Question

Conduct a search for an article published within the last 5 years that relates to the accounting field. The article you select should be a full-text article, not just an abstract. Once you have located an article, read the article and prepare a 250 word summary of your article. The article summary should be written in your own words.

Answer 1

Accounting is the best way to keep records of large number of transactions on day-to-day basis. Solutions for various financial transaction “Books of Original Entry”.

As per human tendency it is easy to learn the things happened two days back but it is more difficult to remember all the transactions of the week, month quarter or a year. Thus for recording each transactions journal entry is passed in chronological order. Journal further divided into sub-ledger like purchase Register, sale register, expense register etc. Journal entry is the base of accounting. With it wrong passing wrong account will get hit which may give absurd results and it’s consequences thereof.

Recording in journal is made according to the rule of Double entry system. Double entry system is based on principle of “Every debit has a credit and every credit has a debit”.

In order to keep a proper record of the transactions, account is classified as Personal A/c, Real A/c, Nominal A/c with respective rules. Personal A/c classified the transaction related to an individual, person, artificial person etc. Rule for Personal A/c is “ Debit the Receiver, Credit the Giver”.

Second is Real A/c , It is related with all those things whose value can be measured in terms of money. Rule for Real A/c is “ Debit what comes in, Credit what goes out.”

Third is Nominal A/c which segregate all the expenses and income thereof. Rule for Nominal A/c is “Debit the expenses and loses and Credit income and gains”.

Again the action is still incomplete after recording the transaction in your journal book unless narration is mentioned against each transaction. True accountant is the person who knows all the rule and know how the transaction need to be shown to reflect true and fair view of financial statement.