WELCOME TO OUR PRESENTATION

We are…… Tasnova Jarin Tonny ID:151-35-1054

Md.Tanvir Rahman ID:151-35-881

Md.Rezwan Ul- Hasan ID:151-35-917

Anisul Islam ID:151-35-846

Sarwar Murshed Tushar ID:151-35-1001

MD. Solaiman ID:151-35-1107

The Recording process

Overviews:

Debits and Credits Entries of Debit and Credit The Journal The Ledger The Trial Balance Limitation of Trial Balance and Errors

Debits and Credits

Debit: A debit is an accounting entry that either increase an asset or expenses account, or decrease a liability or equity account. It is positioned to the left in an accounting entry.

Credit: A credit is an accounting entry that either increase a liability or equity account, or decrease an asset or expense account. It is positioned to the right in an accounting entry.

Debit Balance If Debits are greater than Credits, the account will have a debit balance.

Credit Balance

Credits are greater than Debits, the account will have a credit balance.

Entries of Debit and Credit

Assets and Liabilities

Chapter 3-23

AssetsDebit / Dr. Credit / Cr.

Normal Balance

Chapter 3-24

LiabilitiesLiabilitiesDebit / Dr. Credit / Cr.

Normal BalanceNormal Balance

Assets - Debits should exceed credits.

Liabilities – Credits should exceed debits.

The normal balance is on the increase side.

Owner’s Equity

Chapter 3-25

Debit / Dr. Credit / Cr.

Normal BalanceNormal Balance

Owner’s EquityOwner’s Equity

Chapter 3-25

Debit / Dr. Credit / Cr.

Normal BalanceNormal Balance

Owner’s CapitalOwner’s Capital

Chapter 3-23

Owner’s DrawingOwner’s DrawingDebit / Dr. Credit / Cr.

Normal BalanceNormal Balance

Owner’s investments and revenues increase owner’s equity (credit).

Owner’s drawings and expenses decrease owner’s equity (debit).

Revenues and Expenses

Chapter 3-26

Debit / Dr. Credit / Cr.

Normal BalanceNormal Balance

RevenueRevenue

Chapter 3-27

Debit / Dr. Credit / Cr.

Normal BalanceNormal Balance

ExpenseExpense

The purpose of earning revenues is to benefit the owner(s).

The effect of debits and credits on revenue accounts is the same as their effect on Owner’s Capital.

Expenses have the opposite effect: expenses decrease owner’s equity.

What is a journal?

A journal is a detailed account that records all the financial transactions of a business, so that they can then be used for future reconciling and transfer to other official accounting records.

What should an Accounting Journal Record?

The appropriate date. The amount’s and account’s that will be debited. The amount’s and account’s that will be credited. A short description. A reference such as a check number.

Cheat sheet and Debit and Credit

Jamal Uddin starts his business which he named “Top Lather BD”. The business journey was started on November,2016.The selected transaction occurred during November.

Transactions:

November. 01.Invested $10000 cash is the business. 05.Purchased equipment for $12000 paying $5000 in cash & balance on account. 25.Paid $3000 cash on balance owed for equipment. 28.Hired a manager at a salary of $ 1000 per month. 30.Withdraw $500 cash for personal use.

JOURNAL Date Account Title & Explanation Ref Debit Credit

November 01Cash Dr.Capital Cr.(Invested cash in business)

10000 10000

November 05

Equipment Dr.Cash Cr.Account Payable Cr.(Purchased equipment by cash and due)

12000 5000 7000

November 25Account Payable Dr.Cash Cr.( Paid cash for due)

3000 3000

November 28Not a transaction

November 30

Drawings Dr.Cash Cr.(Withdraw cash for personal use)

500 500

CashDate Explanation Ref Debit Credit Balance

November 01 Capital 10000 10000 Dr.

05 Equipment 5000 5000 Dr.

25 Account Payable 3000 2000 Dr.

30 Drawing 500 1500 Dr.

What is Laser ?A ledger is an accounting book that facilitates the transfer of all journal entries in a chronological sequence to individual accounts

Capital

Equipment

Date Explanation Ref Debit Credit Balance

November 01 Cash 10000 10000 Cr.

Date Explanation Ref Debit Credit Balance

November 05 Cash 1200012000 Dr.

Account Payable

Account Payable

Drawing

Date Explanation Ref Debit Credit Balance

November 05 Equipment 7000 7000 Cr.

November 25 Cash 3000 4000 Cr.

Date Explanation Ref Debit Credit Balance

November 30 Cash 500 500 Dr.

Trial Balance

What and Why ?1. List of balances2. First step towards financial statement3. Ensures every entry are recorded 4. Assures the entries are recorded correctly 5. Tool of detecting errors

Account Title Debit Credit

Cash 1500

Capital 10000

Equipment 12000

Account Payable 4000

Drawing 500

Total 14000 14000

Trial Balance

Limitations of a Trial Balance:

A trail balance only checks the sum of debits against the sum of credits. That is why it does not guarantee that there are no errors. A trial may balance even when:

Missing journal entry Posting incorrect journal entry Posting journal entry twice Posting or Journalizing incorrect account Reversing of amount

What Errors will be happen?

Error of omission Error of original entry Error of reversal Error of commission Error of compensating

Locating Errors:

Checking math Comparing balance Checking journal summaries Checking journal and ledger entries