Learn with Us About How to Create an Account and Maintain Them:
An organization must keep track of all income and expenses to measure the gross profit or loss. After every fiscal year, the ledger is used to calculate the net profit or loss after balancing the debit and credit sides. Inside a ledger, multiple accounts are created to record various incomes, expenses, losses or gains values. How does it help or how does a company create an account can be learned in detail with Creating accounts Assignment Help from us at 24x7assignmenthelp.com.
General ideas on creating an account:
You’ll notice that in accounting all items that are related with business transaction fall into an account. This helps in keep the record on that transaction. The T account is where all those accounts are written. Since the format of that account looks like a ‘T’, it is named after that. In that account you’ll place debits in one side and credits in the other side.
Inside a ledger all those T accounts are placed. From Creating accounts Assignment Help, you can learn about general ledger which is the main ledger in an organization.
What are supporting ledgers?
When you’ll study about ledgers, there are two other important ledgers that need focus with creating account. They are called subsidiary ledgers or supporting ledgers.
- Debtors’ ledger: From Creating accounts Homework Help you can notice that all persons and businesses that owes the business for which that ledger created for are called debtor’s ledger.
- Creditors’ ledger:All businesses and persons that the business owes for which that ledger is made are under this creditor’s ledger.
Importance of learning ledgers:
Creating an account isn’t everything in a business. If the business doesn’t record them in a ledger then at a year end’s calculation it becomes troublesome to gather those accounts separately. General ledger, debtors and creditors ledgers are important to learn about all cash inflows and outflows to finalize a balance sheet.
An example of creating account:
From Creating accounts Homework Helpwe can find out an example to understand this matter properly. Let us suppose that there is a manufacturing company, and in the year 2016 there was a purchase made on April for business purpose. Since this is a direct expense so we can include it in an existing account already made for purchase.
General ledger for the year of 2016
|Date||Dr. ($)||Date||Cr. ($)|
|April 01||Purchase of raw materials||$15000|
So, as a purchase is an expense done in favor for manufacturing, this falls under credit side of the ledger.
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