Question

2. What are the two major types of transactions that occur in the payroll system? What financial statement accounts are affected by each of these types of transactions?

Answer 1

The effects produced on the various accounts by a transaction should be entered into the accounting system as quickly as possible so that information is not lost and mistakes have less time to occur. After analyzing each event, the financial changes caused by a transaction are initially recorded as a journal entry. A list of all recorded journal entries is maintained in a journal (also referred to as a general journal), which is one of the most important components within any accounting system. The journal is the diary of the company: the history of the impact of the financial events as they took place.

A journal entry is no more than an indication of the accounts and balances that were changed by a transaction.

Question: Debit and credit rules are best learned through practice. In order to grasp the use of debits and credits, how should the needed practice begin?

Answer: When faced with debits and credits, everyone has to practice at first. That is normal and to be expected. These rules can be learned quickly but only by investing a bit of effort. Earlier in this chapter, a number of transactions were analyzed to determine their impact on account balances. Assume now that these same transactions are to be recorded as journal entries. To provide a bit more information for this illustration, the reporting company will be a small farm supply store known as the Lawndale Company that is located in a rural area. For convenience, assume that the company incurs these transactions during the final few days of Year One, just prior to preparing financial statements.

Right off the bat, account is characterized as the essential building square of a bookkeeping framework.

An individual record records the present adjust and exchange history of a particular resource, obligation, proprietor's value, income or cost thing.

A company's bookkeeping framework may comprise of scores, hundreds, or thousands of individual records.

The entire rundown of dynamic records dwells in the company's Chart of Accounts. Duty regarding refreshing and revealing record adjusts tumbles to the association's bookkeepers, who serve actually as "managers of the records." Sections beneath additionally characterize account classifications and outline commonplace exchanges for every class.

Record: Second Definition

Furthermore, account alludes to a formal business connection between two gatherings, for the most part a dealer and a client. When one is a record of the other, each gathering has certain rights, benefits, and commitments.

Firms that pitch to different organizations regularly assign their significant rehash clients as records. In such cases, the dealer may designate one of its own business staff as Account administrator, committed to that record. Record administrators in this sense are in charge of offers execution with this client. What's more, they are likewise in charge of building a proceeding with client dealer association with the record.

At times, the merchant may really convey clients as bookkeeping frameworks accounts (as in the main definition above). Banks, for example, convey contributor clients as Liability accounts. What's more, banks convey credit clients as resource accounts