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Journal Entry
Bank Reconciliation
Cost centres (project wise)
Party Reconciliation (Debtors & Creditors)
Sales, purchase, payment, receipt, debit note, credit note
Preparation and finalisation of P/L & B/s…etc various things


Vouching is the act of reviewing documentary evidence to see if it properly supports entries made in the accounting records. For example, an auditor is engaged in vouching when examining a shipping document to see if it supports the amount of a sale recorded in the sales journal. Vouching can work in two directions. For example, an auditor can trace actual inventory items back to the accounting records to see if the items are properly documented, or start with the inventory records and trace back to the warehouse shelves to see if the inventory exists.

When engaged in vouching, an auditor is looking for any errors in the amount recorded in the accounting records, as well as ensuring that the transactions are recorded in the correct accounts. The auditor is also verifying that transactions have been properly authorized.

When vouching uncovers an error, the auditor may need to increase the sample size being audited in order to gain assurance that a system operates properly. An alternative is to engage in different auditing procedures.

Key Point of Vouching : –

It’s a essential pats of basic accounting Vouchers should be adequately categorized. Voucher must present date of such transaction. Its present true and fare view of such transaction. Vouchers helps in identify the credibility of business. Voucher are the record of evidence for such transaction which is incurred by any authorized person on behalf of company it is also signed by authorized person as per appointed by the company, firm. It’s a most part to control of undefine, unnecessary expenses.

Bank Reconciliation

A bank reconciliation statement is a document that compares the cash balance on a company’s balance sheet to the corresponding amount on its bank statement. Reconciling the two accounts helps identify whether accounting changes are needed. Bank reconciliations are completed at regular intervals to ensure that the company’s cash records are correct. They also help detect fraud and any cash manipulations.

Bank Reconciliation Procedure : –

Deduct any outstanding checks.
This will provide the adjusted bank cash balance.
Using the cash balance shown on the bank statement, add back any deposits in transit.
Next, use the company’s ending cash balance, add any interest earned and notes receivable amount.
Deduct any bank service fees, penalties, and NSF checks. This will arrive at the adjusted company cash balance.
After reconciliation, the adjusted bank balance should match with the company’s ending adjusted cash balance.
On the bank statement, compare the company’s list of issued checks and deposits to the checks shown on the statement to identify uncleared checks and deposits in transit.

Other Point: –

Bank reconciliation help to identify frauds. Bank reconciliation help to maintain accountability. Bank reconciliation helps to catch financial mistakes. Bank reconciliation statement confirm that payment have been processed and cash collections. Bank reconciliation ensure the business internal financial record to reflect cash flow statement and share holders make decision on behalf of financial statement.


Costing, or cost accounting, is a system for determining a company’s cost of production. This type of accounting looks at both variable and fixed costs incurred throughout the production process. Companies use costing information to make informed business decisions and ensure each area of production is financially effective and efficient.

An organization’s internal management performs costing activities, and, unlike other forms of accounting, isn’t seen by outside clients or institutions. As a result, there are no set standards that cost accounting must meet, and it has more flexibility in comparison to other types of accounting.

Categories of business expenses

There are a few different categories of expenses that cost accounting looks at. These expenses include:

Variable costs: This type of expense is one that varies depending on the company’s needs and usage during the production process. For example, expenses incurred to produce more inventory to meet the demands of a busy season would be considered variable costs.
Fixed costs: Fixed costs are expenses that don’t change despite the level of production. For example, the monthly payment for the lease on a manufacturing building is considered a fixed cost.
Direct costs: These costs are directly related to manufacturing a product. For example, the employee wages for the company’s assembly line workers are a direct cost.
Operating costs: This type of expense refers to the daily operations of a company. For example, the cost of equipment needed to make products is an operating cost.

Types of costing : –

Lean costing
Absorption costing
Historical costing
Marginal costing
Standard costing
Activity-based costing


Inventory is a current asset account found on the balance sheet, consisting of all raw materials, work-in-progress, and finished goods that a company has accumulated. It is often deemed the most illiquid of all current assets and, thus, it is excluded from the numerator in the quick ratio calculation.

Types Of Inventory

Finished goods: –

Finished goods inventory is inventory that has been completely built and is ready for immediate sale. Regardless of the inventory cost method mentioned above, finished goods inventory consists of the raw material cost, direct labour, and an allocation of overhead.

Work-in-progress: –

Work-in-progress inventory consists of all partially completed units in production at a given point in time.

