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.

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.

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.

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.

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.

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.

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.

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.

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.

Finished goods: –

Work-in-progress: –

Raw materials: –

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.

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.

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.

• 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.

 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.

• 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.