Find out about the five parts to a journal entry and how to decide between debiting or crediting journal entry accounts.
One area of concern for first year accounting students, business students that are only taking accounting because it is a required core class or brand-new bookkeepers is how to prepare journal entries. It is not so much the logistics of presenting the journal entry that causes the most concern but how to figure out which account is debited and which is credited.
Components of a Journal Entry
There are five components to a journal entry:
1. Date: The day on which the account updates are made. For any adjusting journal entries, the date will normally be backdated to the last day of the previous month. Many professional accounting software systems allow the accountant to set up recurring journal entries so in theory a whole year or more of adjusting journal entries could be programmed to post on the last day of each month.
2. Account: This refers to the specific type of asset, liability, revenue, expense or equity account that is being affected by whatever is going on. For example, Cash in Bank is an asset account and Sales is a revenue account.
3. Debit versus Credit: One of the immutable laws of accounting states that assets and expenses are always debited to add to them and credited to subtract from them. Liability, revenue and equity accounts are just the opposite - these accounts are always credited to add to them and always debited to subtract from them. Always, always, always - there is no exception to this rule.
4. Dollar Amount: How much money is changing hands or under the accrual method being accounted for.
5. Description: When writing a description for a journal entry there is a fine line between writing one that is too brief and one that is excessively long. The accountant's goal is to keep the description to the minimum yet be understandable to anyone that might review the journal entry after it has been prepared and posted - for example an external auditor.
Journal Entry Example
On June 5, A retail shop buys $500 of inventory merchandise from ABC Inc.; $100 was paid in cash and $400 of the cost was charged on account.
Here is how the retail shop prepares the journal entry to account for this purchase:
Debit: Merchandise Inventory $500.00
Credit: Cash $100.00
Credit: Accounts Payable $400
Explanation: To record merchandise inventory purchase from ABC Inc.
Journal Entry Standards
In properly written journal entries debits are always shown first. Debits are shown to the left and credits are offset slightly to the right. Finally, debits must equal credits. As shown in this example, total debits of $500 equal total credits ($100 plus $400) $500.
Friday, June 4, 2010
Thursday, June 3, 2010
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University of Essex is ranked top for its Social sciences Department. University of Essex has achieved matrix standard for its student support services. University of Essex has achieved Energy Efficiency Accreditation for its continued investment into energy efficiency. University of Essex provides first class IT facilities and online learning material so that students can study while sitting at home. University of Essex provides online training to teach basics of window and office up to the level required for European Computer Driving License. study in UK university of Essex is a national centre to collect data related to social and economic affairs from academic, governmental and commercial sources in order to make the data available for further analysis. University of Essex is involved in the development of cultural hub strategy. This strategy aims to build rich cultural activities in town and surrounding area. University of Essex has Albert Sloman Library (ASL).This library is equipped with one million books, pamphlets, e-publications and microforms. Library provides 1,115 reader places for students. Computer laboratories of University of Essex are equipped with 500 modern Window PC’s.
Essex University's student support offers advice on many welfare issues including finance and funding, benefits available to students etc University of Essex provides counseling services to its students. Counseling staff offers assistance with educational, social, personal or emotional concerns. All counseling’s are kept confidential. Essex University is highly concerned about the health of its students. There is health centre which offers National Health services including appointments with male and female doctors, nurse for emergency, specialist nurse clinics including asthma, diabetes & sexual health .University of Essex provides state of art dental education unit. This unit offers free dental care service to its students. University of Essex provides paid work placement .This placement helps students in developing employability skills. Essex University provides online vacancy service for its students. University of Essex post vacancies for work experience, internships, gap year and voluntary work positions. University of Essex provides flexible degree courses to its students. In first year students can study four or five subjects and they can study other subjects in next year. Science degrees of University of Essex provides an optional year of industrial placement. Accounting and Finance of University of Essex is ranked 2nd by research assessment exercise. PALLAS programme of University of Essex is ranked as 6th best LLM course in Europe and 10th best in world. School of Law is ranked 5th by research assessment exercise. Department of History of University of Essex is placed 2nd in U.K.
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