the credit. For preparing a trail balance company needs to
closing all the ledgers and the cash book as well as the bank book.
rules preparation of trial balance .
assets , drawing account , expenses account , cash balance , bank balance , any losses
P2 Produce a trial balance, applying the use of the balance off rule
to complete the ledger
to prepare a trial balance any time , it is necessary to determine the balance of each account. This process is
known as balance of. The trail balance can be prepared by listed each closing balance from the general ledger
account. A trial balance is the account of all the balances in the nominal account. In order to prepare a trail,
balance an account company needs to complete or balance off the ledger accounts. Company needs to work
out the on each of these accounts as either a debit or a credit balance. It serves as a check to ensure that for
every transaction. a trial balance prepared for the main financial statement , the balance sheet and the profit
and loss account.
LO2 Prepare final accounts for sole traders, partnerships and limited
companies in accordance with appropriate principles, conventions and
standards.
M2 Analyse profit and loss accounts, balance sheet and cash flow
statements appropriate for the given examples
usually profit and loss account made for income and expenses of annually , weekly and monthly , in the private
limited and small companies profit and loss account show the final statement of financial year. The formula of
net profit. The net profit show that whether you are in profit or in loss the balance sheet is of three common
financial statement businesses use to provide information to outside stakeholders. publically traded
corporation have to submit a balance sheet, cash flow statement, income statement, at several time in each
year covering quarterly and annual data. Sole trader does not need to maintain a balance sheet. Sole trader

keep income and expenses it will be enough for tax rate. Differences between a limited company, partnership,
and a sole trader. A sole trader is a person who runs a business on his own. a company limits is a spattered
legal person means company limited is a separate person it can own a property on its own right. The fourth
financial statement of a sole proprietorship is a cash flow statement it defines the flow of cash that from
where cash is inflow and in what time cash is outflow. is also shows that ow much cash are in hand at the
starting and at the end. This information is very important to the management and the organisation because
cash management is crucial for the company, prosperity, and eventual survival of the business.
. P3 Prepare final accounts from given trial balance figures,
adjusting for accruals, depreciation and prepayments
For both revenue and capital, a trial balance is a list of all the general accounts contained in the ledger of
business. Each nominal ledger account will hold either a debit balance and a credit balance. The value of debit
balance on the debit side of trial balance and the value of credit balance shows the credit side of trial balance.
The trading profit and loss account, balance sheet and other financial reports and accounts information can be
produce using the ledger account listed on the same balance. Form the trail balance the amount of profit and
loss account gas been shown. The main aim of trial balance is to show that debit balance is equal to the
balance of credit. If there is any mistake in the debit balance and the credit balance means if these are not
equal, then there will be an error in the nominal account. The trail balance is generally prepared by the
accountant or a bookkeeper who used day books for their daily expenses and income and to use financial
transaction and then post into nominal and personal account of the company or organisation. Trial balance is
the part of the double entry book keeping system. The trail balance is a list of closing balance of all the
accounts at the date of financial year it is generally prepared at the end of the financial year.
P4 Produce final accounts for a range of examples that include
sole traders, partnerships or limited companies.
Final account is an account that refer to the final trail balance at the end of the accounting period from which
the financial statement can be maintained this final accounts includes all the journal entries used to close the
all books accounts etc. for a manufacturer financial accounts consist manufacturing account, trading accounts
profit and loss account and profit and loss preparation account. Final account shows the both the financial
position of a business along with profit, they are used for external and internal business.
LO3 Perform bank reconciliations to ensure company and bank
records are correct
P5 Apply the bank reconciliation process to prepare a number of
bank reconciliations.
bank reconciliation statement is a document matched with balance sheet if the company. balance sheet is the
financial statement of the company. Bank reconciliation is the fundamental of both accounting and financial
modelling. Bank reconciliation are will be completed on the daily routine and regular intervals to confirm that
company’s record is correct. In the bookkeeping, a bank reconciliation statement is the process that define the
difference between bank balance show the organisation statement supplies by the bank and the amount of
own organisation. Bank reconciliation caused the difference between the two balance. Bank reconciliation
statement is a part of the reconciliation which sets out the countries. Sometimes it is very easy to check the
recent transection in the bank statement and the organisation records. Usually, all the firms open a current
account with a bank and in order to record the transection entered into with the bank, maintain a bank
column in the cash book. Bank also open a separate account for each firm in its ledger and enters all the
transection in it. A bank reconciliation statement is n prepared when an account holder gets duly completed
passbook from the bank. Immediately on receiving the pass book, tallies the bank balance shown by the cash

book with the balance shown by the pass book and, in case of any difference items appearing in the pass book
are checked and ticked with the items appearing in the cash book. Unticked items in both the books will be the
points of the difference.
M3 Apply the reconciliation process demonstrating the use of
deposit in transit, outstanding checks and Not Sufficient Funds
(NSF) check.
A statement of bank reconciliation statement is prepared when an account holder gets the duly completed
pass book from the bank. Immediately on receiving the pass book, he tellies the bank balance shown by the
cash book with the balance shown by the pass book and, in case of any difference, items appearing in the pass
book and in case of any, difference, items appearing in the pass book are checked and ticked within the items
are appearing in the cash book unticked items in the both the books will be the points of the difference. These
will be noted on the piece of the paper and the, with the help of these cause of difference, a bank of
reconciliation will be prepared a bank reconciliation statement can be prepared by taking the balance either as
per cash book or as per pass book as a starting point. If the statement is started with the balance as per the
bank column, of the cash book, the answer arrived at in the end will be the balance as per the pass book.
Alternatively, if the statement is started with the balance as per the pass book the answer arrived at the end
will be the balances per the pass book.
D3 Prepare accurate bank reconciliations that apply appropriate
tools and techniques to check general accounts and balance
sheets
A bank reconciliation statement locates the errors or omission that may have been committed either on the
part of the customer or the bank. The errors so detected can be rectified accordingly.
by preparing the bank reconciliation statement , the customers become sure of the correctness of the bank
balance shown by the cash book. It helps company in making further transection with the bank.
a reconciliation statement facilities the preparation of a revised cash book. for example, the entries relating to
bank charges, interest allowed or charged by the bank, direct payment by the bank open the behalf etc. will be
recorded in the passbook but for which there is no entry in the cash book. such entries will now have recorded
in the cash book as well.
periodic preparation of this statement reduces the chances of embezzlement by the staff of the firm or even
that of the bank.
a reconciliation statement helps in revealing the unnecessary delay on the collection of cheques by the bank.
it also help in keeping a track of cheques which have been sent to the bank for collection.
4 Produce accurate accounts that have been reconciled applying the appropriate method.
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