Question

0. How do you determine the balance of an account?

0. What is the double entry system

0. What is the trial balance? Why is it needed?

0. Do you think being organized and having time management skills is important in accounting?

0. What is a chart of accounts? Why is it needed for businesses?

Answer each question in 100+ words

Answer 1

(1) :- Determine the balance of an account as follows :-

1• Identify the starting balance for the account:- Your starting balance is equal to the ending balance of the previous accounting or reporting period.

2• Calculate any additions to the account :- For asset accounts, add any sales revenue, inventory added or other additions. For liability accounts, any invoices, expenses or prepayments are considered additions to the account.

3• Isolate the reductions in the account balance :- For asset accounts such as the cash account, reductions are debits, such as payments issued, inventory reductions and refunds. Liability accounts are reduced by credits received and similar activity.

4• Determine your ending balance :- The ending balance is the difference between the beginning balance, additions and reductions.

(2):- DOUBLE ENTRY SYSTEM :- The double entry system of accounting or bookkeeping means that every business transaction will involve two accounts (or more).

• For example, when a company borrows money from its bank, the company's Cash account will increase and its liability account Loans Payable will increase. If a company pays $200 for an advertisement, its Cash account will decrease and its account Advertising Expense will increase.

• Double entry also allows for the accounting equation

(assets = liabilities + owner's equity) to always be in balance.

• A third aspect of double entry is that the amounts entered into the general ledger accounts as debits must be equal to the amounts entered as credits.

(3):- TRIAL BALANCE :- A trial balance is a book keeping worksheet in which the balances of all ledgers are compiled into debit and credit columns.

• A company prepares a trial balance periodically, usually at the end of every reporting period. The general purpose of producing a trial balance is to ensure the entries in a company's bookkeeping system are mathematically correct.

NEEDED OF TRAIL BALANCE :- Preparing a trial balance for a company serves to detect any mathematical errors that have occurred in the double-entry accounting system. If the total debits equal the total credits, the trial balance is considered to be balanced, and there should be no mathematical errors in the ledgers. However, this does not mean there are no errors in a company's accounting system.

EXAMPLE:- Transactions classified improperly or those simply missing from the system could still be material accounting errors that would not be detected by the trial balance procedure.

(4):- Good organizational and time management skills can help you to get your projects done on time, an essential skill for the workplace. While it seems that some people are naturally organized, many others have to actively work at it. A smart business owner will give employees the tools that they need for proper time management.

• BENEFITS :- Being organized allows you to quickly find anything that you need, whether it's a contract you signed yesterday or an email you received two years ago. A time management plan helps you to break down large goals into smaller, easily achievable tasks and forces you to complete those tasks on schedule. It helps you to progress in a linear fashion towards meeting a goal.