Raw materials: –

Raw materials inventory is any material directly attributable to the production of finished goods but on which work has not yet begun. An example would be steel for a car manufacturer.

Key Points Of Inventory

It is a part of current assets. Inventory is valued in one of three ways. Inventory management allows business to minimize inventory cost (on needed basis) It’s can be categorized in three different ways like raw materials, work-in-progress and finished goods. Inventory is the raw material used to produce goods as well as the goods that are available for sales.

Journal Entry

A journal entry is a record of the business transactions in the accounting books of a business. A properly documented journal entry consists of the correct date, amounts to be debited and credited, description of the transaction and a unique reference number. A journal entry is the first step in the accounting cycle. A journal details all financial transactions of a business and makes a note of the accounts that are affected. Since most businesses use a double-entry accounting system, every financial transaction impact at least two accounts, while one account is debited, another account is credited. This means that a journal entry has equal debit and credit amounts

Purpose of Journal Entry

A journal is a record of transactions listed as they occur that shows the specific accounts affected by the transaction. Used in a double-entry accounting system, journal entries require both a debit and a credit to complete each entry. So, when you buy goods, it increases both the inventory as well as the accounts payable accounts. Journal entries are the foundation for all other financial reports. They provide important information that are used by auditors to analysis how financial transactions impact a business. The journalized entries are then posted to the general ledger.

A journal entry requires the following elements: –

A header which includes the date of the entry The debit amount is entered in the third column The credit amount is entered in the second column The description of the journal entry in the footer The account number and name. These are recorded in the first column into which the entry is recorded A reference number or a journal entry number that can be used to index and retrieve the journal when required

Cost centres (project wise)

A cost center is a department or function within an organization that does not directly add to profit but still costs the organization money to operate. Cost centers only contribute to a company’s profitability indirectly, unlike a profit center, which contributes to profitability directly through its actions. Managers of cost centers, such as human resources and accounting departments are responsible for keeping their costs in line or below budget.

Key Take A Ways

The main use of a cost center is to track actual expenses for comparison to the budget. A cost center indirectly contributes to a company’s profit via operational excellence, customer service, and enhanced product value. Cost centers can’t simply be eliminated; their role within a company is vital, even if it does not generate any income for the business. A cost center is a function within an organization that does not directly add to profit but still costs money to operate, such as the accounting, HR, or IT departments. The manager for a cost center is only responsible for keeping costs in line with the budget and does not bear any responsibility regarding revenue or investment decisions.

How a Cost Center Works: –

A cost center indirectly contributes to a company’s profit through operational efficiency, customer service, or increasing product value. Cost centers help management utilize resources used. Although cost centers contribute to revenue indirectly, it is impossible to discern the actual revenue generated. Any associated benefits or revenue-producing activities of these departments are disregarded for internal management purposes. Cost centers are often assigned their own general ledger coding that management and personnel can use to absorb and report costs. As budgets are prepared, cost centers are intentionally forecast to operate as a loss; in fact, budgeted revenue will be $0. Instead, management’s goal is to minimize the deficit of a cost center while still providing general support to profit centers.

Purpose of a Cost Center: –

The main function of a cost center is to track expenses. A cost center manager is only responsible for keeping costs in line with the budget and does not bear any responsibility regarding revenue or investment decisions. Cost centers provide metrics more relevant to internal reporting. Internal management utilizes cost center data to improve operational efficiency and maximize profit.

Party Reconciliation (Debtors & Creditors)

Reconciliation is an accounting process that compares two sets of records to check that figures are correct and in agreement. Reconciliation also confirms that accounts in the general ledger are consistent, accurate, and complete. However, reconciliation can also be used for personal purposes in addition to business purposes. Account reconciliation is particularly useful for explaining the difference between two financial records or account balances. Some differences may be acceptable because of the timing of payments and deposits. Unexplained or mysterious discrepancies, however, may warn of fraud or cooking the books. Businesses and individuals may reconcile their records daily, monthly, or annually.

Key Take A Ways

In double-entry accounting, each transaction is posted as both a debit and a credit. Individuals also may use account reconciliation to check the accuracy of their checking and credit card accounts. Companies use reconciliation to prevent balance sheet errors on their financial accounts, check for fraud, and to reconcile the general ledger.

