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A Vouching is reviewing factual validation to see if it properly supports entries made in the account records. For illustration, an adjudicator is assuring when examining a shipping document to see if it supports the amount of a trade recorded in the sales journal. Vouching can work in two directions. For illustration, an adjudicator can trace factual force particulars back to the account records to see if the particulars are properly proved, or start with the inventory records and trace back to the storage shelves to see if the force exists.

When engaged in assuring, an adjudicator is looking for any crimes in the amount recorded in the account records and icing that the deals are recorded in the correct accounts. The adjudicator is also vindicating that deals have been properly authorized.

When assuring uncovers an error, the adjudicator may need to increase the sample size being checked in order to gain assurance that a system operates properly. A violation is to engage in different auditing procedures.


Key Point of Vouching : –

  1. It’s an essential part of the introductory account
    2. Attestations should be adequately distributed.
    3 Vouchers must present the date of analogous trade.
    4. Its present true and fair view of analogous trade.
    5. Attestations help in identifying the credibility of a business.
    6. Vouchers are the record of validation for analogous trade which is incurred by any sanctioned person on behalf of the company it’s also signed by a sanctioned person as per appointed by the company, establishment. It’s an utmost part to control of undefined, gratuitous charges.


Journal Entry

A journal entry is a record of the business deals in the account books of a business. A duly proved journal entry consists of the correct date, amounts to be debited and credited, a description of the sale, and a unique reference number.

A journal entry is the first step in the account cycle. A journal details all fiscal deals of a business and makes a note of the accounts that are affected. Since utmost businesses use a double-entry account system, every fiscal sale impacts 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 deals listed as they do that shows the specific accounts affected by the sale. Used in a double-entry account system, journal entries bear both a debit and a credit to complete each entry. So, when you buy goods, it increases both the force and the accounts outstanding accounts.

Journal entries are the foundation for all fiscal reports. They give important information that is used by adjudicators to analyze how fiscal deals impact a business. The journalized entries are also posted to the general tally.

A journal entry requires the following elements: –

1. A title which includes the date of the entry.
2. The debit quantum is entered in the third column.
3. The credit quantum is entered in the alternate column.
4. The description of the journal entry in the footer.
5. A reference number or a journal entry number that can be used to indicator and recoup the journal when needed.

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 : –

  1. Debuct any outstanding checks.
    2. This will give the acclimated bank/cash balance.
    3. Using the cash balance shown on the bank statement, add back any deposits in conveyance.
    4. Next, use the company’s ending cash balance, add any interest earned, and note the delinquent quantum.
    5. Abate any bank service fees, penalties, and NSF checks. This will arrive at the acclimated company cash balance.
    6. After Reconciliation, the acclimated bank balance should match with the company’s ending acclimated cash balance.
    7. 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 conveyance.

Other Point: –

  1. Bank reconciliation helps to identify frauds.
    2. Bank reconciliation helps to maintain responsibility.
    3. Bank reconciliation helps to catch fiscal miscalculations.
    4. The bank reconciliation statement confirms that payment has been reused and cash collections.
    5. Bank reconciliation ensures the business’s internal fiscal record reflects the cash inflow statement and shareholders make decisions on behalf of the fiscal statement.

Party Reconciliation (Debtors & Creditors)

Reconciliation is an accounting process to help us to verify the balance so that our account remains tally and no further mistakes are made.

Reconciliation is an accounting process that helps to check and compare two sets of records that the figures are correct.

Reconciliation also verifies that our ledger accounts are free of errors, are accurate and complete. However, reconciliation can be used for individual purposes in addition to business purposes.

Account reconciliation is particularly useful for explaining the differences between two financial records. Some variation may be acceptable at the time of receipt and payment. Unexplained or mysterious discrepancies, however, may warn of fraud or cooking the account of statement. Businesses and individuals can reconcile their records daily, monthly, half yearly or annually.

Key Take A Ways

  1. In double-entry accounting, each transaction is posted as a debit and a credit.
  2. Individuals can also use account reconciliation to check the accuracy of their accounts.
  3. Companies use the solution to prevent balance sheet and profit loss errors in their financial accounts, investigate fraud, and reconcile the general ledger.

Types of Reconciliation

Personal Reconciliation: –

From time to time, many individuals reconcile their check book and credit accounts by comparing their written checks, debit card receipts, and credit receipts to their bank and credit statements. This type of account reconciliation makes it possible to decide whether money is being withdrawn fraudulently or not.


By reconciling their accounts, one also ensures that financial institutions (FIs) have not made any errors in their accounts, and it gives consumers an overall picture of their spending. When a books is reconciled, the transaction details must match the records of the account holder. For a checking account, it is important to keep track of pending deposits or outstanding checks.

Business Reconciliation: –

Companies must reconcile their accounts to prevent balance sheet errors, prevent fraud, scrutiny, and avoid negative opinions from auditors. Companies generally reconcile the balance sheet every month after the previous month’s books are closed. This type of account reconciliation involves reviewing all balance sheet accounts to ensure 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 reconciliation is necessary to ensure that cash inflows and outflows match between the income statement, balance sheet, and cash flow statement. GAAP requires that if the straight method of presenting the cash flow statement is used, the company must still reconcile the cash flows in the income statement and balance sheet. If the indirect method is used, the cash flows from the operating section are already presented as a reconciliation of the three financial statements. Other solutions convert non-GAAP measures, such as earnings before interest, taxes, depreciation and amortization, into their GAAP-approved equivalents.




