Topic 3 - General journal, General leger, Financial Statements Flashcards
GST excluded
no. x 0.1
GST included
no. / 11
General Ledger
T account
General Journal
date | description | credit | debit
Perpetual Inventory System
Trading stock is recorded as inventory
Advantages perpetual inventory system
- short term income statements can be prepared at any time
- possibility of running out of stock is reduced
- fast and slow moving inventory lines can be easily identified
Disadvantages perpetual inventory system
-more expensive
-loss of items
periodic inventory system
trading stock purchased is recorded in an expense ledger
Closing entries step 1. GJ
- debit income (sales, interest income)
- credit profit and loss
* transfer income to p+l - debit p+l
- credit expenses (cogs wages rent advertising)
* transfer expense to p+l - debit p+l
- credit capital
* transfer profit to capital - debit capital
- credit drawings
*transfer drawings
closing entries step 2. GL
make expenses, p+l, income. T account
expenses:……………….income:
put all expenses…….|..put all income
profit/capital = ………| line over total
income - expenses…|
line over total
Closing entries step 2 example
expenses. ………..P+L…….income
_________________________________________
cos 39200……………| sales 84,000
wages 24,000………| interest income 2000
rent 13,000………….|…. _________
advertising 700……|…….86,000
interest loan 1800.|
profit/capital 1000.|
___________
86,000
assets and expenses
are debited
liability owners equity and income
are credited
entries to commence business
put a e in debit
put l oe i in credit
should equal
what is a bad debt
amount of money owing to us that we will never receive