Types of Reconciliation

Personal Reconciliation: –

Periodically, many individuals reconcile their check books and credit card accounts by comparing their written checks, debit card receipts, and credit card receipts with their bank and credit card statements. This type of account reconciliation makes it possible to determine whether money is being fraudulently withdrawn. By reconciling their accounts, individuals also can make sure that financial institutions (FI) have not made any errors in their accounts, and it gives consumers an overall picture of their spending. When an account is reconciled, the statement’s transactions should match the account holder’s records. For a checking account, it is important to factor in pending deposits or outstanding checks.

Business Reconciliation: –

Companies must reconcile their accounts to prevent balance sheet errors, check for fraud, and avoid auditors’ negative opinions. Companies generally perform balance sheet reconciliations each month, after the books are closed for the prior month. This type of account reconciliation involves reviewing all balance sheet accounts to make sure that transactions were appropriately booked into the correct general ledger account. It may be necessary to adjust journal entries if they were booked incorrectly. Some reconciliations are necessary to ensure that cash inflows and outflows concur between the income statement, balance sheet, and cash flow statement. GAAP requires that if the direct method of presenting the cash flow statement is used, the company must still reconcile cash flows to the income statement and balance sheet. If the indirect method is used, then the cash flow from the operations section is already presented as a reconciliation of the three financial statements. Other reconciliations turn non-GAAP measures, such as earnings before interest, taxes, depreciation, and amortization (EBITDA), into their GAAP-approved counterparts.

Preparation and finalisation of P/L & B/s…etc various things

Profit and loss (P&L) accounting is the process of creating a profit and loss statement to help companies have a clear view of the revenues and expenses over a period. The segregated view of the financial inflows and outflows enables organizations to track their financial performance and implement ways to keep up the same or improve it.

Key Take A Ways

These statements let creditors and investors make well-informed decisions on whether to involve with or invest in a company.
Revenue, cost, accrual and prepaid, EBITDA, and net profit are some of the components that help format a standard P&L statement.
To ensure accurate P&L accounting, the professionals prepare separate ledgers first and then create a trial balance and profit and loss statements.
Profit and loss accounting is when companies prepare the profit and loss statements to figure out their financial performance for a fiscal quarter or year.

Balance Sheet

A financial statement that reports a company’s assets, liability, and shareholder equity at a specify point.
The term balance sheet refers to a financial statement that reports a company’s assets, liabilities, and shareholder equity at a specific point in time. Balance sheets provide the basis for computing rates of return for investors and evaluating a company’s capital structure. In short, the balance sheet is a financial statement that provides a snapshot of what a company owns and owes, as well as the amount invested by shareholders. Balance sheets can be used with other important financial statements to conduct fundamental analysis or calculate financial ratios.

Key Take A Ways: –

Fundamental analysts use balance sheets to calculate financial ratios. The balance sheet is one of the three core financial statements that are used to evaluate a business. It provides a snapshot of a company’s finances (what it owns and owes) as of the date of publication. The balance sheet adheres to an equation that equates assets with the sum of liabilities and shareholder equity.

Sales, purchase, payment, receipt, debit note, credit note

Sales: –

Sale is a simple statement which consignees prepare to communicate to the consignors their consignment related financial transactions and activities. It is not a part of the formal accounting record of either party. Also, there is no specific or standard format available for the preparation of account sales.

Purchase: –

The purchases account is a general ledger account in which is recorded the inventory purchases of a business. This account is used to calculate the amount of inventory available for sale in a periodic inventory system.

Receipt & Payment: –

A receipt payment account has many important features. All receipts in a receipts or payments account are recorded on one side (the debit side) and all payments on the other side (the credit side). A receipt payment account is a summary of a cashbook. It begins with the bank balance and opening cash, sometimes merged.

Debit Note: –

A debit note is a commercial document, common in business to business (B2B) transactions, that either buyers or sellers may use regarding the amount due for a sale of goods or services. It is essentially an additional note related to an invoice, usually indicating the need to adjust the invoiced amount.

Credit Note: –

A credit note is a commercial instrument that seller’s issue to purchasers whenever they return goods bought on credit. This note acknowledges and notifies the suppliers to update the accounts book accordingly.

Key Points Of Sales, purchase, payment, receipt, debit note, credit note: –

Receipts, its Sales is always build revenue of the company, firm…. etc. Receipt and payment, it does not include any transactions that are not cash or bank items. Purchase, its used by marketers and retailers when planning the placement of consumer products. Debit Note, its separated from an invoice and informs a buyer of current debt obligations. Credit Note, it’s a way to communication of any change that happen to an invoice that has already been paid.