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

Sales: –

Sale is a simple statement that the consignor prepares to convey to the consignor the financial transactions and activities related to his goods. It is not part of either party’s formal accounting records. Also, there is no specific or standard format available for preparing for an account sale.


Purchase: –

The purchases account is a general ledger account in which merchants track their inventory. This account is used to calculate inventory for sale purchases.

Receipt & Payment: –

Receipt & payment accounts have several features. In the receipt or payment account, all receipts are recorded on (the debit side) and payments are recorded on (the credit side). Receipt Payment Account is a summary of the cash book. It starts with bank balance and initial cash, sometimes combined.

Debit Note: –

A debit note is a commercial document in used for business-to-business transactions, that either vendor or supplier may use regarding the amount due for a sale of supply. It is essentially an additional note related to an invoice, usually indicating the need to adjust the invoiced Value.

Credit Note: –

A credit note is a commercial document to issued by sellers to buyers when they return goods. This note acknowledges and informs the suppliers to update the statement of account accordingly.

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

The sale always builds the wealth of the company.

Receipt and payment account does not include any transaction except cash and bank.

Purchase is used for planning consumer products.

A debit Note is a separate form to inform a buyer of current debit obligations.

Credit Note is used for communication of any change in invoice.


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

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

Cost centres (project wise)

A cost center is a department or function within an association that doesn’t directly add to the benefit but still costs the association a plutocrat to operate. Cost centers only contribute to a company’s profitability laterally, unlike a profit center, which contributes to profitability directly through its conduct. Directors of cost centers, similar to human resources and account departments are responsible for keeping their costs in line or below budget.

Key Take A Ways

  1. The main use of a cost center is to track factual charges for comparison to the budget.
  2. A cost center laterally contributes to a company’s profit via functional excellence, client service, and enhanced product value.
  3. Cost centers can’t simply be excluded; their part within a company         is vital, even if it doesn’t induce any income for the business.
  4. A cost center is a function within an association that doesn’t directly add to the benefit but still costs a plutocrat to operate, similar to the account, HR, or IT departments.
  5. The director of a cost center is only responsible for keeping costs in line with the budget and doesn’t bear any responsibility regarding profit or investment opinions.

How a Cost Center Works: –

A cost center laterally contributes to a company’s profit through functional effectiveness, client service, or adding product value. Cost centers help operations use resources. Although cost centers contribute to profit laterally, it’s insolvable to discern the actual revenue generated. Any associated benefits or revenue-producing conditioning of these departments are disregarded for internal operation purposes.

Cost centers are frequently assigned their own general tally rendering that operation and labor force can use to absorb and report costs. As budgets are set, cost centers are designed read to operate as a loss; in fact, the calculated profit will be$ 0. Rather, the operation’s thing is to minimize the deficiency of a cost center while still furnishing general support to profit centers.

Purpose of a Cost Center: –

The main function of a cost center is to track charges. A cost center director is only responsible for keeping costs in line with the budget and doesn’t bear any responsibility regarding profit or investment opinions. Cost centers give criteria more applicable to internal reporting. The internal operation utilizes cost center data to ameliorate functional effectiveness and maximize profit.


A Costing, or cost accounting, is a method of determining a company’s production costs. This type of accounting looks at both variable and fixed costs incurred during the production process. Companies use cost information to make informed business decisions about whether each area of production is financially effective and efficient.

The internal management of an organization carries out costing activities, and, unlike other forms of accounting, is not observed by external customers. As a result, there are no set standards for cost accounting to meet, and it has more flexibility than 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 Cost: This type of expense is that varies depending on the company’s needs and usage during the production process. For explanation, expenses incurred to produce more inventory to meet the demands of a busy season would be considered a variable cost.

Fixed Costs: Fixed costs are expenses that do not change regardless of the level of production. For explanation, the monthly payment for the lease of a manufacturing building is considered a fixed cost.

Direct Costs: These costs are directly related to the manufacturing of a product. For explanation, employee salaries for a company’s assembly line workers are a direct cost.

Operating Costs: This type of expense refers to the daily operation of a company. For explanation, the cost of equipment needed to make a product is an operating cost.

Types of costing : –

1. Lean costing
2. Absorption costing
3. Historical costing
4. Marginal costing
5. Standard costing
6. Activity-based costing

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

Profit and loss( P&L) account is the process of creating a profit and loss statement to help companies have a clear view of the earnings and expense over a period. The segregated view of the financial inflows and outflows enables associations to track their financial performance and apply ways to keep up the same or meliorate it.

Key Take A Ways

  • These statements let creditors and investors make well-informed opinions on whether to be involve with or invest in a company.
  • profit, cost, addendum and refunded, EBITDA, and net profit are some of the factors that help format a standard P&L statement.
  • A profit and loss account is when companies prepare the profit and loss statements to figure out their financial performance for a fiscal quarter or time.

Balance Sheet

 A financial statement that reports a company’s Assets, liability, and shareholder equity at a specific 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 give the base for calculating rates of return for investors and assessing a company’s capital structure. In short, the balance sheet is a financial statement that provides a shot 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 rates.

Key Take A Ways: –

  • Fundamental judges use balance sheets to calculate financial rates.
  • The balance distance is one of the three core financial statements that are used to estimate a business.
  • It provides a shot 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.